Products July 26, 2010

Bank of America Merrill Lynch Offers ETF-Specific Algorithm

Bank of America Merrill Lynch has unveiled its premium algorithm, ETF-aX.
Reported by

This new ETF-specific algorithm analyzes market depth and price data across an ETF’s underlying portfolio to identify the most efficient combination of ETF, stock, and futures and then automatically trades them to source liquidity and find the best prices, according to a press release.  

Upon receiving a client’s order to trade an ETF, the engine analyzes inside pricing and depth of book across the ETF, stock, and futures markets to compile a picture of available liquidity. Once ETF-aX determines the optimal way to transact, balancing a desire for the best pricing against a need to capture the most liquidity, slices are simultaneously sent out to all market centers. A composite ETF price is assembled from the different executions and provided to clients.  

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“The primary challenge with trading ETFs is market fragmentation; liquidity is limited outside of the top-ranked ETFs,” said Charlie Whitlock, an execution consultant at BofA Merrill, in the announcement. “By using ETF-aX, clients are able to leverage our in-house ability to trade a combination of the component parts in different markets, gaining liquidity at more efficient pricing.”
Products July 26, 2010

Van Eck Launches Emerging Markets Local Currency Bond ETF

Asset manager Van Eck Global has launched a U.S.-listed exchange-traded fund (ETF) designed to provide investors with exposure to an index that tracks a basket of bonds issued in local currencies by emerging market governments.
Reported by

Market Vectors Emerging Markets Local Currency Bond ETF (NYSE Arca: EMLC) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of J.P. Morgan Government Bond Index-Emerging Markets Global Core Index (ticker: GBIEMCOR), according to a press release. The fund has a gross expense ratio of 0.60% and net expense ratio of 0.49%.   

GBIEMCOR currently has 171 constituents with maturities ranging from one to 30 years, and an average yield-to-maturity of 6.8% as of July 1, 2010. The Index currently tracks a selection of bonds issued in local currencies by thirteen emerging market countries representing Latin America, Eastern Europe, Africa, and Asia: Brazil, Colombia, Egypt, Hungary, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, South Africa, Thailand, and Turkey.   

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GBIEMCOR is market-cap weighted, with individual country exposures capped at 10% to provide more diversification among countries within the index. As of July 1, 2010 six countries met the 10% threshold, including Brazil, Malaysia, Mexico, Poland, South Africa and Thailand. Index rebalancing occurs monthly.   

More information is at http://www.vaneck.com.

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