How About an 'Exchanges' ETF?

Despite all the enthusiastic CCP activities of the exchanges, the question is what could the exchanges earn with this new business? According to a recent reserach report of the Tabb Group, the global annual CDS clearing revenue is forecast to hit just $140 million by 2011. This calculation assumes that 55% of the OTC swaps volume is cleared on an exchange.

The exchange operators themselves see much brighter opportunities. ICE recently said in a statement that the increase in its second-quarter revenue was driven primarily by new products, high trading volume and the launch of its new CDS clearing platform.

ICE earned $250 million within the second quarter 2009. Even if there will be some uncertainties, now is the time to start participating on the performance of selected global exchange operators. We designed the following product sample.

Components of an 'Exchanges ETF' Company ISIN Weight DEUTSCHE BORSE AG DE0005810055 20% INTERCONTINENTAL EXCHNG. INC. US45865V1008 20% NYSE EURONEXT INC. US6294911010 15% SINGAPORE EXCHANGE LTD SG1J26887955 15% London Stock Exchange GB00B0SWJX34 15% Hongkong Exch. + Clear. Ltd. HK0388045442 15% Source: ETF-Radar; ISIN=international securities identiftying number

Historical Performance Component 1M 3M 1Y DE0005810055 -4,32% -15,15% -21,86% US45865V1008 -2.87% -16.97% 3.78% US6294911010 0.56% -12.92% -33.23% SG1J26887955 -3.67% 19.39% 34.48% GB00B0SWJX34 8.32% 9.51% -4.16% HK038804542 -8.85% 9.26% 41.28% Source: ETF-Radar

This product is suited for investors who have the ability to tolerate risk and short-term periods of underperformance, as well as a long-term commitment to the underlying investment philosophy. This ETF is recommended as satellite investment only.

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