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ESMA assesses the compliance with UCITS liquidity rules and highlights areas for vigilance
March 24, 2021-The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, today publishes the results of the 2020 Common Supervisory Action (CSA) on UCITS liquidity risk management (LRM).
The CSA showed that the overall level of compliance with the applicable rules is satisfactory in most cases, but there is scope for improvement in liquidity management for some UCITS analysed. The exercise also highlighted areas where ESMA will work to further promote convergence across National Competent Authorities (NCAs).
This exercise was launched on 30 January 2020. Its purpose was for all NCAs to conduct coordinated supervisory activities to assess whether UCITS managers comply with their LRM obligations. The CSA was also an opportunity to strengthen the ongoing exchange of supervisory knowledge and experience among NCAs.
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Source: ESMA
Italy: Staff Concluding Statement of the 2021 Article IV Mission
March 30, 2021-- Economic Situation and Outlook
The pandemic has dealt a harsh blow to the Italian people and their economy. The large number of infections and fatalities as well as repeated waves of social distancing have caused considerable personal suffering. The economic impact has also been severe, interrupting the slow recovery from the previous double-dip recession and causing an unprecedented-but highly uneven-fall in output.
Despite the very strong rebound in the third quarter of last year and manufacturing returning close to pre-COVID levels, GDP dropped by almost 9 percent in 2020, with hospitality, tourism, and transport most affected. At end year, output remained about 6½ percent below the level at end 2019.
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Source: IMF
ECB steps up pace of bond-buying in bid to tame rise in borrowing costs
March 23, 2021--Europe is facing a difficult second quarter as coronavirus infections rise and governments reimpose lockdown measures, but the European Central Bank will do its part to keep borrowing costs ultra low, ECB chief economist Philip Lane said on Tuesday.
Fearing that rising borrowing costs would derail the recovery, the ECB earlier this month promised to ramp up bond purchases to keep yields low. Figures published on Monday showed its buys of mostly government bonds were already up by a half in the week since that decision.
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Source: sg.news.yahoo.com
Turkish lira tumbles in echoes of last year's meltdown
March 22, 2021--Turkey's lira plunged more than 4 percent against the U.S. dollar on Friday, its biggest one-day fall since a currency crisis took hold in August, raising concerns that Turks are buying more foreign cash as ties with Washington deteriorate.
The 2018 crisis, which tipped the economy into recession, was echoed across Turkish financial markets on Friday, with stocks hitting their lowest levels since January.
The currency shrugged off a stop-gap decision by the central bank to suspend one-week repo auctions in an attempt to squeeze liquidity in the market. The average cost of funding in Turkey saw a near record jump.
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Source: reuters.com
Investors' doubts rise over LSE takeover of Refinitiv
March 21, 2021--Worries have increased over scale of challenge to integrate business
Stock markets offer a blunt measure of buyer's remorse.
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Source: ft.com
UBS Licenses Solactive Index for new China Technology ETF
March 19, 2021--China is pushing for technical innovation. The world's second-largest economy is currently transitioning towards a "New Economy" where innovation and digital transformation are the key driving forces. Swiss bank UBS pooled the vast opportunities of this development in a dedicated ETF, the UBS Solactive China Technology UCITS ETF. The Exchange Traded Fund will be launched on March 19th, 2021, and it tracks the Solactive China Technology Index.
This release marks a new engagement between UBS and Solactive after the successful launches of previous ETFs and Index Certificates[1].
The Chinese tech industry is emerging as a high-profile opportunity for investors globally, and the pandemic has considerably accelerated this process. Record high internet, app, and mobile payment usage confirm this trend, and many companies in this industry are benefiting from both this growing demand as well as from supportive political initiatives. Above all, China is shaping up to be a tech leader beyond the IT industry. It has become the largest Electric Vehicle market globally[2], is bound to challenge the US' dominance in the biotech industry[3], and is a creative hub from many technologically oriented sectors.
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Source: Solactive AG
ESMA clarifies application of position limits pending MiFID II change
March 19, 2021--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, is issuing a public statement on its supervisory approach to position limits for commodity derivatives. The purpose is to clarify the application of position limits and coordinate the supervisory actions of National Competent Authorities (NCAs), pending the legislative change introduced by the MiFID II Recovery Package for commodity derivatives.
This legislative change will start to apply in early 2022.
Position limits, under the amended legal provisions, will only continue to apply to agricultural commodity derivatives and critical or significant commodity derivatives. In addition, positions that are objectively measurable as resulting from transactions entered into to fulfil obligations to provide liquidity on a trading venue will be exempted from position limits.
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Source: ESMA
ETFGI reports record assets of US$1.33 trillion invested in ETFs and ETPs listed in Europe at the end of February 2021
March 19, 2021-- ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs/ETPs ecosystem, reported today that ETFs and ETPs listed in Europe reported net inflows of US$22.15 billion during February, bringing year-to-date net inflows to a record US$42.66 billion.
Assets invested in the European ETFs/ETPs industry have increased by 2.3%, from US$1.30 trillion at the end of January, to US$1.33 trillion, according to ETFGI's February 2021 European ETFs and ETPs industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Assets invested in European ETFs and ETPs industry reach a record $1.33 trillion at the end of February.
Net inflows gathered in February were $22.15Bn, are the second highest behind the $27.17 Bn gathered in December 2020.
11 consecutive month net inflows.
YTD net inflows of $42.66 are a record, beating the prior YTD record of $25.86 Bn in February 2018 and much higher than the $21.23Bn gathered at this point in 2020.
Equity ETFs/ETPs listed in Europe attracted $35.22 Bn accounting for the majority of net inflows in February.
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Source: ETFGI
Shining a light on climate risks: the ECB's economy-wide climate stress test
March 18, 2021--Climate change is one of the greatest challenges facing humankind this century. If left unchecked, it is likely to result in more frequent and more severe climate events, causing widespread devastation and economic disruption.
Substantial changes in our production, consumption and living habits are required if the world is to avert catastrophic climate change. However, the changes required may themselves disrupt the economy and the financial system.
While the primary responsibility for combating climate change lies with governments, central banks can play an important contributory role. They can help ensure that the financial system is resilient to the transition to a low-carbon economy, by providing more and better information to market participants on the risks from climate change. Stress tests can be an important tool here, as they can cast a light on climate risks that currently still lurk in the darkness.
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Source: ECB
ESMA sees high risk for investors in non-regulated crypto assets
March 17, 2021--The European Securities and Markets Authority (ESMA), the EU securities markets regulator, today publishes its first Trends, Risks and Vulnerabilities (TRV) Report of 2021. The Report analyses the impact of COVID-19 on financial markets during the second half of 2020 and highlights the increasing credit risks linked to significant corporate and public debt overhang, as well as the risks linked with investments in non-regulated crypto-assets.
Continued high risk across financial markets
Globally, risks in markets under ESMA's remit remain very high. The significant rebound of equity markets and the valuation of debt indices which reached pre-pandemic levels, contrast with weak economic fundamentals. The main risk for European Union's (EU) financial markets is that this ongoing decoupling leads to a reversal in investor risk assessment and a sudden market correction.
Crypto-assets: ESAs remind consumers about risks
As crypto-assets, including so-called virtual currencies such as Bitcoin, continue to attract public attention, the European Supervisory Authorities (EBA, EIOPA and ESMA - together the 'ESAs') recall the continued relevance of their previous warnings.
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Source: ESMA
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