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ESG Futures – S&P 500 and STOXX 600

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In my recent article, ESG Investments – A first look at the detail, I noted that two of the major Equity Index Futures contracts, CME S&P 500 and Eurex STOXX 600 have ESG screened variants. In today’s article I look at the volume and open interest of these contracts.

CME S&P 500 ESG

Starting with CME E-mini S&P 500 ESG Futures, which we now have in CCPView.

CME E-mini S&P 500 ESG volumes (usd millions)
  • Monthly volume ranging from a high of $3.3 billion in Dec-20 to a low of $1.5 billion in Jan-21, for the selected four month period
  • ADV of between $70 million to $140 million or 450 to 900 contracts.

Open Interest as of March 12, 2021 was 7,198 contracts or $1.2 billion.

Eurex STOXX 600 ESG-X

Next, lets look at Eurex STOXX 600 ESG-X in CCPView.

Eurex STOXX 600 ESG-X volumes (eur millions)
  • Monthly volume ranging from a high of €3.3 billion in Dec-20 to a low of €475 million in Jan-21
  • ADV of between €23 million to €145 million or 1,500 to 9,900 contracts.

Open Interest as of March 12, 2021 was 85,045 contracts or €1.3 billion.

Comparisons

Both contracts with similar volume and just to check, we can chart together.

Monthly volume in usd millions
  • S&P 500 ESG with a cumulative $8.9 billion over the four months.
  • STOXX 600 ESG-X with a cumulative $6.5 billion
  • S&P 500 with higher volume each month except for Dec-20

If we were to switch to a daily volume view, we would see volume on every single day in our period, further demonstrating the market adoption that these two contracts have now achieved.

Comparing to the Benchmark

The real test for the ESG Futures is to compare their volume and open interest to the main contract, for CME that is the S&P 500 Future with it’s three variants, E-Mini, Micro E-Mini and S&P 500.

In Volume terms it is not a contest with over $6 trillion of monthly volume in the CME S&P 500 Futures compared to the $1.5-$3.3 billion in the ESG, so less than 0.05%. While in open interest terms the ESG contract is a shade higher at 0.2%.

CME S&P 500 Futures are one of the largest contracts in the world, with massive volume and liquidity, so it is not surprising that the ESG contract, which launched in 4Q 2019 only represents such a low percentage in comparison.

STOXX 600 ESG-X volumes however are worth a chart.

Eurex STOXX 600 and ESG-X (eur millions)
  • STOXX 600 in the range €22 billion to €42 billion
  • STOXX 600 ESG-X in the range €0.5 billion to €3.3 billion
  • STOXX 600 ESG-X volumes ranging from 1.95% to 7% of STOXX 600

While open interest on March 12, 2021 was STOXX 600 ESG-X €1.3 billion vs STOXX 600 €10.5 billion, or 13%.

Good to see such high share, even allowing for the fact that Eurex STOXX 600 is not the largest Equity Index Future at Eurex, which is STOXX 50, followed by DAX 50 and while these each have ESG variants, those variants are yet to gain material volume or open interest.

For further reading on the S&P 500 and STOXX 600 ESG Futures, please see this article by optiver.

That’s It

That’s all I have time for today.

We will continue to look at ESG Futures and Options.

Options at CBOE S&P 500 ESG and Eurex STOXX 600 ESG-X.

Futures at Euronext, ICE, Nasdaq OMX, SGX.

And check how volumes develop.

ESG Investments and Derivatives are set to increase.

Standardization of ESG Disclosures will certainly help.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.clarusft.com/esg-futures-sp-500-and-stoxx-600/?utm_source=rss&utm_medium=rss&utm_campaign=esg-futures-sp-500-and-stoxx-600

Fintech

Payhawk raises $20M to unify corporate cards, payments and expenses

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Fintech startup Payhawk has raised a $20 million funding round. QED Investors is leading the round with existing investor Earlybird Digital East also participating. Payhawk is building a unified system to manage all the money that is going in and out.

Essentially, companies switching to Payhawk can replace several services they already use and that didn’t interact well with each other. Payhawk lets you issue corporate cards for your employees, manage invoices and track payments from a single interface.

After signing up, customers get their own banking details with a dedicated IBAN. You can connect with your existing bank account, load funds to your Payhawk account and start using it in multiple ways.

Compared to other companies working on similar products, Payhawk gives each customer their own IBAN, which means they can receive third-party payments.

One of the key features of Payhawk is that customers can issue virtual and physical cards for employees with different rules. You can set up a team budget, configure an approval workflow for large transactions and let Payhawk handle receipt collection from those card transactions.

You can upload invoices to manage them through Payhawk. The startup tries to automatically extract data from those invoices for easier reconciliation. Payhawk also lets you reimburse employees. The service acts as a single source of truth for your company’s spending. Finally, you can connect Payhawk with your existing ERP system.

As a software-as-a-service solution, you pay a monthly subscription fee that will vary depending on optional features and the number of active cards. Clients include LuxAir, Lotto24, Viking Life, ATU, Gtmhub, MacPaw and By Miles. Overall, the startup has 200 clients.

The company has been growing nicely as revenue doubled in Q1 2021. It currently accepts clients in the European Union and the U.K. but it already plans to expand beyond those markets. Up next, Payhawk plans to launch credit cards, more currencies and tighter integration with corporate bank accounts.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://techcrunch.com/2021/04/19/payhawk-raises-20-million-to-unify-corporate-cards-payments-and-expenses/

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Crowdfunding

DeFi Needs a More Reliable Credit Scoring System According to Blockchain Platform Ontology Founder Li Jun

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Decentralized finance (DeFi) requires a more reliable credit scoring system, however, we need to be cautious, according to Ontology (ONT) Founder, Li Jun.

