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Adapting to a new normal in European asset management
November 26, 2019--Structural shifts are reshaping Europe's asset-management,landscape. For individual firms, there is no single winning formula for success-but the response must be proactive and bold.
Asset-management industry economics in Western Europe have remained relatively resilient, buoyed by the short duration of periods of downside market performance and asset values remaining near the current cycle's highs.
However, the industry is clearly continuing to contend with persistent structural shifts: lower returns due to interest-rate dynamics, the shift to passive and alternative asset classes, slowing organic growth, continued fee pressure, elusive operative leverage, and aggressive competition from within and outside the industry.
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Source: mckinsey.com
IMF Working Paper-Breaking the Bank? A Probabilistic Assessment of Euro Area Bank Profitability
November 22, 2019--Summary:
This paper explores the determinants of profitability across large euro area banks using a novel approach based on conditional profitability distributions. Real GDP growth and the NPL ratio are shown to be the most reliable determinants of bank profitability.
However, the estimated conditional distributions reveal that, while higher growth would raise profits on average, a large swath of banks would most likely continue to struggle even amid a strong economic recovery. Therefore, for some banks, a determined reduction in NPLs combined with cost efficiency improvements and customized changes to their business models appears to be the most promising strategy for durably raising profitability.
view the IMF Working Paper-Breaking the Bank? A Probabilistic Assessment of Euro Area Bank Profitability
Source: IMF
ECB-Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 23-24 October 2019
November 21, 2019--1. Review of financial, economic and monetary developments and policy options
Financial market developments
Mr Cœuré reviewed the latest financial market developments. Since the Governing Council's last monetary policy meeting on 11-12 September 2019, the prospect of a breakthrough in the trade negotiations between the United States and China, as well as declining fears of a "no-deal" Brexit, had helped to underpin global market sentiment.
In the euro area, the overnight index swap forward curve had shifted upwards at both the short and the long end, and it had also become notably steeper in 2021 compared with the situation in September 2019. In the United States, the effect of receding uncertainty surrounding Brexit and trade had been partially offset by changes in near-term monetary policy expectations in response to weaker economic data. The market-implied probability of a rate cut at the US Federal Reserve System's meeting on 29-30 October 2019 had increased notably over the course of October. Overall, however, bond yields on both sides of the Atlantic remained at very low levels compared with earlier in 2019.
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Source: ECB
FTGP launches factor based fixed income Ucits ETF
November 21, 2019--First Trust Global Portfolios, the affiliate of First Trust Advisors LP, has launched a fund using carry and value risk premia to generate returns from government bonds.
The First Trust Low Duration Global Government Bond Ucits ETF is described as an active product that seeks income primarily, with capital growth as a secondary objective. It is currency hedged and aims to deliver lower interest rate risk than benchmarks such as the Bloomberg Barclays Global Treasury index.
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Source: investmenteurope.net
European Central Bank ponders digital currency launch
November 21, 2019--The European Central Bank (ECB) has confirmed that it is investigating how a European public digital currency could work and whether it is desirable, with its conclusions expected next year.
The ECB's research into the feasibility of what has been dubbed a 'digital euro' comes as both nation states and the world's largest tech corporations ramp up preparations for their own digital currencies.
Progress on the feasibility of an ECB-backed digital currency could be made in the coming months, senior officials have told Reuters, cautioning that the project is a long-term one and faces a range of challenges.
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Source: globalgovernmentforum.com
ESMA Newsletter-N0.9
November 20, 2019--The ninth edition of ESMA's newsletter takes a closer look at the new website section on sustainable finance and SFTR, highlights the full list of ESMA staff speaking appearances and catch up on publications from October and early November.
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Source: ESMA
ECB-Euro area investment fund statistics: third quarter of 2019
November 20, 2019--In the third quarter of 2019 the outstanding amount of shares/units issued by investment funds other than money market funds was €12,537 billion, €446 billion higher than in the second quarter of 2019.
The outstanding amount of shares/units issued by exchange-traded funds (ETFs) stood at €781 billion, which was €47 billion higher than in the second quarter of 2019.
The outstanding amount of shares/units issued by money market funds was €1,247 billion, €92 billion higher than in the second quarter of 2019.
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Source: ECB
Solactive releases new Euro IG Corporate Index with ESG Integration developed by SD-M
November 20, 2019--ESG remains the big topic in the year of 2019 since more and more investors emphasize this exciting and future-oriented topic. The ESG incorporation methodologies are manifold, and for each purpose, ETF providers and asset managers can find their benchmark.
The variety of screening-practices can appear overmuch to some individuals. Therefore, German ESG provider SD-M developed a straightforward and robust classification model focusing on three standardized material key performance indicators for respective industries and sectors. Solactive takes advantage of SD-M's approach to create the Solactive Euro IG Corporate SD-KPIndex(R), tailored to investors, in need of a reliable and accessible ESG Benchmark in the investment-grade corporates space.
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Source: Solactive AG
Deutsche Börse, Swisscom and partners successfully settle securities transactions via tokens in Switzerland
November 19, 2019--Proof of concept lays the foundation for a leap in efficiency in post-trade services/Settlement of securities transactions using different DLT protocols
Deutsche Börse, Swisscom and the three partners Falcon Private Bank, Vontobel and Zürcher Kantonalbank have succeeded in jointly settling securities transactions with tokenised shares via Distributed Ledger Technology (DLT).
With this proof of concept, the partners demonstrate how the immediate and secure settlement of legally binding securities transactions in shares of small and medium-sized enterprises (SMEs) could work in the future.
Within this proof of concept, the share registry of a real Swiss enterprise was digitalised using the platform of the start-up company daura, and the shares were then tokenised. To enable the execution of a delivery-versus-payment transaction based on DLT, money was made available in the form of cash tokens.
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Source: Deutsche Börse Group
Euronext, SIX Group square up for battle for Madrid bourse
November 18, 2019--Pan-European stock market operator Euronext (ENX.PA) and Switzerland's SIX sparked a bidding war for Spain's Bolsas y Mercados Espanoles (BME) (BME.MC) on Monday, with both trying to snap up one of Europe's last standalone stock exchanges.
SIX made a friendly all-cash offer for the Spanish bourse, whose shares jumped by more than a third in early trading, while Euronext said it was in talks with BME with a view to a potential bid, without saying how much it was prepared to pay.
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Source: Reuters
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