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IMF Working Paper-Carbon Prices and Inflation in the Euro Area
February 16, 2024-Summary:
What is the effect of carbon pricing on inflation? This paper shows empirically that the consequences of the European Union's Emission Trading System (ETS) and national carbon taxation on inflation have been limited in the euro area, so far. This result is supported by analysis based on a panel local projections approach, as well as event studies based on individual countries.
Our estimates suggest that carbon taxes raised the price of energy but had limited effects on overall consumer prices.
Since future climate policy will need to be much more ambitious compared to what has been observed so far, including the need for larger increases in carbon prices, possible non-linearities might make extrapolating from historical results difficult. We thus also use input-output tables to simulate the mechanical effect of a carbon tax consistent with the EU's'Fit-for-55' commitments on inflation. The required increase of effective carbon prices from around 40 Euro per ton of CO2 in 2021 to around 150 Euro by 2030 could raise annual euro area inflation by between 0.2 and 0.4 percentage points. It is worth noting that the energy price increases caused by the rise in the effective carbon price to 150 Euro is substantially smaller than the energy price spike seen in 2022 following the invasion of Ukraine.
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Source: imf.org
Jupiter's Compliance Team Blocks Crypto ETP Investment: Report
February 16, 2024--Jupiter Asset Management's compliance team blocked its investors from having any exposure to a cryptocurrency exchange-traded product (ETP) in one of its Irish UCITs funds, according to a Financial Times report.
The reason for blocking the investment was due to, "divergent regulatory approaches in the EU."
UCITS are open-ended investment funds and are a popular form of investment vehicle, especially for European retail investors. Currently, Ireland does not allow crypto investments in UCITS funds.
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Source: cryptonews.com
New fixed income ETF from Goldman Sachs on Xetra: access to the global bond market for green bonds
February 15, 2024--Since Thursday, a new exchange-traded fund issued by Goldman Sachs Asset Management has been tradable on Xetra and via the trading venue Börse Frankfurt.
The Goldman Sachs Global Green Bond UCITS ETF-EUR-Hedged (DIST) provides investors with access to the global bond market for green bonds denominated in one of the G10 currencies.
The portfolio consists of global, investment-grade, fixed-rate green bonds, which are mainly issued by supra-nationals, sub-sovereigns, agencies and corporates. The proceeds from the issuance of green bonds are used to finance climate and environmental projects contributing to positive benefits to the environment.
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Source: xetra
Deutsche Borse expands crypto offering on Xetra with Valour's first internet computer ETN
February 14, 2024---Deutsche Börse is further expanding its range of cryptocurrency products: As of today, for the first time, an Exchange Traded Note (ETN) on Internet Computer (ICP) can be traded via Xetra and the trading venue Börse Frankfurt. The issuer of the ETN is Valour Digital Securities.
With 1Valour Internet Computer Physical Staking, investors on Xetra can participate in the performance of the Internet Computer cryptocurrency in combination with staking for the first time without having to set up crypto wallets.
Staking is the process of depositing the respective crypto assets on the blockchain to validate transactions. In return, a premium is paid. In this way, investors can participate not only in the performance of the cryptocurrency, but also in the respective staking income.
The ICP-backed ETN has been admitted to the Regulated Market of the Frankfurt Stock Exchange and is centrally cleared via Eurex Clearing.
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Source: xetra
ESMA publishes latest edition of its newsletter
February 14, 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 January on the last ESMA consultation package related to the Markets in Crypto Assets Regulation (MiCA).
We invited stakeholders to send their feedback on reverse solicitation and classification of crypto assets as financial instruments by 29 April 2024 and we have also launched a social media campaign with useful reminders.
In addition, together with the National Competent Authorities, we raised awareness of the requirements which apply when posting investment recommendations on social media. See video here. We have also published our first risk monitoring report of 2024, where ESMA set out the key risk drivers currently facing financial markets.
