What’s in store for the ECB and the Euro

ETF Securities What’s in store for the ECB and the EuroWhat’s in store for the ECB and the Euro

What’s in store for the ECB and the Euro

ETF Securities FX Research: A global recession is just hype

Summary

Market dynamics in 2016 indicate that investors fret over the possibility of a global recession. There is little evidence or likelihood of this happening.

Central bank policy is bowing to market pressure to raise stimulus. The same stimulus measures that once had an impact are failing and new ideas are needed.

The Euro appears headed higher as the ECB again disappoints the market.

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Not the end of the world

During 2016, share markets have mostly been in freefall, (in line with bond yields), and global asset volatility has surged. Investors appear concerned that the global economy is about to experience a recession. In turn, markets are expecting and most central banks seem willing to provide fresh stimulus to support economic activity. While such actions can produce a short-term impetus for risk appetite, it is unlikely to provide a sustained improvement in the underlying economy. New thinking is needed.

While investors are concerned about another global slowdown, and that market weakness could provide a negative feedback loop to the real economy, there appears little evidence of this occurring. The value of more and more of the same QE and lower and lower rates appears dubious, as does the reality surrounding recession fears. Economic data shows that activity isn’t stellar but it not in recession territory as investors fear.

(Click to enlarge) Source: Bloomberg, ETF Securities

The US and the UK economies remain robust, with good growth rates around 2%, and unemployment back near pre-crisis levels. Swedish Q4 2015 growth rose to the highest level in four years.

Eurozone unemployment remains elevated but has reached the lowest level in four years. Services sector buoyancy is offsetting weakness in manufacturing and overall growth is hovering at 1.5%. Even concern over the European banking sector seems misplaced. Although loan growth is stagnant, margins appear stable and non-performing loans have been falling for around 12 months, down 30% since the March 2014 peak.

Clearly oil exporters like Canada and Norway are struggling and require stimulus. However, other commodity currency countries (Australia and New Zealand) and faring well, with growth rates in the 2-3% range. Japanese growth has been stagnant for many years, despite some evidence of gaining traction. Nonetheless, negative rate environment has not assisted the real economy or kick-started inflationary forces. And the strong currency is hurting the Swiss economy, which is weakening sharply.

Who’s been doing what?

The main policy that G10 central banks have been implementing have been similar: a combination of asset purchases, so called quantitative easing (QE) and lowering interest rates (some into negative territory). While the impact of such policies appear to be losing their potency, policymakers appear to be pandering to market whims and simply responding to rising asset volatility.

Over the past year, six of the G10 central banks have cut rates and three are below zero, and appear ready to do more. At some point, moving rates further negative will either force banks to lend to increasing risky borrowers or enforce negative rates on its customers (potentially causing depositor flight). In an uncertain economic environment, neither choice is very palatable for banks. This leaves the option of central banks pushing rates further into negative territory as one that has limited gains and could keep FX volatility elevated. Inflation expectations are significantly correlated to oil prices, a weight on inflation that is generally accepted by central bankers to be a temporary influence. Accordingly, central banks shouldn’t be reacting to the volatility that the oil price movements are having on overall market sentiment. We feel that volatility is moderating and knee jerk policy reactions are likely to be a mistake and generate unintended consequences.

(Click to enlarge) Source: Bloomberg, ETF Securities

The impact on currency?

The beggar thy neighbour nature of central bank stimulus on currencies appears to be very myopic, short-lived and unlikely to have a sustained (if any) impact on trade. The idea that efficiency gains can drive rising export volumes seems flawed. The ‘J-curve effect’ is likely to take several months before improvement is seen in trade volumes. The UK and the US are the top two trading partners for the Eurozone countries, accounting for around 25% of total exports outside the Euro Area. In order for a meaningful improvement in trade, a sustainable depreciation in the Euro is required. This will not happen if the ECB continues its recent method of promising more than it delivers.

