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The EBA and ESMA analyse recent developments in crypto-assets
January 16, 2025--The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) today published a Joint Report on recent developments in crypto-assets, analysing decentralised finance (DeFi) and crypto lending, borrowing and staking. This publication is the EBA and ESMA's contribution to the European Commission’s report to the European Parliament and Council under Article 142 of the Markets in Crypto-Assets Regulation (MiCAR).
EBA and ESMA find that DeFi remains a niche phenomenon, with value locked in DeFi protocols representing 4% of all crypto-asset market value at the global level. The report also sets out that EU adoption of DeFi, while above the global average, is lower than other developed economies (e.g. the US, South Korea).
The EBA and ESMA observe that the number of DeFi hacks and the value of stolen crypto-assets has generally evolved in correlation with the DeFi market size. Since flows on decentralised exchanges represent 10% of spot crypto trading volumes globally, DeFi protocols present significant risks of money laundering and terrorist financing (ML/TF).
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Source: esma.europa.eu
EU funds continue to reduce costs-at low and varying pace
January 14, 2025--The European Securities and Markets Authority (ESMA), the EU financial markets regulator and supervisor, today publishes its seventh market report on the costs and performance of EU retail investment products, showing a decline in the costs of investing in key financial products.
Despite this decline the cost levels of funds in the EU remain high by international standards. With more than 50,000 funds and an average fund size almost 10 times smaller than that of for example US mutual funds, EU funds do not exhaust the economies of scale commensurate with the EU’s single market. The market inefficiencies revealed by this higher cost level shows the need to focus on the competitiveness of EU markets, within a future Savings and Investments Union.
The key findings in the report are:
UCITS costs decline gradually, from high levels: Costs have declined, but investors should continue to consider fund fees carefully in their investment decisions-especially since costs have not dropped for all categories of funds: ongoing costs of mixed funds and equity passive funds have been relatively stable over time.
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Source: esma.europa.eu
ESMA publishes latest edition of its newsletter
January 9, 2025-- The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, as today published its latest edition of the Spotlight on Markets Newsletter.
Entities interested to apply are encouraged to register and submit their requests to participate in the selection procedure by 7 February 2025.
Your one-stop-shop in the world of EU financial markets focuses on the last policy documents related to MiCA, as the regulation officially entered into force across the EU on 30 December 2024. ESMA has delivered extensive regulatory work over the past 18 months, comprising more than 30 Technical Standards and Guidelines.
ESMA put forward Q&As on the application of the Guidelines on funds' names, providing further explanations on green bonds, the convergence on "meaningfully investing in sustainable investments", and the definition of controversial weapons.
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Source: esma.europa.eu
Palmer Square Capital Management Set to Launch First European CLO ETFs
January 9, 2025--Top global CLO issuer expands European footprint with three innovative investment products
Palmer Square Capital Management ("Palmer Square"), a credit-focused alternative asset management firm with more than $33 billion in assets under management founded in 2009, is planning to launch three pioneering ETFs for European institutional investors.
Two of the ETFs will be passively focused on EUR and USD denominated AAA and AA CLO debt with the third planned to be an active multi-strategy ETF providing similar exposure to the actively managed ETF currently offered in the US by Palmer Square.
"The launch of these ETFs in Europe underscores our commitment to delivering cutting-edge solutions in complex investment environments across the globe. It is a natural extension of our global expertise in structured credit and demonstrates our ability to meet the rising market demand," said Angie Long, Chief Investment Officer and Portfolio Manager at Palmer Square Capital.
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Source: Palmer Square Capital Management
Amundi to shut its original 'multi' smart beta ETF
January 8, 2025--The fund made returns of nearly 20% last year but has failed to retain sufficient assets to be 'economically efficient'
Amundi is to close a multi-strategy smart beta exchange traded fund, the product it launched to enter the space a decade ago.
The Amundi Index Equity Global Multi Smart Allocation Scientific Beta Ucits ETF will be liquidated on February 4, according to a shareholder notice published late last week.
