Eurex

Eurex to launch next generation of ESG derivatives

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The international derivatives exchange Eurex is supporting the strong global trend towards responsible investing by expanding its ESG segment. With futures and options on the EURO STOXX 50 ESG Index, Eurex will add another European benchmark to its offering. In addition, derivatives on the DAX 50 ESG Index will cover the German market for the first time. The new contracts will be launched on 9 November.

ESG derivatives are playing an important role in the transition towards a more sustainable economy as they help to more effectively align investment exposures to environmental, governance and social risk factors. And with these new contracts, Eurex is going one step further in terms of methodology. For the first time, these derivatives will be based on indexes incorporating ESG scores. This means, in combination with screening out undesirable securities, ESG rankings are also considered as part of the selection process. (Source: Eurex)

 

Further information:

 

Photo: Deutsche Börse AG

European Datawarehouse submits application to ESMA to be registered as a securitisation repository

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European DataWarehouse (EDW) announced it has submitted its application to become a Securitisation Repository registered and supervised by the European Securities and Markets Authority (ESMA).

The extensive application describes in detail the sound operational and technical aspects of the company and its market-leading reporting solutions.

In January 2018, European DataWarehouse announced its intention to become a Securitisation Repository under ESMA. The same year it released a testing platform for the Securitisation Regulation (EU) 2017/2402 within EDITOR.  Since the platform was initially launched, EDW has made a number of enhancements to reflect the latest template changes and requirements from ESMA.

Prof. José Manuel González-Páramo, Chairman of European DataWarehouse stated:

“EDW was founded in 2012 to foster transparency in the European securitisation market and restore confidence of investors. Building on its proven track record as the securitisation repository of the Eurosystem I am confident that EDW will submit a successful application and be registered as the first securitisation repository by ESMA”.

The Regulatory Technical Standards (RTS) for Securitisation Repositories was published in the Official Journal of the European Union on 03 September 2020. According to ESMA, those entities who wish to be registered as a securitisation repository can submit their applications from 23 September 2020.

European DataWarehouse was established as part of the implementation of the European Central Bank’s ABS loan-level initiative. Since its inception as an initiative by the leading participants of the European securitisation market, EDW acted as a repository that has collected loan-level data and relevant documentation for nearly 1,600 transactions.

About European DataWarehouse GmbH

European DataWarehouse (EDW) is the first and the only centralised data repository in Europe for collecting, validating and distributing detailed, standardised and asset class specific loan-level data for Asset-Backed Securities (ABS) and private whole loan portfolios. EDW stores loan-level data and corresponding documentation for investors and other market participants. Operating as a market infrastructure and designated by the Eurosystem, EDW aims to increase transparency and restore confidence in the ABS market. Through EDW’s data, users are able to analyse underlying portfolios in a more efficient way and compare portfolios on a systematic basis.

 

Photo: Tumisu via Pixabay.

Bergsteiger

European Private Business Survey 2020

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In a recent study, PwC shows that medium-sized companies in the DACH region are reacting resiliently to the Covid-19 crisis. For example, 53 percent of the companies surveyed intend to maintain or expand their growth in the coming 12 months and 67 percent have adjusted their product portfolio as a result of Covid-19. For the European Private Business Survey 2020, PwC surveyed 2,500 companies in 31 European countries shortly before the outbreak of the COVID-19 pandemic and 400 again in May and June.

“The fact that the companies in the DACH region have changed course so quickly is largely due to their SME virtues, which have always characterized them: Client focus, fast decision-making and a solid financial position,” comments Uwe Rittmann, member of the Board of Managing Directors of PwC Germany and Head of the Family Businesses and SMEs department, on the results.

All graphics, results and a link to download the study can be found on the PwC homepage (german).

 

Photo by Diogo Tavares via Unsplash.

Jörg Kukies in conversation: Berlin pushes financial market union

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State Secretary for Finance aims at a common EU policy on digital finance strategy by the end of the year

The Federal Government is moving ahead with the digital financial market union. During its EU Council Presidency, it hopes to achieve a political consensus among member states on the EU Commission’s digital finance strategy by the end of the year. This could mean that legislation could already start in Brussels.

“The regulation of stablecoins, the demarcation between tech companies and financial service providers and the financial industry’s access to clouds are the most important issues for our EU Presidency in the area of digitisation and financial markets.” In an interview with the Börsen-Zeitung, State Secretary for Finance Jörg Kukies outlined the working plan for the digital financial market union, which the Federal Government intends to implement during its EU Presidency by the end of the year. EU finance ministers already discussed the plan at an informal meeting in Berlin.

Berlin aims to unite the Member States on a common political line by December.

“Our aim is to achieve as clear a vision as possible of the strategic priorities for a digital financial market union during our Presidency based on the EU Commission’s proposal in Ecofin,” says Kukies.

If the group successfully reaches common conclusions, the legislative process can start. Berlin’s points belong to the EU Commission’s not yet published digital finance strategy.

