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IOSCO consults on lessons learned from the operational resilience of trading venues and market intermediaries during the pandemic
January 13, 2022-- The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on the lessons learned regarding the operational resilience of trading venues and market intermediaries during the COVID-19 pandemic.
In the Consultation Report, Operational resilience of trading venues and market intermediaries during the COVID-19 pandemic , published today, IOSCO describes the impact of the pandemic on trading venues and market intermediaries (regulated entities).
It concludes that these regulated entities largely proved to be operationally resilient and continued to serve their clients and the broader economy, despite unprecedented challenges, such as the restrictions on mobility and business operations and periods of extreme market volatility and record trading volumes. The pandemic also increased cyber security risks, accelerated the use of existing, new and emerging technologies and disrupted outsourcing arrangements.
Monetary Finance: Do Not Touch, or Handle with Care?
January 13, 2022--Summary:
This paper reviews the theoretical arguments in favor and against MF and presents an empirical assessment of the risks that it may pose for inflation.
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Crypto Prices Move More in Sync With Stocks, Posing New Risks
January 11, 2022--There's a growing interconnectedness between virtual assets and financial markets.
Crypto assets such as Bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns.
The market value of these novel assets rose to nearly $3 trillion in November from $620 billion in 2017, on soaring popularity among retail and institutional investors alike, despite high volatility. This week, the combined market capitalization had retreated to about $2 trillion, still representing an almost four-fold increase since 2017.
Amid greater adoption, the correlation of crypto assets with traditional holdings like stocks has increased significantly, which limits their perceived risk diversification benefits and raises the risk of contagion across financial markets, according to new IMF research.
Global Growth to Slow through 2023, Adding to Risk of 'Hard Landing' in Developing Economies
January 11, 2022--Spread of COVID-19 Variants Alongside Inflation, Debt, and Inequality Intensifies Uncertainty
Following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies, according to the World Bank's latest Global Economic Prospects report.
Global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies-including the United States and China-will weigh on external demand in emerging and developing economies.
view the World Bank Global Economic Prospects January 2022 report
IMF-Global Financial Stability Notes-Cryptic Connections
January 11, 2022--Summary:
Crypto assets have emerged as an increasingly popular asset class among retail and institutional investors. Although initially considered a fringe asset class, their increased adoption across countries-in emerging markets, in particular-amid bouts of extreme price volatility has raised concerns about their potential financial stability implications.
This note examines the extent to which crypto assets have moved to the mainstream by estimating the potential for spillovers between crypto and equity markets in the United States and in emerging markets using daily data on price volatility and returns.
The analysis suggests that crypto and equity markets have become increasingly interconnected across economies over time. Spillovers from price volatility of the oldest and most popular crypto asset, Bitcoin, to the S&P 500 and MSCI emerging markets indices have increased by about 12-16 percentage points since the onset of the COVID-19 pandemic, while those from its returns have increased by about 8-10 percentage points. Spillovers from the most traded stablecoin, Tether, to these indices have also increased by about 4-6 percentage points. In absolute terms, spillovers from Bitcoin to global equity markets are significant, explaining about 14-18 percent of the variation in equity price volatility and 8-10 percent of the variation in equity returns. These findings suggest that close monitoring of crypto asset markets and the adoption of appropriate regulatory policies are warranted to mitigate potential financial stability risks.
Volatility managed multi-factor portfolios
January 10, 2022-Abstract
This paper shows that portfolio performance can be improved significantly when jointly using volatilities of past factor returns and option-implied market volatilities to determine factor exposures.
Improvements are much larger in risk regimes characterized by option-implied right-skewed and/or high vola market returns. When model parameters are estimated separately for different regimes, risk-adjusted portfolio returns improve even further. The results are not driven by a specific set of factors but also achieved when principal components of a large universe of factors are used as factors. The findings are robust to transaction costs and to out-of-sample estimation.
World Economy Will Exceed $100 Trillion In 2022
January 4, 2022--The world economy will reach $100 trillion by 2022 instead of 2024, according to the Centre for Economics and Business Research.
China will lead the way of being the global top economy and gross domestic product, the London-based group noted.
Global economies will see their GDP increase while they recover from the pandemic, but could be stymied from higher inflationary risks.
"The important issue for the 2020s is how the world economies cope with inflation," said Douglas McWilliams, the CEBR's deputy chairman.
As the ETF world booms, so do the risks
January 3, 2022--A brilliant financial innovation is being pushed to the extremes.
It is a heady time for the ETF world. Total inflows final yr topped $1tn for the primary time.
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ETFGI reports record year to date net inflows of US$148.28 billion invested into Smart Beta ETFs and ETPs listed globally at the end of November
December 30, 2021--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs/ETPs ecosystem, reported today that equity-based Smart Beta ETFs and ETPs listed globally gathered net inflows of US$12.72 billion during November, bringing year-to-date net inflows to US$148.28 billion which is higher than the US$42.59 billion gathered at this point last year.
Year-to-date through the end of November 2021, Smart Beta Equity ETF/ETP assets have increased by 31.7% from US$999 billion to US$1.32 trillion, with a 5-year CAGR of 22.8%, according to ETFGI's November 2021 ETF and ETP Smart Beta industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar vales in USD unless otherwise noted.)
Highlights
Assets of $1.32 Tn invested in Smart Beta ETFs and ETPs listed globally are 2nd highest on record.
Assets have increased 31.7% YTD going from $999 Bn at end of 2020 to $1.32 Tn at end of November.
Smart Beta ETFs and ETPs listed globally gathered net inflows of $12.72 Bn during November
Record YTD net inflows of $148.28 Bn beat prior record of $81.37 Bn gathered YTD 2019.
$148.28 Bn YTD net inflows are $58.48 Bn or 65% greater than the full year 2019 record net inflows of $89.80 Bn.
$159.65 Bn in net inflows gathered in the past 12 months.
16th month of consecutive net inflows
ETFGI reports a record US$20.23 billion invested in Crypto ETFs and ETPs listed globally at the end of November 2021
December 30, 2021-- ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs/ETPs ecosystem, reported today a record US$20.23 billion invested in Crypto ETFs and ETPs listed globally at the end of November 2021. Crypto ETFs and ETPs listed globally gathered net inflows of US$1.11 billion during November, bringing year-to-date net inflows to US$9.26 billion which is much higher than the US$278 million gathered at this point last year.
Total assets invested in Crypto ETFs and ETPs increased by 3.7% from US$19.52 billion at the end of October 2021 to US$20.23 billion at the end of November, according to ETFGI's November 2021 Crypto ETFs and ETPs industry landscape insights report, a monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Record $20.23 invested in Crypto ETFs and ETPs listed globally at the end of November.
Assets increased by 3.7% from $19.52 billion at end October to $20.23 billion at end November.
Assets have increased 549% year to date in 2021 going from $3.12 Bn at end of 2020 to $20.23 Bn at end November.
Crypto ETFs and ETPs listed globally gathered net inflows of $1.11 billion during November.
Record YTD net inflows of $9.26 Bn beating the prior record of $278 Mn gathered YTD in 2020.
$9.40 Bn in net inflows gathered in the past 12 months.
4 Consecutive months of net inflows.