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ECB-Meeting of 10-11 April 2024
May 10, 2024--Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 10-11 April 2024
1. Review of financial, economic and monetary developments and policy options-Financial market developments
Ms Schnabel noted that since the Governing Council's previous monetary policy meeting on 6-7 March 2024 financial markets had started to price in some divergence between the monetary policy paths expected in the euro area and in the United States.
This was reflected in a widening interest rate differential. In the United States, a series of solid economic data releases had signalled the US economy’s resilience to the current levels of interest rates. This had led financial markets to expect the timing of a first interest rate cut to be later and the overall extent of monetary policy easing to be less than previously anticipated.
In the euro area, by contrast, expectations regarding the path of the ECB's monetary policy had changed to a lesser extent. Owing to the Governing Council's communication and incoming euro area economic data, spillovers of US rate expectations to the short end of the euro area yield curve had remained contained. Investors saw almost no chance of a rate cut at the present meeting, but had fully priced in a rate cut for June, followed by another two rate cuts later in the year.
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Source: ECB.org
New ETNs from WisdomTree on Xetra: access to Nasdaq 100 and S&P 500 E-mini futures as well as Euro STOXX 50 with 5x leverage
May 8, 2024--Since Wednesday, six new exchange-traded notes issued by WisdomTree have been tradable on Xetra and Börse Frankfurt.
The WisdomTree Qs100 5x ETN offers a leveraged investment in the nearest quarter E-mini-Nasdaq 100 futures contract. Investors can choose to participate in the five-times leveraged rising or falling price development of the daily performance of the underlying US Technology Rolling Futures Index.
The WisdomTree S&P 500 5x ETN tracks the daily performance of the S&P 500 Futures Index (0930-1600 ET) with five times leverage. It consists of a quarterly e-mini futures contract on the S&P 500, that trades between 9:30 a.m. and 4:30 p.m. EST. Investors can choose between rising and falling price movements. With the WisdomTree EURO STOXX 50 5x ETN, investors can participate in the daily performance of the EURO STOXX 50 Index with a leverage of five and choose between rising and falling price performance.
The six WisdomTree ETNs are debt securities that track the performance of a benchmark index and are fully collateralised.
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Source: Xetra
ESMA publishes latest edition of its newsletter
May 8, 2024--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its latest edition of the Spotlight on Markets Newsletter.
Your one-stop-shop in the world of EU financial markets focused in April on the DORA preparations for the European Supervisory Authorities (ESAs) and the industry: the arrangements for the next implementation stage, the consultation on for joint examination teams, and the first recruitments to set up the oversight team.
In addition, ESMA published an article that aims to improve the understanding of crypto-asset trading and the extent to which it resembles or differs from traditional financial markets. An article showing the correlation between social media interactions and stock excess returns at the very short term has also been shared.
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Source: ESMA
Paris report 2: Europe's economic security
May 8, 2024--COVID-19 and the subsequent supply chain congestion, the wake-up call over the dependency of Europe on Russia for energy, and geopolitical shifts and the increasingly adversarial tone of the US-China relationship have underscored the need for a comprehensive reassessment of the EU's economic security strategy.
The second Paris Report examines where Europe is vulnerable and where and how it should de-risk. While the new global geoeconomic map may necessitate an EU pivot towards economic security, this must not become an excuse for protectionism, and it must preserve international cooperation. This requires innovative policy instruments, joint preparedness, contingency planning, and stronger governance mechanisms at both the EU and the international level.
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Source: bruegel.org
BNY Mellon Insights-How Active ETFs Are Changing the European Market
May 8, 2024--Distribution, fees, transparency and market structure are key challenges in the rapidly growing active exchange-traded funds (ETF) market in Europe, according to a panel hosted by BNY. Experts from across the ETF spectrum-including representation from market makers, issuers and fund governance professionals- met in May to discuss the changing landscape of active investment choices.
While all agree the presence of active ETFs represents a clear opportunity in European markets, there are nuances that will require the industry to adjust.
Growth trends
Although the market share of active ETFs versus their established passive products is currently low-around 2%1- it is accelerating fast, according to the panel. Citing the visible trends from the United States, where active ETFs have jumped to more than 8% market share2 (1,200+ products), members of the panel pointed out that as of May 7, 2024, almost a third of all U.S. ETF flows went to active structures. That pattern has the potential to be repeated in Europe in the coming years.
