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ESMA to allow decision on reporting of net short position of 0.1% and above to expire
March 15, 2021--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, has decided not to renew its decision to require holders of net short positions in shares traded on a European Union (EU) regulated market, to notify the relevant national competent authority (NCA) if the position reaches, exceeds or falls below 0.1% of the issued share capital. The measure, which has applied since 16 March 2020, will expire on 19 March 2021.
ESMA's view is that with GDP forecasts showing moderate optimism for recovery, volatility decreasing and the main EU stock indices close to pre-pandemic levels, the current situation in financial markets no longer resembles the emergency situation required by the Short Selling Regulation to maintain the measure.
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Source: ESMA
Deutsche Borse welcomes FlexShares as a new ETF issuer on Xetra
March 15, 2021--Quant and ESG combined: low volatility or high dividend yield
Two exchange traded funds issued by FlexShares have become tradable via Xetra and Börse Frankfurt for the first time since Monday.
With the FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF-Acc and the FlexShares Developed Markets High Dividend Climate ESG UCITS ETF-Dist, investors have two actively designed ETFs with ESG filters available.
Both ETFs are based on the STOXX Global 1800 index, a globally diversified equity index from industrialised nations.
From this universe, stocks are selected that are performing in terms of profitability, management experience and cash flow. At the same time, ESG criteria are applied to take ecological, social, and corporate governance principles into account when selecting companies.
The FlexShares Developed Markets High Dividend Climate ESG UCITS ETF-Dist offers investors access to companies with a high dividend yield. In contrast, the FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF- Acc focuses on companies with overall lower volatility.
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Source: Deutsche Börse
Financial services: The Brexit dust begins to settle
March 11, 2021--The phase of greatest Brexit-related uncertainty for the European financial sector ended on 1 January. Although too early to discern more than the broadest contours of the future landscape, it is increasingly apparent that London will be less dominant than before.
The Brexit story has entered a new phase.
The United Kingdom's exit from the European single market on 1 January was orderly in the financial sector, despite significant shifts of liquidity in shares and derivatives, and unlike the shift in trade for goods.
In contrast to the past five years of radical uncertainty, the near-future policy framework is now fairly predictable, with the EU and UK taking separate regulatory paths. The resulting financial 'decoupling' has left the City of London on the back foot, whereas the prospects for EU financial services will depend greatly on whether EU policy supports further financial market integration. The structural consequences of this new state of affairs will take years to unfold.
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Source: bruegel.org
Euro area securities issues statistics: January 2021
March 10, 2021--The annual growth rate of the outstanding amount of debt securities issued by euro area residents was 7.4% in January 2021, the same as in December 2020.
For the outstanding amount of listed shares issued by euro area residents, the annual growth rate was 1.4% in January 2021, compared with 1.3% in December 2020.
Debt securities
New issuances of debt securities by euro area residents totalled EUR 772.9 billion in January 2021. Redemptions amounted to EUR 628.6 billion and hence net issues to EUR 144.3 billion. The annual growth rate of outstanding debt securities issued by euro area residents was 7.4% in January 2021, unchanged from December 2020.
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Source: ECB
Low interest rates in Europe and the US: one trend, two stories
March 10, 2021--Interest rates have been on a long-term decline, associated with declining productivity growth. To tackle this, the priorities are to reduce market concentration and, in Europe, change the financing model.
In both Europe and the United States, interest rates have been declining for more than fifteen years.
For much of this period, real interest rates have been negative and they are expected to remain negative for at least another decade. The literature associates this decline in interest rates with a similarly protracted decline in productivity. But the decline in productivity appears paradoxical given major technological advances.
The decline in the price of capital is underpinned by the factors that have caused a decline in demand for capital, as well as a relative increase in its supply. On the supply side, aging and an increase in overall macroeconomic risk since the financial crisis have both led to increased savings. On the demand side, the increase in the importance of intangible capital in production has reduced the demand for physical capital.
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Source: bruegel.org
LSE ETP February 2021 Monthly Newsletter
March 9, 2021--Key highlights
15 new ETPs listed in February 2021. In total, there are now 1,322 ETFs (available as 1,915 lines through multi-currency offerings) and 303 ETCs/ETNs (available as 426 lines) on our market.
Legal & General Investment Management has expanded its thematic range with the launch of the first hydrogen economy ETF in Europe.