Nevertheless, the Federal Ministry of Finance’s timetable is ambitious if the Commission is to present the digital finance strategy, as expected, in October. There is little time for negotiations between now and December. “In the negotiations, we will try to reach a Council position on all capital market issues during our Presidency,” said the State Secretary, describing the further process. “We are very hopeful about the Capital Market Union. Proposals have already been made,” he said. “With regard to the digital financial market union, we are waiting for the Commission’s announced legislative proposals in addition to the two strategies for payments.”

Resolving fragmentation

The EU Commission had set out a broad field for the strategy in the summer when it called for consultation. The aim is to eliminate the fragmentation of the single market for digital financial services and to support the data-driven financial sector. It is about a new regulatory framework for financial services in the digital age. It should manage risk appropriately while being innovation-friendly and technology-neutral. It also aims to enable consumers and businesses to take advantage of the single digital financial market. Finally, the Commission wants to promote a well-regulated, data-driven financial sector and improve the operational stability of digital systems in the EU financial system.

The Wirecard case in Germany shed light on a long recognised but unsolved problem of financial supervision, which is the control of companies that offer services in the financial sector but are not considered financial services providers. Kukies sees a need for EU regulation there. The term “financial holding company” is defined in the Capital Requirements Directive CRR. “We must clearly shift the demarcation between tech companies and financial companies towards a stronger inclusion of services in financial market regulation,” Kukies explains. The issue of “data cloud” is also a question of demarcation. The data company Google recently acquired banks as customers nationwide and offered its cloud services. If financial services providers transfer transactions to the area of pure service providers, questions arise about the scope of financial supervision.

Strict consumer protection

In the case of cryptocurrencies, such as Facebook’s proposed Libra, the German government, together with four other EU countries, is pushing for strict specifications.

“We want clear supervision of cryptocurrencies,” says Kukies. “With our national laws on crypto-custody and the crypto-securities register in the Electronic Securities Act, we are enabling innovation, but within a clear legal framework, thus creating legal certainty.”

Five EU states, including Germany, declared in Berlin that clear Euro-denomination, the explicit regulation of consumer rights and a legally guaranteed right to collateral are central. If the step into the digital future is to succeed, the new financial instruments must also be safe for investors. “We also want to create acceptance among our citizens,” Kukies says, underlining the further plans. “We, therefore, want to set high standards.”

 

Source: Börsen-Zeitung, 15 September 2020, Angela Wefers, © All rights reserved.

Image: Gerd Altmann/Pixabay

Annual bwf and ICMA Capital Markets Conference

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The Annual Federal Association of Securities Trading Firms (bwf) and International Capital Market Association (ICMA) Capital Markets Conference will take place on 23 September 2020 as a virtual panel discussing MiFID II/R: the “Quick-Fix“ and beyond.

This year’s bwf and ICMA joint annual event will feature an expert panel of speakers who will discuss the likely impacts of the MIFID II “quick fix” as part of the EU’s coordinated response to the COVID-19 pandemic and the extent to which this will play a key role in promoting the recapitalisation of European companies as they emerge from the crisis. Under discussion will be the distribution of bonds with make-whole clauses to retail investors, changes to costs and charges disclosures, and the suspension of best execution reporting. The panel will then look ahead to the MiFID II/R review and the possible areas where either fine-tuning or a wholesale rethink could prove helpful, including the hot topics of research unbundling and  post-trade transparency.

Speakers include:

  • Frank Engels, CIO (UIP), Union Investment Privatfonds; Board Member, ICMA
  • Andy Hill, Senior Director, Market Practice and Regulatory Policy, ICMA
  • Dr. Annette Kliffmüller-Frank, Managing Director, ICF BANK AG
  • Dr. Jörg Kukies, State Secretary, Federal Ministry of Finance Germany
  • Tilman Lueder, Head, Securities Markets Unit, DG FISMA, Securities Markets, European Commission
  • Michael Sterzenbach, Secretary General, Bundesverband der Wertpapierfirmen

This ICMA event is free of charge and open to all bwf and ICMA members as well as interested financial market participants. Registration in advance is essential (Please note: registrations will close on Tuesday, 22 September at 17.00 CEST).

 

Image: difisher/Pixabay

SGC – Virtual Roundtable: Experiences of German FDI in China

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The Sino-German Center of Finance and Economics (SGC) invites you to its fifth virtual roundtable in 2020 that will continue the topic of the last webinar about the EU-China Comprehensive Investment Agreement. This time, the Panel Discussion will focus on the experiences of German FDI in China with company’s representatives.

Date:

22. September 2020, 11am – 12pm (CEST) via Zoom.

Panellists:

Dirk Lubig, Managing Director, Deutsche Bank China, Beijing

Christian Martin, CFO, Zeiss Greater China, Shanghai

Stefan Messer, CEO, Messer Group, Bad Soden

Henry Tillman, China Investment Research, London

Moderators:

Prof. Horst Löchel, Co – Chairman Sino-German Center

Prof. Rüdiger von Rosen, Co – Chairman Sino-German Center

 

Register at: Website of Sino-German Center of Finance & Economics

The Sino-German Center of Finance and Economics (SGC) is a registered association since 2015.
It emerged from the RMB initiative of the Government of Hessen to position the financial center of Frankfurt as RMB offshore hub. The opening ceremony took place in September 2015 at the German embassy in Beijing jointly conducted by the Deutsche Bundesbank and the People’s Bank of China.