Additionally, rising FX market volatility has certainly been a factor in curbing the ambition of policymakers seeking competitive depreciations of local currencies, by limiting the timeframe of the currency response to policy changes.

(Click to enlarge) Source: Bloomberg, ETF Securities

Draghi to the rescue?

The next policy signpost is this week’s ECB meeting. Expectations remain high that the central bank will cut interest rates further and add to its QE program. Although most G10 central banks do not have a specific currency mandate (objective), it comes as no surprise that central bank policy indirectly impacts currencies. ECB President Draghi noted at its January meeting that, ‘ it’s pretty clear that our actions have an effect on the exchange rate’.

Interest rate differentials matter for currencies in any environment, but particularly when yield is such a scarce commodity as it is currently. In order to have a sustained impact on the local currency (the so-called easy win for efficiency gains), the central bank has to do more than its competitors, something that isn’t happening. Central banks need to send positive signals to market participants if they believe (as we do ) that the global recovery remains on a recovery path. Buying riskier debt instruments within the QE program can help restore some normalcy to government bond markets by switching more QE demand to private sector debt markets.

Composition of ECB balance sheet remains firmly skewed to government debt purchases. The ECB’s Public Sector Purchase program, of which the vast majority is sovereign bonds, accounts for over 75% of its QE asset purchases. The main difference between the Asset Backed Security Purchase Program (ABSPP) and the Covered Bond Purchase Program (CBPP3) schemes is that covered bond purchases remain on the balance sheet of the banks and purchases under ABSPP program can help relieve balance sheet stress of the banking sector because the debt pool is taken off balance sheet – something that investors have been acutely worried by in recent months. Nonetheless, both programs can help lift demand for the underlying bonds and motivate lending to (riskier sectors of) the real economy, as rates remain historically low, thereby repairing the credit transmission mechanism and supporting growth. The ECB could also loosen the criteria for eligibility for the ABSPP and CBPP3 programs.

(Click to enlarge) Source: European Central Bank, ETF Securities

Without further risk taking from the ECB and its ability to differentiate itself from other central banks in terms of generic QE and declining rates, the Euro is likely to reverse course and become a burden for the economic union’s trade volumes. The ECB has consistently over promised and under delivered and we expect next week’s meeting to again disappoint.

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

What Happens When Fundamentals Reassert Over Sentiment

What Happens When Fundamentals Reassert Over Sentiment

Commodity & FX Outlook What Happens When Fundamentals Reassert Over Sentiment

What Happens When Fundamentals Reassert Over Sentiment

Summary

The commodity cycle is turning – but commodity prices do not yet reflect the stronger underlying fundamentals. As sentiment realigns with fundamentals we believe there is scope for strong price gains.

Volatility has been a pervasive force in G10 currency markets with the ongoing Greek saga and prospect of tighter monetary policy in the US. Whilst sentiment has been a key driver of policy moves recently, we expect growth and policy fundamentals to become the focus in the upcoming quarter.

Tomorrow we will be hosting a webinar at 2pm (BST) to discuss these trends in commodity and FX markets. We will be joined by Sheryl King from Roubini Global Economics who will be looking at equity and fixed income trends for the quarter ahead. Register here

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).

When being made within Switzerland, this communication is for the exclusive use by ”Qualified Investors” (within the meaning of Article 10 of Section 3 of the Swiss Collective Investment Schemes Act (”CISA”)) and its circulation among the public is prohibited.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Is Volatility Here to Stay?

Is Volatility Here to Stay?

ETFS Multi-Asset Weekly – Is Volatility Here to Stay?

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Highlights

Precious metals stage comeback as Greek negotiations falter.
Rollercoaster ride continues for China A-shares.
Euro defies potential of Greek exit.

