Some sense & some rubbish - Must be Silly Season!

ETFs Hit the Mainstream

As all my regular readers know, I love ETFs.  They are the obvious tool for building an investment portfolio.  Punters like me can't possibly know which stocks to buy, but we can have views on which markets, sectors or regions are likely to do well.  The launch of the self-branded ETFs by HSBC marks another important step in the evolution of ETFs.  HSBC has been working on this project for some time and I know several people that were involved in the process.  There was a lot of debate, discussion and disagreement, but in any case, it is now the real thing! Needless to say HSBC Securities Services will be pleased with the additional supply and no doubt the Global Markets group (that has recently announced plans to enter into the Prime Brokerage business) will have played their part in the development of the business at HSBC.  

There is an interview with Farley Thomas of HSBC by Paul Amery of IndexUniverse.com that you can read here.  Also, read Paul’s follow-up comments here.  I won’t reiterate Paul’s observations, but I have a couple of my own.  The fact that one of Paul’s first questions was about securities lending shows how closely intertwined the two activities have become.  The second is that the readers of IndexUniverse.com are not typically knowledgeable about securities lending, but are more exposed to the subject than ever before.  This can only be a good thing in the crusade to build secondary market liquidity through the expansion of both the supply and demand side of securities lending for ETFs.  

Myners Voting Madness  

I couldn’t believe when I read recently that Lord Myners was promoting the idea of shareholders selling voting rights.  I guess the idea is that if a shareholder isn’t interested in actively participating in the management of a company by exercising its vote, it should sell that vote to someone who is interested.  I think this is one of those things that sounds good over a couple of glasses of port in the evening, but in the cold light of day is rather bizarre.  It particularly strikes me as odd given the furore (unnecessary in my view as it rarely happens) over the idea of hedge funds and other firms borrowing shares with the sole objective of obtaining voting rights.  Regulators, politicians and CEO’s have all railed against such actions.  And now one of that group talks about selling the rights?  I assume the idea was floated in August so that most people would be on holiday and not notice.  

Tut-tut on the Tobin Tax, Mr Turner  

While on the subject of silly season commentary, I can’t believe that a former banker has suggested a transaction tax on banks.  Yet Adair Turner, Chairman of the FSA has proposed a “Tobin Tax” on banking deals.  The idea is to assess an additional tax on banking transactions and in so doing, limit profits of the banks and thereby stopping mega bonuses.  Are you kidding me?  If I hadn’t already used the word “bizarre” in the blog already, I would be using it now.  (Oh, I DID use it again.  Bad editing.)  Most of the trading activities that would be looked at are incredibly easily transferred to another jurisdiction and would just leave our fine British soil.  Along with all those who are already planning on leaving with the upcoming 50% tax rate and the emergency preparations being made by some hedgies to flee proposed EU Alternatives regulations.  At least the traffic coming in to the City will be reduced.

Have a great weekend - especially those of you having Monday as a holiday as well!