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ESMA sees high risks amid fragile markets
February 9, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, today publishes the first Trends, Risks and Vulnerabilities (TRV) Report of 2023. Overall, risks in ESMA’s remit remain high, and investors should be prepared for further market corrections.
The second half of 2022 was dominated by the slowdown of economic activity, high inflation, global tightening of financial conditions, the geopolitical environment and the materialisation of peripheral risks linked to leverage and liquidity, together with growing concerns over business practices in the crypto space.
These remain the defining drivers of risk in EU financial markets at the current juncture.
Main findings:
Overall risk assessment: Contagion and operational risks are considered very high, as are liquidity and market risks. Credit risk stays high and is expected to rise, reflecting the growing concerns over public and corporate indebtedness. Risks remain very high in securities markets and for asset management. Risks to infrastructures and to consumers both remain high, though now with a worsening outlook, while environmental risks remain elevated.
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Source: ESMA
ESMA report finds EU MMF industry at close to 1.5tn Euro
February 8, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, today published its inaugural market report on European Union (EU) Money Market Funds (MMF).
With this report ESMA provides for the first time a comprehensive market-level view of EU MMFs, based on supervisory information collected by National Competent Authorities (NCAs) and ESMA.
The main findings included in today's report are:
EU MMF sector: The EU MMF sector had €1.44tn of assets in 2021, with 89% of the funds domiciled in France, Luxembourg and Ireland.
Sector breakdown: Low-volatility NAV (LVNAV) MMFs account for 46% of the total assets, followed by Variable NAV (VNAV) MMFs (42%) and Constant NAV (CNAV) MMFs (12%). All MMFs domiciled in France are of the VNAV type and almost exclusively denominated in EUR. MMFs in Luxembourg and Ireland are mainly in non-EU currencies and set up mostly as CNAVs and LVNAVs. MMFs authorised in other EU jurisdictions are VNAVs denominated in other EU domestic currencies and account only for a small fraction of assets.
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Source: ESMA
New thematic ETF from VanEck on Xetra: access to companies with a focus on uranium and nuclear energy
February 8, 2023--A new exchange-traded fund issued by VanEck has been tradable on Xetra and via Börse Frankfurt since Wednesday.
The VanEck Uranium and Nuclear Technologies UCITS ETF offers investors access to companies worldwide that generate at least half of their revenues from uranium or nuclear energy infrastructure.
This includes the mining, exploration, development and production of uranium and other activities that support uranium mining. Uranium is used especially in nuclear power plants to generate electricity.
The benchmark index currently comprises 25 companies mainly based in Canada, Japan, USA, and South Korea. The weighting of a company is limited to 15 per cent.
Name: VanEck Uranium and Nuclear Technologies UCITS ETF
Asset class: Equity ETF
ISIN: IE000M7V94E1
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Source: Xetra
ESMA TRV Risk Analysis
Artificial intelligence in EU securities markets
February 7, 2023--The use of artificial intelligence (AI) in finance is under increasing scrutiny from regulators and supervisors interested in examining its development and the related potential risks.
This article contributes by providing an overview of AI use cases across securities markets in the EU and assessing the degree of adoption of AI-based tools.
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Source: ESMA
Research: UK official holdings of international reserves: January 2023
February 3, 2023--This release details movements in the international reserves of gold and assets held by the UK Government.
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Source: gov.uk
ESMA reviews the scope of clearing and derivatives trading obligations
February 1, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its final report on the clearing (CO) and derivative trading (DTO) obligations to accompany the benchmark transition.
The report sets out proposed draft Regulatory Technical Standards (RTS) amending the scope of the CO and DTO for over-the-counter (OTC) interest rate derivatives (IRD) denominated in EUR, GBP, JPY, and USD.
The report is part of the transition away from EONIA and LIBOR and onto alternative benchmarks, primarily Risk-Free Rates such as €STR, SOFR, SONIA and TONA.
ESMA's proposed amendments aim to ensure a smooth benchmark transition while maintaining an effective scope for these obligations, in line with the G20 objectives. The proposals include:
for the CO-introduce the TONA OIS (with maturities up to 30 years) class and extend the SOFR OIS class (up to 50 years); and
for the DTO - introduce certain €STR OIS classes.
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Source: ESMA
BlackRock pushes to attract more retail investors to ETFs
January 31, 2023--World's largest asset manager offers new ETFs savings plans with neobroker Bux
BlackRock has joined forces with the neobroker Bux to offer low-cost savings plans that use exchange traded funds in a push by the world's largest asset manager to encourage more retail investors across Europe to adopt ETFs.
Investors will be able to build investment portfolios of up to 10 BlackRock iShares ETFs in a so-called savings plan that will cost a flat fee of just €1 per month on the Bux platform. Investors will be able to make portfolio trades that can adjust the allocations across all of the ETFs they hold for a €1 commission fee and the minimum required investment has been set at just €10 per month to appeal to younger savers.
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Source: ft.com
IMF-France: Selected Issues
January 30, 2023--SPENDING EFFICIENCY AND REFORMS1
The trend increase in primary current spending over the last three decades leaves France with the highest spending ratio in Europe. France will need to reverse this trend through structural spending reforms to rebuild fiscal buffers that have been further eroded by the large fiscal response to successive shocks over 2020-22.
This paper identifies areas where scope for savings or efficiency gains exist based on an analysis of public spending on key categories and related outcomes relative to peers. Reform of social protection, health, education, and civil service should preserve or improve outcomes while generating savings that would help meet medium-term adjustment needs. In parallel, rationalizing
costly, distortive, or inefficient tax expenditures would allow for base broadening and partially offset
permanent revenue losses from the rebalancing of revenues away from labor and production taxes.
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Source: imf.org
ECB-Monetary developments in the euro area: December 2022
January 27, 2023-Annual growth rate of broad monetary aggregate M3 decreased to 4.1% in December 2022 from 4.8% in November
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, decreased to 0.6% in December from 2.4% in November
Annual growth rate of adjusted loans to households decreased to 3.8% in December from 4.1% in November
Annual growth rate of adjusted loans to non-financial corporations decreased to 6.3% in December from 8.3% in November
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to 4.1% in December 2022 from 4.8% in November, averaging 4.7% in the three months up to December.
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Source: ECB
New Equity ETF from Amundi on Xetra: access to largest Swiss equity companies
January 27, 2023--A new exchange-traded fund issued by Amundi Asset Management has been tradable on Xetra and via the trading venue Börse Frankfurt since Friday.
The Amundi MSCI Switzerland UCITS ETF gives investors the opportunity to track the performance of a portfolio consisting of the largest and highest-turnover companies on the Swiss equity market.
The underlying index is currently composed of 43 companies such as Nestle, Roche Holding and Novartis, which together account for 85 per cent of the Swiss market capitalisation. The largest sectors include healthcare (35 per cent), consumer staples (24 per cent) and financial services (16 per cent). The base currency of the fund is the Swiss franc.
Name: Amundi MSCI Switzerland UCITS ETF-CHF
Asset class: Equity ETF
ISIN: LU1681044993
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Source: Xetra
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