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Source: bnymellon.com
ESMA asks for input on assets eligible for UCITS
May 7, 2024--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, today publishes a Call for Evidence on the review of the Undertakings for Collective Investment in Transferable Securities (UCITS) Eligible Assets Directive (EAD). The objective of this call is to gather information from stakeholders to assess possible risk and benefits of UCITS gaining exposure to various asset classes.
Investors and consumer groups interested in retail investment products, management companies of UCITS, self-managed UCITS investment companies, depositaries of UCITS and trade associations are invited to provide their feedback on market practices and interpretation or practical application issues with respect to the eligibility criteria and other provisions set out in the UCITS EAD.
ESMA is additionally interested in gathering insights on some key notions and definitions used in the UCITS EAD and their transversal consistency with other pieces of legislation in the EU Single Rulebook.
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Source: ESMA
Janus Henderson enters European ETF market through the acquisition of independent European ETF provider tabula
May 2, 2024--Tabula and Janus Henderson Group plc (NYSE: JHG) today announced that they have entered into an agreement under which Janus Henderson will acquire European ETF provider Tabula Investment Management.
Janus Henderson Group & Tabula Investment Management overview
Janus Henderson Group is a leading global active asset manager dedicated to helping clients define and achieve superior financial outcomes through differentiated insights, disciplined investments, and world-class service.
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Source: tabulaim.com
European Economic Security: Current practices and further development
May 2, 2024--Abstract
The rise in geopolitical tensions in recent years and the weaponisation of trade links have led to an increased focus on economic security. With its Economic Security Strategy, the European Commission has put EU-level initiatives in this area into an overarching framework.
In this in-depth analysis, we discuss the challenges posed by economic security and the approaches to it taken by other large economies. We then analyse the European strategy in this framework.
While the EU has been slower than other large economies to focus on economic security, it has learned from its peers and there has been a notable evolution of European measures in this area. However, challenges remain, in particular with regard to the coordination of measures that are still largely national competencies. Furthermore, more could be done to align incentives for both companies and countries to avoid moral hazard risks. Finally, more progress has to be done to align the foreign policies of EU countries to give credibility to economic security instruments.
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Source: bruegel.org
Key factors likely to shape the EU's trade agenda in the next five-year term
May 2, 2024-Abstract
The landscape in which European Union trade policy operates has changed drastically in recent years. In addition to, and partly in competition with, its traditional objective of economic wellbeing, EU trade policy has become increasingly shaped by two other considerations: geopolitics and concerns over the resilience of supply chains, and climate change.
This briefing note examines the emergence of this new landscape, how it has already affected EU trade policy with measures to increase European economic security and complement the European Green Deal, how it might affect EU trade policy in the next five years, and how the new landscape has already impacted and might affect in future the multilateral trading system.
EU policymakers should be cautious about the economic and climate costs associated with geopolitical-driven policies, particularly in trade. The note ends with recommendations for EU trade policy, calling for a comprehensive assessment of costs in economic terms and climate objectives to safeguard living standards and maintain opportunities for international cooperation in the current context of heightened economic security concerns. Despite evident internal divisions over the EU's approach to multilateralism, finding a strategic balance between its traditional stance and fostering key trade partnerships is imperative.
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Source: bruegel.org
ESAs risk update: risks remain high in the EU financial system
April 30, 2024--The three European Supervisory Authorities (EBA, EIOPA and ESMA -the ESAs) today issued their Spring 2024 Joint Committee update on risks and vulnerabilities in the EU financial system. The risk update shows that risks remain elevated in a context of slowing growth, an uncertain interest rate environment and ongoing geopolitical tensions.
In recent months, financial markets have performed strongly in anticipation of potential interest rate cuts in 2024 in both the EU and the US, despite the significant uncertainty surrounding these. This strong performance entails elevated risks of market corrections linked to unexpected events. Credit risk is also expected to continue to increase as refinancing needs grow, particularly for high-yield debt and real estate. While asset quality has remained robust in the banking sector, it is expected to deteriorate as economic growth slows further. The real estate slowdown could also drive impairments at banks.
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Source: ESMA
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