The board of the Luxembourg-based Amundi Index Solutions Sicav, the ETF's umbrella structure, wrote that net assets in the vehicle were below the "minimum level [...] to be operated in an economically efficient manner".
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Source: ft.com
ESMA launches selection of the Consolidated Tape Provider for bonds
January 3, 2025-- The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, is launching the first selection procedure for the Consolidated Tape Provider (CTP) for bonds. Entities interested to apply are encouraged to register and submit their requests to participate in the selection procedure by 7 February 2025.
The CTP aims to enhance market transparency and efficiency by consolidating trade data from various trading venues into a single and continuous electronic stream. This consolidated view of market activity should help market participants to access accurate and timely information and make better-informed decisions, leading to more efficient price discovery and trading.
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Source: esma.europa.eu
ECB-Monetary developments in the euro area: November 2024
January 2, 2025--Annual growth rate of broad monetary aggregate M3 increased to 3.8% in November 2024 from 3.4% in October
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, increased to 1.5% in November from 0.2% in October
Annual growth rate of adjusted loans to households stood at 0.9% in November, compared with 0.8% in October
Annual growth rate of adjusted loans to non-financial corporations decreased to 1.0% in November from 1.2% in October
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 increased to 3.8% in November 2024 from 3.4% in October, averaging 3.5% in the three months up to November. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, increased to 1.5% in November from 0.2% in October.
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Source: ECB
Clean-Tech Exports from Central and Eastern Europe Poised to Bolster EU Green Growth, World Bank Report Finds
December 19, 2024--Clean technology exports from Central and Eastern Europe have the potential to at least triple, strengthening the EU economy and its global competitiveness, according to the latest EU Regular Economic Report by the World Bank.
The annual report highlights the EU's emergence from an unprecedented tightening cycle, avoiding a deep recession and widespread job losses. GDP growth is forecast at 1.4 percent in 2025, although with variation among member states. With easing inflation and sustained nominal wage increases, real wages-after a sustained decline-are showing signs of improvement. However, risks remain, including geopolitical tensions, trade disruptions, and uneven economic recoveries coupled with elevated costs of living across the bloc.
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Source: worldbank.org
ESMA delivers final report on equity transparency under MiFID II
December 16, 2024-The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, published today the Final Report with proposals for amendments related to equity transparency under the Markets in Financial Instruments Directive (MiFID II). Through its proposals ESMA aims to contribute to a more informative pre-trade and post-trade transparency regime.
The report includes proposals for the amendment of the regulatory technical standards (RTS) as well as technical advice (TA) on the provisions on equity transparency, covering:
Changes to the definition of a liquid market for equity instrument;
Specification of information to be disclosed for pre-trade transparency purposes, which is also of relevance for the equity consolidated tape;
Review of the pre-trade transparency requirements for Systematic Internalisers (SIs), including the calibration of two quoting sizes.; and
Post-trade transparency reports, including flags for equity instruments.
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Source: ESMA
ESMA puts forward Q&As on the application of the Guidelines on funds' names
December 13, 2024-The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, is today publishing Q&As with further details on specific aspects of the practical application of the Guidelines on funds' names using ESG or sustainability-related terms.
The Q&As are related to green bonds [UCITS, AIF][1], the convergence on "meaningfully investing in sustainable investments" [UCITS, AIF] and the definition of controversial weapons [UCITS, AIF]. The objective is to ensure a smooth application of the Guidelines through common understanding of key concepts.
The Q&A on green bonds explains that investment restrictions related to the exclusion of companies do not apply to investments in European Green Bonds. For other green bonds, fund managers may use a look-through approach to assess whether the activities financed are relevant for the exclusions;
The Q&A on "meaningfully investing in sustainable investments" presents a common understanding among national competent authorities that funds may not be "meaningfully investing in sustainable investments" if they contain less than 50% of sustainable investments; and
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Source: ESMA
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