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Source: ESMA
BlackRock splits custody business for Irish-domiciled ETFs
February 14, 2024--BNY Mellon joins rival State Street as a depositary and administration service provider for the Irish ETFs
BlackRock has appointed BNY Mellon as an additional custodian for €673bn Dublin-domiciled iShares exchange traded funds, splitting custody for the business between two post-trade service providers.
The US bank and custody giant joins domestic rival State Street as a depositary and administration service provider for the Irish ETFs.
The $10tn US fund giant said the move mitigated risk and created efficiency.
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Source: ft.com
BlackRock Debuts Europe's Lowest-Fee India Government Bond ETF
February 12, 2024--BlackRock has entered the rupee sovereign space with Europe's lowest-fee Indian government bond ETF.
The iShares India INR Govt Bond UCITS ETF (INGB) is listed on Euronext Amsterdam with a total expense ratio of 0.35%.
INGB is the fifth India government bond ETF in Europe after the L&G India INR Government Bond UCITS ETF (TIGR) launched in October 2021 with an expense ratio of 0.39%.
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Source: finance.yahoo.com
IMF Working Paper-The Impact of Derivatives Collateralization on Liquidity Risk: Evidence from the Investment Fund Sector
February 9, 2024--Summary:
Stricter derivative margin requirements have increased the demand for liquid collateral, but euro area investment funds, which use derivatives extensively, have been reducing their liquid asset holdings. Using transaction-by-transaction derivatives data, we assess whether the current levels of funds' holdings of cash and other highly liquid assets would be adequate to meet funds' liquidity needs to cover variation margin calls on derivatives under a range of stress scenarios.
The paper finds that labor market The estimates indicate that between 13 percent and 33 percent of euro area funds with sizeable derivatives exposures may not have sufficient liquidity buffers to meet the calls under adverse market shocks. As a result, they are likely to redeem money market fund (MMF) shares, procyclically sell assets, and draw on credit lines, thus amplifying the market dynamics under such stress scenarios. Our findings highlight the importance of further work to assess the potential role of macroprudential policies for nonbanks, particularly regarding liquidity risk in funds.
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Source: imf.org
IMF Working Paper-The Impact of Derivatives Collateralization on Liquidity Risk: Evidence from the Investment Fund Sector
February 9, 2024--Summary:
Stricter derivative margin requirements have increased the demand for liquid collateral, but euro area investment funds, which use derivatives extensively, have been reducing their liquid asset holdings. Using transaction-by-transaction derivatives data, we assess whether the current levels of funds' holdings of cash and other highly liquid assets would be adequate to meet funds' liquidity needs to cover variation margin calls on derivatives under a range of stress scenarios.
The estimates indicate that between 13 percent and 33 percent of euro area funds with sizeable derivatives exposures may not have sufficient liquidity buffers to meet the calls under adverse market shocks. As a result, they are likely to redeem money market fund (MMF) shares, procyclically sell assets, and draw on credit lines, thus amplifying the market dynamics under such stress scenarios. Our findings highlight the importance of further work to assess the potential role of macroprudential policies for nonbanks, particularly regarding liquidity risk in funds.
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Source: imf.org
Boerse Stuttgart Records January Turnover Of Around EUR 8.5 Billion-Trading Volume Increases Compared To The Same Month Of The Previous Year -Growth In Structured Securities, Bonds And Exchange-Traded Products
February 2, 2024--Based on the order book statistics, Boerse Stuttgart generated turnover of around EUR 8,5 billion in January- around 11 percent more than in the same month of the previous year.
Structured securities made up the largest share of the turnover.
The trading volume in this asset class was around EUR 3,7 billion-an increase of around 9 percent compared to the previous month. Leverage products generated turnover of around EUR 2,7 billion.
Investment products contributed around EUR 985 million to the total turnover.
The monthly total for trading in debt instruments (bonds) was around EUR 1,7 billion in January, an increase of around 20 percent compared to the same month of the previous year. At around EUR 828 million, the lion's share of turnover in this asset class was attributable to corporate bonds.
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Source: boerse-stuttgart.de
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