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German court asks ECB to justify key stimulus program
May 5, 2020--Germany's highest court cast doubt on key eurozone stimulus efforts by giving the European Central Bank three months to prove that its key bond-buying program is justified and appropriate.
If it doesn't make that showing, the court ruled, Germany's own national central bank can no longer participate in the program- and would even have to sell bonds that it had purchased.
The euro fell after the decision by a half-cent to $1.0850.
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Source: washingtonpost.com
IMF-Connectedness of the Dutch Economy Leads to Lower GDP Growth Forecast
May 4, 2020--The GDP growth forecasts for the Netherlands issued by the IMF in its April 2020 World Economic Outlook (WEO) surprised many, not only for the large negative 2020 number itself, but for it being weaker than some other leading European economies.
Let me make some general considerations about forecasting amid today's immense uncertainties, and then look at the Dutch economy.
Forecasting the effects of an unprecedented shock
Economists often conceptualize macroeconomic variables, such as real GDP growth, as the sum of a predictable or systematic component and an unpredictable shock. We develop and estimate statistical models of the predictable part and use them to make forecasts.
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Source: IMF
EBA updates its list of risk indicators, IMF-FSI mapping and respective guides
May 4, 2020--The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on specific reporting requirements for market risk. These ITS introduce the first elements of the Fundamental Review of the Trading Book (FRTB) into the EU prudential framework by means of a reporting requirement. The ITS are expected to apply from September 2021.
The specific reporting requirements for market risk include a thresholds template, providing insights into the size of institutions' trading books and the volume of their business subject to market risk, and a summary template, reflecting the own funds requirements under the alternative standardised approach for market risk (MKR-ASA). At a later stage, and in line with the mandate of Article 430b of the amended Capital Requirements Regulation (CRR), these reporting requirements will be complemented with details on the own funds requirements under the MKR-ASA and the alternative internal model approach.
view the Statement on the application of the prudential framework on targeted aspects in the area of market risk in the COVID-19 outbreak
Source: European Banking Authority (EBA)
Scientific Beta warns against design flaws in European Commission proposals on Climate Benchmarks and Sustainability Disclosures
May 4, 2020--This draft regulation makes the weights of stocks in the new climate indices depend more on their stock market performance than on their ecological performance.
In the context of the ongoing consultation on the draft delegated acts implementing the November 2019 update of the EU Benchmarks Regulation, the smart beta index provider Scientific Beta takes exception to key provisions of the European Commission's projects and puts forward remedial proposals.
view the Unsustainable Proposals, A Critical Appraisal of the TEG Final Report, Scientific Beta Publication, February 2020
Source: Scientific Beta
Investors blast EU's omission of oil from ESG disclosures
May 3, 2020--Latest proposal accused of being misleading over environmental risk
Investors, politicians and campaigners have hit out at EU regulators' "ludicrous" exclusion of oil and gas from a definition of fossil fuels.
But critics also argue they risk undermining the EU's commitment to becoming a world leader in sustainable finance, a key priority for the bloc as it seeks to tie the coronavirus recovery to creating a...
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Source: FT.com
ESMA publishes annual bond transparency calculations, systematic internalisers calculations and new bond liquidity data
April 30, 2020--The European Securities and Markets Authority, the EU's securities markets regulator, has today made available, under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR):
the annual transparency calculations of the large in scale (LIS) and size specific to the instruments (SSTI) thresholds for bonds;
systematic internaliser calculations for equity, equity-like instruments and bonds; and
new data for bonds subject to the pre- and post-trade requirements of MiFID II and MiFIR.
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Source: ESMA
New Lyxor ETFs on Xetra: Sustainable investing in five future themes
April 30, 2020--Lyxor offers the exposure to investment trends with a sustainability filter.
Since Thursday, five new exchange traded funds issued by Lyxor International Asset Management are tradable on Xetra and Börse Frankfurt.
The five new Lyxor ETFs enable investors to invest in future-oriented themes while taking sustainability criteria into account.
The five ETFs are each based on the MSCI ACWI IMI Index, which includes large, medium-sized and small companies from 31 countries worldwide.
The Lyxor MSCI Disruptive Technologies ESG Filtered (DR) UCITS ETF includes companies that are expected to generate significant revenues in areas such as 3D printing, the Internet of Things, cloud computing, fin tech, digital payment, healthcare, robotics, clean energy and smart grids, and cyber security.
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Source:Deutsche Börse
ECB-Monetary policy decisions
April 30, 2020--At today's meeting the Governing Council of the ECB took the following monetary policy decisions:
(1) The conditions on the targeted longer-term refinancing operations (TLTRO III) have been further eased. Specifically, the Governing Council decided to reduce the interest rate on TLTRO III operations during the period from June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem's main refinancing operations prevailing over the same period.
Moreover, for counterparties whose eligible net lending reaches the lending performance threshold, the interest rate over the period from June 2020 to June 2021 will now be 50 basis points below the average deposit facility rate prevailing over the same period.
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Source: ECB
ECB in fresh push to lend to banks at ultra-low rates
April 30, 2020--The European Central Bank has expanded its loans to banks at ultra-low rates after data published earlier on Thursday showed the eurozone's economy shrank by the fastest rate on record in the first quarter.
In a move to bolster the European banking system's access to funds and to avoid a drying up of credit, the ECB said it would lend money to banks at rates as low as minus 1 per cent through a planned programme and also launched a separate round of fresh lending.
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Source: dnyuz.com
SocGen Equities Trading Wiped Out in Perfect Storm for CEO Oudea
April 30, 2020--Equities unit slumps as dividend suspensions hit derivatives
Bad loan provision could reach 5 billion euros in worst case.
Societe Generale SA slumped to a surprise first-quarter loss after coronavirus-related market volatility wiped out stock trading revenue and bad loan provisions surged.
Revenue from equities trading, a traditional stronghold of the firm, slumped 99%, more than offsetting strength in the smaller fixed-income unit, the French lender said Thursday.
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Source: bloomberg.com
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