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The Wirecard debacle calls for a rethink of EU, not just German, financial reporting supervision
June 30, 2020--The spectacular collapse of Wirecard AG should serve as a wake-up call for the European Union on the need to pool the relevant supervisory mandates at EU level.
Wirecard AG, the Munich-based payments and financial services company that was a member of the DAX index of Germany's 30 leading blue chip stocks, collapsed spectacularly and filed for insolvency on June 25, 2020.
Among many lessons, this disaster has revealed major gaps in audit regulation and accounting enforcement in Germany and by extension in the European Union (EU). Like in other areas of financial supervision, having oversight over financial reporting in an integrated EU market only at the national level generates perverse incentives that impair supervisory effectiveness. The policy response to this challenge should be to pool the relevant supervisory mandates at the EU level.
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Source: bruegel.org
European exchanges reject London's plan for shorter trading day
June 30, 2020--Shorter hours would not be in the best interests of investors or stock markets, European bourses said on Wednesday, dashing hopes at banks and investment companies in London of cutting 90 minutes from the trading day.
The Federation of European Securities Exchanges (FESE) said shorter hours would be a move in the wrong direction. The current European trading day is 0900-1730 continental European time, longer than in Asia or Wall Street.
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Source: reuters.com
Solactive releases 'Solactive right, 2 Degree-Aligned Europe Index' based on right, based on Science's XDC Economic Climate Impact Model
June 29, 2020--With numerous regulatory initiatives concerning sustainable finance, the European Union is currently setting the course for the area's transition towards the <2°C scenario captured in the Paris Agreement. This shift creates a quest for innovative data to shape the investment solutions supporting this transition not only in Europe but on a global scale.
Now Solactive, with the support of climate metrics and software provider right. based on science, developed a benchmark index, the Solactive right. 2 Degree-Aligned Europe Index, a broad portfolio of sector-leading European companies aligned with a 2°C global warming scenario through 2050.
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Source: Solactive AG
New Credit Suisse ETFs on Xetra: Sustainable investments in global real estate stocks and US small cap companies
June 29, 2020--Since Monday, two new exchange traded funds issued by Credit Suisse Asset Management have been tradable on Xetra and Börse Frankfurt.
The CSIF (IE) FTSE EPRA Nareit Developed Green Blue UCITS ETF- B USD enables investors to invest globally in the performance of real estate companies and listed Real Estate Investment Trusts (REITs). The properties are subjected to a sustainability assessment, considering energy consumption values and "Green Building" certification.
With the CSIF (IE) MSCI USA Small Cap ESG Leaders Blue UCITS ETF - B USD, investors invest in small caps from the USA in accordance with sustainability criteria. Companies with significant business activities in nuclear energy, tobacco, coal, alcohol, gambling, weapons and genetically modified organisms are excluded from the index.
Dividends are reinvested in both ETFs. The annual costs are 0.25 and 0.20 per cent.
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Source: Deutsche Börse
EU fund performance forecasts 'failed Covid-19 test'
June 29, 2020--Controversial European rules designed to help retail investors choose suitable funds failed to warn about steep performance falls during the coronavirus-induced market sell-off, raising more doubts about the effectiveness of the regulations.
EU rules introduced in 2018, known as Priips, require providers of all investment products sold to retail investors to publish future performance projections reflecting a range of market conditions to help customers make more informed decisions.
The rules have faced resistance from asset managers, who warned that they had created misleadingly optimistic projections due to the strong performance of markets in recent years.
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Source: technocodex.com
Credit Suisse new ETF range hits $2bn in three months
June 29, 2020--The asset manager has also launched two new passive strategies that focus on ESG and allocate to global real estate and US small caps.
Credit Suisse AM's first ETF range has reached $2bn in assets in only three months since its official launch.
The asset manager ventured into the space in March this year and the new product suite currently complements 98 existing index funds with $104bn assets under management.
In addition, Credit Suisse has launched two new ETF products: the CSIF (IE) MSCI USA Small Cap ESG Leaders Blue UCITS ETF and CSIF (IE) FTSE EPRA Nareit Developed Green Blue UCITS ETF.
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Source: citywireselector.com
The Climate Financial Risk Forum publishes its guide to help the financial industry address climate-related financial risks
June 29, 2020-Today the Climate Financial Risk Forum (CFRF) has published a guide written by industry for industry to help firms approach and address climate-related financial risks. The guide, the first of its kind, provides practical recommendations to firms of all sizes on disclosure of climate-related financial risks; effective risk management; scenario analysis, and opportunities for innovation in the interest of consumers.
The CFRF was jointly established in March 2019 by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), reflecting the importance of climate change to their respective strategic objectives. Its aim is to build capacity and share best practice across financial regulators and industry to advance the sector's responses to the financial risks from climate change. Membership is drawn from a wide range of industry participants, to ensure the perspective of a broad range of firms is represented.
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Source: bankofengland.co.uk
ESMA responds to European Commission consultation on the Digital Finance Stragtegy
June 29, 2020--Thee European Securities and Markets Authority (ESMA), the EU's securities markets regulator, has submitted a response to the European Commission’s (EC) consultation on a new digital finance strategy for the European Union (EU). ESMA welcomes the EC consultation noting that it builds on the 2018 FinTech Action Plan that set a number of deliverables for the ESAs, all of which were completed.
Cooperation around financial innovation at EU level is key to remove fragmentation in the digital financial services market. ESMA believes that certain specific initiatives would support this goal, such as developing Digital Financial Identities, that are usable and recognised throughout the EU, based around the existing ISO 17442 global standard of the Legal Entity Identifier (LEI). ESMA’s response also outlines several conditions needed for a well-regulated data-driven financial sector, including appropriate skills, data standardisation and data security.
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Source: ESMA
Broad German Parliament Alliance Plans to Back ECB Bond Buying
June 29, 2020--A broad coalition of ruling and opposition parties in Germany has agreed on a draft motion to back the European Central Bank's bond buying program, according to two officials familiar with the accord, likely ending a standoff that was triggered by the country’s constitutional court last month.
At a meeting of party representatives on Monday, Chancellor Angela Merkel’s coalition partners as well as the Greens and the Liberal Democrats agreed in principle to accept explanations the ECB provided on its so-called public sector purchase program, or PSPP, the officials said.
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Source: bloomberg.com
New UBS ETFs on Xetra: Currency-hedged investments in Japanese and UK equities and sustainable investments in global corporate bonds
June 26, 2020--Three new ETFs issued by UBS Global Asset Management have been tradable on Xetra and Börse Frankfurt since Friday.
With the UBS ETF (LU) MSCI Japan UCITS ETF (hedged to EUR) A-acc and the UBS ETF (LU) MSCI United Kingdom UCITS ETF (hedged to EUR) A-acc, investors can invest in large and medium-sized companies from Japan and the UK. Investors are hedged against currency risks against the Euro.
The UBS ETF (LU) Bloomberg Barclays MSCI Global Liquid Corporates Sustainable UCITS ETF (USD) A-acc is an investment grade fixed income corporate bond issued in local currency from the US, Canada, the eurozone and the UK. To be included in the index, the bonds must have different minimum volumes and a remaining maturity of at least one year and must have been issued in the last three to five years.
Any dividends or interest accrued are reinvested in the three ETFs. The annual costs are between 0.20 and 0.30 per cent.
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Source: Deutsche Börse