 

Image: Markus Winkler/Pixabay

Moody’s ESG Summit

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Understand the climate challenges to embed better risk analysis

Following last year’s success, Moody’s ESG Summit is coming back in digital format. What to expect?

  • Climate Risk Insight: Examine regional trends that will shape recovery
  • HD Broadcast: Watch broadcast quality sessions live or on demand
  • Live Participation: Discover market sentiment and get your questions answered

Some of the topics in focus:

  • What are the key climate challenges facing policy makers, regulators and the market participants?
  • The $80 trillion question – integrating credit rating and climate scenarios
  • The new risk dynamics: embedding scenarios into risk analysis

Live broadcast starts 24 September 09.15 EST.

Find more information on Moody’s ESG Summit here.

 

 

Photo by Josh Riemer via Unsplash.

 

 

Your road to IPO at Deutsche Börse

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Shape your company’s future with a listing in Frankfurt

As one of the largest international exchange organisations, Deutsche Börse helps your company gain access to the global capital pool you need to finance dynamic growth. Read more

DVFA Commission for Corporate Analysis: Wirecard – Anatomy of a Fraud

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On Thursday, June 25, 2020, Wirecard became the first member of the DAX benchmark index to file for insolvency. Since then, three questions concern the investment community: Why was Wirecard’s fraud not uncovered earlier? Could Wirecard’s fraud have been detected earlier? What lessons can be learned from Wirecard’s fraud? The DVFA Commission for Corporate Analysis took a closer look at this unique case in the history of the German capital market.

Why was the Wirecard fraud not uncovered earlier?

The primary perpetrators are well networked and generally first-time offenders. Board criminals are people who nobody would typically suspect of committing fraud. At the same time, board fraudsters are extremely careful when it comes to manipulating or destroying evidence requested by auditors. Apparently, for Dr. Braun, it was relatively easy to manipulate auditors, who were perhaps overwhelmed by the complexity of the client. Thus, it is common practice for auditors to simply repeat the work done in the previous year. They simply do not have the time to question details or even the big picture.

But it is not only time that is scarce, but also conviction. After all, the confirmation bias theory already shows that a client who has survived the auditor’s rigorous examination process in previous years must be trustworthy.

Could Wirecard’s fraud have been detected earlier?

As in 2001 and 2008, statements are now being made everywhere as to why the scandal was foreseeable. This reveals a defect known in Behavioural Finance as hindsight bias. Hindsight bias leads to an event appearing more predictable after it is known than it actually was before. In extreme cases, there could be investors who still believed that Wirecard’s insolvency was foreseeable even though they still held shares of the financial services company in their portfolios.

Now, capital market participants are by far, not the only ones subject to hindsight bias. There are numerous scientific studies and meta-studies on this phenomenon, ranging from the assessment of the chances of success of start-ups to the election chances of top political candidates to the results of sports competitions, the occurrence of terrorist attacks or the announcement of medical diagnoses. What they all have in common is that those who succumbed to the hindsight bias would have made a different decision in retrospect than they actually did at the time of the decision. Irrespective of this, the phenomenon is difficult to convey to experienced decision-makers, in the case of Wirecard, fund managers and financial analysts.

What lessons can be learned from Wirecard’s fraud?

Fraud patterns have changed little over the past 300 years. Just like back then, fraud today consists primarily of two elements: The “Suggestio Falsi”, i.e. the insinuation of falsehood, and the “Suppressio Veri”, the suppression of truth. While criminal investigators, as noted above, are trained to think like criminals in order to catch criminals, this approach is fundamentally atypical for financial analysts and asset managers. Instead, many actors, especially in the financial sector, tend to neglect behavioural explanations for inconsistencies. Since the consequences of fraud, as shown by Wirecard, can be so severe, it would make sense to place additional training emphasis on behavioural epistemology, not only for the detection of fraud but also as a deterrent. In other words, if we want to discuss the crime itself, we must inevitably include the human factor of the criminal.

 

The complete publication can be found on the website of the DVFA – Commission for Corporate Analysis or downloadable here as a PDF file (in German only).

Text: © 2020 DVFA e.V.

360T PODCAST

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The podcast series offers a wide range of unique insights regarding how the FX market today is developing.

As a technology provider for the global foreign exchange market, 360T interacts daily with a wide spectrum of international financial institutions that contain a wealth of expertise, knowledge and insight regarding the world’s largest asset class. In their podcast series 360T looks to tease out just a fragment of this information inviting their listeners to join an exchange amongst industry professionals with each episode.

The episodes themselves consist of short, informal interviews with senior figures from market-leading firms within the FX industry, exploring some of the key trends and themes they see impacting the market today. Tracing the evolution of technology, liquidity, credit, data analytics, market structure, trading strategies and more, the podcast series offers a wide range of unique insights regarding how the FX market today is developing around us.

Further informations can be found on the Website of 360T.

 

 

Image: Daniel Friesenecker/Pixabay