MSN – Two agencies with oversight of the financial markets are trying to coordinate their regulations to eliminate differences involving similar types of investments and instruments.

The Securities and Exchange Commission, the government’s primary markets watchdog, and the Commodity Futures Trading Commission — which oversees the trading of oil, gas and other commodities as well as financial instruments — have battled in the past over regulatory turf and found separate supporters in Congress.

But as lawmakers craft an overhaul of the nation’s financial rules and consider the Obama administration’s sweeping proposal, the two agencies recently reached an agreement on sharing regulation of the over-the-counter derivatives market. Derivatives are traded in a $600 trillion unregulated market worldwide.

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Tags: commodities, derivatives market, financial-instruments, obama, securities-and-exchange, unregulated market, watchdog

Bloomberg – Intercontinental Exchange Inc.’s bid to be the top U.S. guarantor of credit-default swap trades won Federal Reserve approval, leaving the Securities and Exchange Commission as the futures market’s final regulatory hurdle.

Intercontinental and larger rival CME Group Inc. are among four clearinghouse owners vying to back the $27 trillion credit- default swap market, with the winner standing to gain as much as $400 million a year in revenue, according to estimates by Wachovia Capital Markets and Keefe Bruyette & Woods Inc.

“I don’t think the SEC will have any issues” signing off Intercontinental’s clearing plans after the Fed approved them yesterday, said Brian Yelvington, an analyst at CreditSights Inc. in New York. “I hope it’s a rubber stamp, because given the new regulatory regime I would hope this has been a carefully coordinated process.”

Regulators on both sides of the Atlantic are developing separate plans to stabilize the derivatives market after American International Group Inc., once the world’s largest insurer, almost went bankrupt last year from its use of credit- default swaps. The unregulated, privately traded contracts stymied government efforts to assess bank credit risk because the full range of trades between dealers was unknown.

SEC spokesman John Nester said he didn’t know when the agency will make a decision. “The proposal is under active consideration,” he said in an interview yesterday.

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Tags: american international group inc, american-international-group, credit default swaps, credit risk, credit-default-swap, creditsights inc, derivatives market, futures market, government efforts, guarantor, intercontinental exchange inc, international-group-inc, keefe bruyette, regulatory hurdle, regulatory-regime, securities-and-exchange-commission, spokesman john, swap market, yelvington

West Palm Beach (HedgeCo.net) -  The AlphaMetrix STTI tracker fund, launched in mid-December 2008 by AlphaMetrix LLC currently has approximately $70 million under management, with additional commitments from large institutional investors expected in the coming months, according to the company. In January 2009, its first full month, the fund was up 1.94%.

"Short-term strategies have little to no correlation to any traditional or alternative investments, making them appealing to investors seeking to add pure ‘liquid alpha’ to their portfolios," said Aleks Kins, CEO of AlphaMetrix. "Further, the Short-Term Traders Index includes a wide range of diversified trading strategies, with each CTA heavily vetted, highly liquid and completely transparent."

Interest in short-term trading strategies is rising for many reasons, including unease over the lack of liquidity in other alternative investments such as hedge funds, the counter party guarantee offered by the exchange-traded derivatives market, historically strong risk-adjusted returns, limited downside risk and low volatility.

"The index is a highly practical application of our research into the best ways to construct portfolios,” said Galen Burghardt, head of research for Newedge. “We expected short-term futures traders to demonstrate valuable diversifying properties, and we have been very satisfied with the results. We expect the index to produce results that continue to be uncorrelated to every major asset class and expect the average correlation of returns in the index to remain low. As a result, we expect the index to track returns in this space with very low volatility."

Alex Akesson

Editor for HedgeCo.Net
Email: alex@hedgeco.net

Tags: accredited-investors, alternative investments, asset class, derivatives market, downside risk, futures traders, galen burghardt, hedgeco, institutional-investors, newedge, palm-beach, party guarantee, term futures, term strategies, term traders, traders index, trading strategies