The L&G Hydrogen Economy UCITS ETF (HTWO) has listed on London Stock Exchange providing investors exposure to the long-term investment opportunity offered by the transition to a low-carbon, hydrogen economy.
Invesco has expanded its fixed income range with the launch of Europe's first US municipal bond ETF on London Stock Exchange: the Invesco US Muncipal Bond UCITS ETF (MUNI). MUNI offers investors exposure to municipal debt publicly issued by US states and territories and their political subdivisions.
Trading Activity
ETP order book turnover in February 2021 was £14.6bn on London Stock Exchange (YoY: +26%). Average daily value traded was £s;730m. A new record was set on Feb 3, 2021, with ETPs accounting for 23% of all London Stock Exchange's order book trading. 5 ETPs featured in the top 20 securities by value traded and total ETP turnover was over £s;1.1bn.
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Source: londonstockexchange.com
A whole-economy carbon price for Europe and how to get there
March 9, 2021--Putting carbon pricing at the centre of the EU climate policy architecture would provide major benefits. Obtaining these benefits requires a uniform, credible and durable carbon price- the economic first-best solution, however, several preconditions required to attain this solution are not yet met. This paper proposes a sequenced approach to ensure convergence of the policy mix on the first-best in the long run.
The European Union's plan for climate neutrality by 2050 reopens the question of the role carbon pricing can and should play. Carbon pricing should not -and ultimately cannot-only be an enforcement tool or backstop that ensures targets are met, while the heavy-lifting of decarbonisation comes from directed technological change policies. Instead, a technologyneutral carbon price must become the main element, providing signals for decarbonised operations, investment and innovation in all sectors. This would guarantee cost-effective emission cuts, provide a clear path to net-zero and is a requirement for international cooperation and a global carbon pricing regime. Carbon pricing must therefore be at the core of EU climate policy.
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Source: bruegel.org
EU to Make Fund Managers Back Up Sustainability Claims
March 9, 2021--New sustainable-investment rules apply to all fund managers that raise money in the bloc
The European Union is bringing rules into effect on Wednesday that seek to regulate the fast-growing sustainable-finance industry for the first time.
Managers of funds that invest in line with environmental, social or governance considerations, known as ESG, will have to put forward a tangible, measurable plan for how they will do so. This will apply to all asset managers that raise money in the EU, whether they are based within its borders or not, from March 10.
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Source: wsj.com
Deutsche Borse expands innovative centrally cleared crypto offering on Xetra with Ethereum and Bitcoin Cash
March 9, 2021--New ETNs offer easy access to the performance of cryptocurrencies with physical backing
Central clearing offers reduced risks and settlement efficiencies
From today, Exchange Traded Notes (ETNs) issued by 21Shares and ETC Group on the cryptocurrencies Ethereum and Bitcoin Cash are available to investors on Xetra for the first time. With this move, Deutsche Börse is expanding its range of innovative, centrally cleared crypto ETNs.
The new products are physically backed and listed on the Regulated Market of the Frankfurt Stock Exchange.
"Cryptocurrencies are a rapidly growing market segment. With the expansion to Ethereum and Bitcoin Cash, we are now offering further investment opportunities to trade crypto products efficiently in a regulated on-exchange environment. This means investors no longer have to turn to unregulated crypto venues or set up their own crypto wallets," says Stephan Kraus, Head of Deutsche B&puml;rse's ETF segment.
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Source: Deutsche Börse Group
New Xtrackers ETFs on Xetra: global equities and emerging markets from Asia
March 8, 2021--Since Monday, two new exchange traded funds issued by Xtrackers are tradable on Xetra and Börse Frankfurt.
With the Xtrackers MSCI World Swap UCITS ETF 1D, investors invest in an equity portfolio of 23 industrialised nations worldwide. The MSCI World Index currently comprises 1,583 large and medium-sized companies from various sectors and thus covers around 85 per cent of market capitalisation.
Companies from the USA, Japan and Great Britain are most strongly represented in the index.
The Xtrackers MSCI Emerging Markets Asia Swap UCITS ETF 1D allows investors to invest in emerging market equities. The focus is on large and medium-sized companies from nine Asian countries such as China, Taiwan or South Korea. Currently, 1,114 stocks from different sectors are included.
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Source: Xetra