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The EU green bond standard: sensible implementation could define a new asset class
July 13, 2021--The proposed EU green bond standard will be less prone to 'greenwashing', and the widest possible set of issuers and jurisdictions should be encouraged to use the standard.
The European Commission's proposal for a European Union green bond standard, published 6 July, comes at a time when issuance of green bonds is booming, with the bulk being issued and traded within the EU.
Demand for such assets by investors is similarly strong, though increasingly there are concerns about 'greenwashing'-exaggerated claims by issuers about the environmental quality of the underlying projects financed by the bonds. Dubious practices by some issuers could undermine the entire market. The EU green bond standard may not become effective for some time but nevertheless the Commission's proposal could do much to direct investors into higher-quality bonds and projects. If used widely, a new asset class in global capital markets could emerge.
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Source: bruegel.org
SPACs in the gap
July 13, 2021--Special-purpose acquisition vehicles could fill a gap in European equity markets and lure risk-averse investors off the sidelines.
European equity markets lag behind their American counterparts and draw relatively limited interest from insurance companies and pension funds. Getting this capital off the sidelines and into growing companies is one of the main goals of the European Union's capital markets union project. To move forward, the EU will need to consider innovating, not just expanding, its equity offerings.
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Source: bruegel.org
New Invesco ETF on Xetra: Emerging Markets Companies with Robust ESG Profile
July 13, 2021--Since Tuesday, a new exchange traded fund of the issuer Invesco has been tradable on Xetra and Börse Frankfurt.
The Invesco MSCI Emerging Markets ESG Universal Screened UCITS ETF-Acc gives investors access to large and mid-cap companies from 26 emerging markets worldwide.
The investment strategy focuses on increasing the weighting of companies that not only have a good ESG profile, but also have a proven track record of improving it.
The weighting by market capitalisation is regularly adjusted on the basis of certain ESG criteria, whereby this is limited to a maximum of five percent per security.
Companies that do not have an MSCI rating, have been involved in serious ESG controversies, or do business with weapons, oil sands, thermal coal, tobacco or non-medical cannabis are excluded from the index.
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Source: Xetra
New Xtrackers ETFs on Xetra: Green Corporate Bonds and Sustainable Companies in the Cyclical Consumer Goods Sector
July 12, 2021--Since Monday, four new exchange traded funds from issuer Xtrackers have been tradable via Xetra and Börse Frankfurt.
With the Xtrackers Corporate Green Bond UCITS ETFs, investors participate in the performance of green bonds denominated in US dollars or euros issued by companies or public authorities with an investment grade rating.
Green bonds are debt instruments issued to finance projects with direct environmental benefits. These include climate and environmental projects such as alternative energies, environmentally friendly buildings, sustainable water management or those that contribute to the reduction of greenhouse gases. Companies with business activities in the areas of tobacco, weapons, power plant coal or oil sands are excluded from the index.
For bonds denominated in US dollars, investors can also choose a share class with currency hedging against the euro.
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Source: Xetra
Euro area securities issues statistics: May 2021
July 12, 2021--The annual growth rate of the outstanding amount of debt securities issued by euro area residents decreased from 7.0% in April 2021 to 5.6% in May.
For the outstanding amount of listed shares issued by euro area residents, the annual growth rate increased from 2.0% in April 2021 to 2.3% in May.
Debt securities
New issuances of debt securities by euro area residents totalled EUR 684.8 billion in May 2021. Redemptions amounted to EUR 598.0 billion and hence net issues to EUR 86.8 billion. The annual growth rate of outstanding debt securities issued by euro area residents decreased from 7.0% in April 2021 to 5.6% in May.
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Source: ECB
ECB to chart new policy path next week
July 12, 2021--The European Central Bank will chart a new policy path at its next meeting to reflect its change of strategy and show it is serious about reviving inflation, ECB policymakers said on Monday.
Announced last week, the ECB's new strategy allows it to tolerate inflation higher than its 2% goal when rates are near rock bottom, such as now.
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Source: ECB
New WisdomTree ETF on Xetra: Diversified Commodity Investment with Roll Optimisation
July 12, 2021--Since Monday, a new exchange traded fund of the issuer WisdomTree is tradable via Xetra and Börse Frankfurt.
The WisdomTree Enhanced Commodity ex-Agriculture UCITS ETF enables investors to invest in a basket of different futures on energy commodities, precious metals and industrial metals, which each make up one third of the total portfolio.
Name: WisdomTree Enhanced Commodity ex-Agriculture UCITS ETF
Asset class: Commodity ETF
ISIN: IE00BDVPNV63
Ongoing charges: 0.60 per cent
Distribution policy: Accumulating
Reference index: MS RADAR ex Agriculture & Livestock Commodity Index
The product offering in Deutsche Börse's XTF segment currently comprises a total of 1,668 ETFs. With this selection and an average monthly trading volume of around €17 billio, Xetra is the leading trading venue for ETFs in Europe.
Source: Xetra
ESMA consults on the review of transparency requirements under MiFIR
July 9, 2021--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, has today launched a Consultation Paper on the review of the regulatory technical standards-RTS 1 equity and RTS 2- non-equity transparency-on transparency requirements under the Markets in Financial Instruments Regulation (MiFIR).
The Consultation Paper focuses on technical issues and addresses topics that do not require a prior change of MiFID II/MiFIR. The review includes:
providing more clarity on non-price forming transactions and the reporting of such transactions which will help obtain a better picture of the actual split between lit and over-the-counter (OTC) trading;
a recalibration of the regime for commodity derivatives ensuring better tailored transparency requirements for this class of derivatives);
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Source: ESMA
ECB Meeting of 9-10 June 2021 Account of the monetary policy meeting of the Governing Council of the European Central Bank
July 9, 2021-- Held in Frankfurt am Main on Wednesday and Thursday, 9-10 June 2021
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel reviewed the financial market developments since the Governing Council's previous monetary policy meeting on 21-22 April 2021.
The nominal euro area ten-year GDP-weighted sovereign bond yield had increased by around 5 basis points,
while short to medium-term yields had remained broadly unchanged.
Taking into account also broader developments since the Governing Council's 10-11 March meeting, a mild steepening of the yield curve could be observed- a typical phenomenon of an economy on the verge of recovery. Long-term US Treasury yields, meanwhile, had remained largely unchanged over the same period.
Market intelligence pointed to two key drivers behind the diverging yield developments in the euro area and the United States. The first factor related to the pace of vaccination, which had been accelerating in all major euro area countries. As a result, the euro area was now expected to close most of the vaccination gap with the United States by the start of the summer. A high proportion of vaccinations had also strengthened investor confidence in the resilience of the euro area recovery.
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Source: ECB
ESMA consults on derivatives clearing and trading obligations in view of the benchmarks transition
July 9, 2021--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, today launches a consultation on the review of the regulatory technical standards (RTS) specifying classes of derivatives subject to the clearing (CO) and trading obligations (DTO).
The Consultation Paper examines the state of the transition away from EONIA and LIBOR, which will cease to exist, and onto alternative risk-free rates, such as €STR, SONIA and SOFR, in the OTC interest rate derivatives market.
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Source: ESMA
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