The ongoing ‘deal or no deal’ saga has kept most asset markets on edge, as rising uncertainty spooks investors. We expect that volatility will begin to stabilise once we have greater clarity on the scope of a bailout and the conditions attached. To that end, we do not expect a ‘Grexit’ and feel that the ECB will stem any potential run on the Greek banking system via the ELA. Notwithstanding a stronger USD, gold appears well placed to add to recent gains the longer the Greek negotiations are drawn out, with benchmark equities already rebounding as investors appear to expect a near-term resolution.

Commodities

Precious metals stage comeback as Greek negotiations falter. Precious metals began to show their mettle, responding to the prolonged standoff between Greek officials and the Troika last week. Gold and silver led the way, their value to investors as monetary metals coming to the fore. While these gains could be unwound in the near-term if an agreement is reached, we expect further modest gains in coming months as the ECB and other major central banks continue down the money printing path. Meanwhile, El Niño continues to be the question mark for agricultural markets, potentially threatening both wheat and sugar supplies in H2 2015. Cocoa gained a further 6 % last week, as a tighter supply from Ghana and El Niño fears continued to support the market. However, grind demand has also been somewhat weak and could threaten the price bullish sentiment.

Equities

Rollercoaster ride continues for China A-shares. After MSCI announced that it would continue to keep the China A shares inclusion under review, focus has again turned to the amount of unwanted leverage in Chinese stocks. A crackdown by regulators on unauthorized margin lending has been the latest setback for China A shares, sending them tumbling over 6% last week. Despite the volatility, we expect further gains in the medium term, with valuations in line with historical averages and significant market cap growth potential. Meanwhile, volatility was a feature for European bourses also as they rebounded, tracking US benchmarks higher, as the threat of a Greek exit fades.

Currencies

Euro defies potential of Greek exit. The market view on EUR/USD is becoming increasingly polarized, with some expecting gains in the face of rising volatility. We expect downside risks to come more into play and would feel any near-term rally as an opportunity to establish short positions. Optimism over a Greek deal is weighing on the Euro in early trading. The FOMC meeting last week was interpreted relatively dovishly by the market and began the decline for the US Dollar, and coupled with investment flows that supported the Euro, it was one-way traffic last week. However, as concern over the Greek sovereign situation begins to stabilise, investors are again likely to focus on the fundamentals and the relative strength of the US economy. Current market pricing is indicating further USD strength against most G10 currencies this week. GBP has also been buoyant and we expect this to continue with evidence of rising wages raising expectations of tighter policy from the Bank of England. Last week’s retail sales data also surprised to the upside, highlighting the health of household balance sheets.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.

USD Outpaces G10 As Economy Does Same

USD Outpaces G10 As Economy Does Same

ETFS Currency Weekly USD Outpaces G10 As Economy Does Same

USD Outpaces G10 As Economy Does Same A weekly overview of global currency market developments. The report details the past week’s performance of G10 currency pairs and currency baskets, directional model signals for the week ahead, longer-term consensus currency forecasts, futures market positioning data and a macroeconomic commentary on the FX market.

 

Summary

 

US jobs confirm robust recovery and fuel further USD upside momentum

Better industrial production will keep Swedish Krona supported

Euro to suffer under ECB balance sheet growth

 

 

Download the complete report (.pdf)

For more information contact

 

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

 

Important Information

General

 

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

 

Third Parties

 

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.

FX Market Refocuses on Central Banks

FX Market Refocuses on Central Banks

FX Market Refocuses on Central Banks ETFS Currency Weekly

A weekly overview of global currency market developments. The report details the past week’s performance of G10 currency pairs and currency baskets, directional model signals for the week ahead, longer-term consensus currency forecasts, futures market positioning data and a macroeconomic commentary on the FX market.

Summary

FX Market Refocuses on Central Banks

US dollar continues to strengthen as Fed signals policy normalisation

TLTRO flop for ECB

Sell the Union

Download the complete report (.pdf)

Regional reports

United Kingdom Sterling (GBP)

Europe: Euro (EUR)
Switzerland: Swiss Franc (CHF)

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
Webb etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).
Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.