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ESAs call for vigilance in the face of mounting financial risks
April 25, 2023--The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) today issued their Spring 2023 Joint Committee Report on risks and vulnerabilities in the EU financial system. While noting that EU financial markets remained broadly stable despite the challenging macro environment and recent market pressure in the banking sector, the three Authorities are calling on national supervisors, financial institutions and market participants to remain vigilant in the face of mounting risks.
The second half of 2022 witnessed a worsening of the macro environment due to high inflation and tighter financial conditions, and the economic outlook remains uncertain. Although recent growth forecasts no longer point to a deep recession and inflation is showing signs of moderation, price growth may remain elevated for longer than previously expected. Recent market pressure on banks following the collapse of a few midsize banks in the United States and the emergency merger of the distressed Credit Suisse with the Union Bank of Switzerland (UBS) highlighted continued high market uncertainty, the sensitivity of the European financial system to exogenous shocks and potential risks related to the end of over a decade of very low interest rates.
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Source: ESMA
New crypto ETN from ETC Group on Xetra: access to 20 leading digital assets
April 24, 2023--Since Monday, a new crypto ETN issued by ETC Group has been tradable on Xetra and via Börse Frankfurt.
The ETC Group MSCI Digital Assets Select 20 ETP gives investors access to the performance of a portfolio of 20 world-leading digital assets by market capitalisation. These are based on blockchain technology or can support smart contracts. Currently, these are, for example, Bitcoin, Ethereum or Ripple.
The proportion of a single value is limited to a maximum of 30 per cent. So-called stablecoins, privacy coins and meme coins are not included in the index.
The ETC can be traded either in euros or US dollars using the individual symbol.
Name: ETC Group MSCI Digital Assets Select 20 ETP
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Source: Xetra
IMF Working Paper-European Housing Markets at a Turning Point-Risks, Household and Bank Vulnerabilities, and Policy Options
March 24, 2023--Summary:
European housing markets are at a turning point as the cost-of-living crisis has eroded real incomes and the surge in interest rates has made borrowers more vulnerable to financial distress.
This paper aims to (i) shed light on the risks in European housing markets, (ii) quantify household vulnerabilties, (iii) assess banking sector implications and (iv) examine policies' effectiveness using simulations based on microdata from the Household Finance and Consumption Survey (HFCS) and EU statistics on income and living conditions (EU-SILC).
Under the baseline IMF macroeconomic forecast, the share of households that could struggle to meet basic expenses could rise by 10 pps reaching a third of all households by end 2023. Under an adverse scenario, 45 percent of households could be financially stretched, representing over 40 percent of mortgage debt and 45 percent of consumer debt. The impact on the banking sector seems contained under the baseline forecast, though there are pockets of vulnerability. A 20 percent house price correction could deplete CET1 capital by 100-300 basis points. Fiscal measures, such as subsidies to the bottom income tercile, could save 7 percent of households from financial distress at an estimated cost of 0.8 percent of GDP.
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Source: imf.org
Europe's digital investment platforms raise ETF demand
April 24, 2023--Younger investors are turning to neobrokers to open regular savings plans
Digital investment platforms are set to drive the rapid adoption of exchange traded funds by European investors, according to industry forecasts based on the take-up of new channels to access equity markets.
BlackRock, the world's largest asset manager, estimates that there are around 65mn retail investors across Europe but only 5 per cent of "wealth assets" are currently invested through digital platforms.
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Source: ft.com
UBS ETFs haemorrhage assets following Credit Suisse takeover
April 20, 2023--The bank's exchange traded funds suffered €2bn in outflows in March, more than any other issuer in Europe
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Source: ft.com
ECB-Meeting of 15-16 March 2023-Account " of the monetary policy meeting of the Governing Council of the European Central Bank
April 20, 2023--Held in Frankfurt am Main on Wednesday and Thursday, 15-16 March 2023
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel distinguished two periods when reporting on financial market developments since the Governing Council's previous monetary policy meeting on 1-2 February 2023.
In the first period, stretching until the collapse of Silicon Valley Bank (SVB) in the United States, mounting signs of more persistent pressures on core inflation in the euro area - i.e. inflation in the Harmonised Index of Consumer Prices (HICP) excluding the food and energy components -had led investors to reassess their views on the likely future path of inflation and interest rates, and they were pricing in a higher-for-longer inflation and rate environment.
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Source: ECB
ESMA finds data quality significantly improves under new monitoring approach
April 19, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, today published the third edition of its Data Quality Report under the European Markets Infrastructure Regulation (EMIR) and the Securitised Financing Transactions Regulation (SFTR) reporting regimes.
The report highlights the increased use of transaction data by EU financial regulatory authorities in their day-to-day supervision and identifies significant quality improvements following a new approach to data monitoring. In addition, it sets out how ESMA, together with the National Competent Authorities (NCAs), the European Central Bank (ECB) and the European Systemic Risk Board (ESRB), has incorporated key insights from its data monitoring in several internal workstreams.
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Source: ESMA
New ETFs from Invesco on Xetra: access to selected sectors and high-yield corporate bonds while taking sustainability into account
April 17, 2023--Since Monday, five new exchange-traded funds issued by Invesco have been tradable on Xetra and via Börse Frankfurt.
The four new equity ETFs provide access to companies from individual sectors of the S&P Developed Ex-Korea LargeMidCap ESG Enhanced Index family. Large and mid-cap companies from developed countries are considered, taking ESG and environmental factors into account.
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Source: Xetra
ESMA publishes latest edition of its newsletter
April 4, 2023--This paper aims to inform the discussion in relation to China with accounts of experiences in large and complex financial sectors.
The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its latest edition of its Spotlight on Markets Newsletter.
Your one-stop-shop in the world of EU financial markets focused in March on various important topics such as the Market Correction Mechanism (MCM) and our cooperation with ACER-the Agency for the Cooperation of Energy Regulators- as well as the launch of the first ESMA cartoon on investor protection.
The results of the Effects Assessment confirmed the findings of the preliminary data report that, to date, no measurable impact of the MCM can be identified. In addition, we signed an updated Memorandum of Understanding with ACER, which strengthens collaboration between the two institutions and incorporates new cooperation areas under the MCM Regulation and benchmarks related to the energy sector.
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Source: ESMA
Exchange traded funds
Ireland extends lead over Luxembourg in ETF industry
March 30, 2023--More than two-thirds of European ETF assets are now domiciled in Dublin
Luxembourg has fallen further behind Ireland as an exchange traded fund domicile in Europe and the gap is expected to widen.
Ireland is now home to more than two-thirds of European ETF assets, with a 67 per cent market share and assets under management of €939bn as of the end of January, according to Morningstar data.
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Source: ft.com
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