Jun explains that credit scores have been “a cornerstone of risk evaluation in the global banking systems for decades.”

He adds that they allow banking institutions to determine who may qualify or is eligible to receive a loan, at what interest rate, and what the credit limits might be for an individual or business. Lenders use these scores to assess or evaluate the “likelihood that the borrower will fulfill their obligations and repay their loan,” Jun explained.

He also mentioned that the global lending and payments market managed to reach $6.7 trillion last year. It may be on track to reach $7.6 trillion this year, Jun revealed. He also noted that if you’ve applied for a bank loan, then you’ll know that these traditional credit-scoring systems and ID verification processes “work together.” He added that these include proof of address and a copy of a passport (or some other form of official identification).

Jun further noted that Europe’s Open Banking initiative, PSD2, is expected to streamline credit scoring. It will “make it possible for lenders and borrowers to access a full picture of an individual’s financial history in real-time,” Jun added while noting that its introduction into financial services systems will “revolutionize the loan process.” It will “increase speed, accuracy, and more importantly, financial inclusion,” Jun predicts.

He also mentioned:

“In comparison to this highly sophisticated system, lending and borrowing in the DeFi industry is still in its [early stages of development.] However, as we know, over the past 12 months it’s grown at an incredible rate. Total Value Locked (TVL) in DeFi as of March 2021 stands at $39.7 billion, according to DeFi Pulse. What’s more, it is lending that makes up for the largest segment of that market. The DeFi lending market sits at $17.8 billion. Decentralized exchanges follow closely behind at $15.6 billion.”

He continued:

“What the DeFi industry has been missing is a credit scoring system that provides a full picture of an individual’s varied crypto assets across different wallets and chains. To increase trust and reputation when it comes to lending and borrowing through DeFi, we need a system that supports cross-chain interaction and verifiable credentials. By connecting user identities with personal accounts, users can bind their digital assets and contact addresses making it easy for the correct due diligence to take place.”

Jun further noted that crypto credit scores will allow lenders to look at or review the borrower’s eligibility or creditworthiness. They should also help them with avoiding “over-collateralization when looking to borrow assets,” Jun explained while adding that they’ll “have the ability to put their positive credit scores to use and to access more rewarding opportunities.”

He also noted:

“As the DeFi industry progresses to merge with traditional financial systems, there will need to be an evaluation of on-chain and off-chain assets. To create a trusted merger between these two worlds, a full picture of traditional and digital holdings and history needs to be made available. This will further bolster the benefits of legislation like Europe’s PSD2. It will provide a more rounded, integrated look at asset holdings and histories, including crypto assets, in real-time.”

But he also pointed out that as we have now seen with any new technology that “deals with highly sensitive data, we must be cautious.”

He also mentioned that any decentralized credit scoring system “applied to DeFi lending and borrowing needs to put user privacy and security first.” Jun also believes we “cannot ask individuals to give up their data sovereignty in exchange for a well-working DeFi lending system.”

He added:

“Decentralized digital identity systems can help immensely here. By coupling decentralized credit scoring with a decentralized digital identity system, no one party will hold full control over an individual’s financial data. The buck will stop with the individual. The World Economic Forum has been promoting these kinds of digital identity solutions for a long time. In addition, the UK Government endorsed their use universally as the cornerstone of future economies.”

Jun concluded:

“If DeFi is serious about going mainstream and further nurturing relationships with institutional players, a reliable means for evaluating risk in a timely, accurate manner while permitting the same level of due diligence is integral. In addition, [if]the DeFi industry wants to win the trust of mainstream finance, it … [must] avoid the mistakes many disruptors in big tech have made in recent years.”

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.crowdfundinsider.com/2021/04/174368-defi-needs-a-more-reliable-credit-scoring-system-according-to-blockchain-platform-ontology-founder-li-jun/

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AI

Australian FinTech company profile #122 – Unhedged

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1. Company Name: Unhedged

2. Website: www.unhedged.com.au

3. Key Staff & Titles: Peter Bakker – Founder & CEO, Mike Cohen – Co-Founder & COO, Glen VanBavinckhove – CTO, Jeremy Beasley – Growth, Jeremy Machet – Growth, and 6 others who are building like crazy

4. Location(s): Melbourne and Sydney

5. In one sentence, what does your fintech do?: Unhedged uses AI to deliver algorithmic returns to the everyday investor

6. How / why did you start your fintech company?: Being an Algotrader and working with rich people I got annoyed that these advanced tools were not available to my friends. When I looked up the returns of robo-investors I got really annoyed and thought: there must be a better way

7. What is the best thing your company has achieved or learnt along the way (this can include awards, capital raising etc)?: Raised 500K in 3 days which was faster then I ever raised before.

8. What’s some advice you’d give to an aspiring start-up?: Watch your cashflow: companies die of lack of cash, not lack of ideas

9. What’s next for your company? And are you looking to expand overseas or stay focussed on Australia?: Lauchinh the fund in April/May, a crowd fund raise in June and launching the retail product in July….

10. What other fintechs or companies do you admire?: Finserv (most stable earnings and growth), Blackrock: amazing money machine. Ellevest: a narrow target markets that works. CacheInvest: fundmanager as a service

11. What’s the most interesting or funniest moment that’s happened in your company’s lifetime?:
An investor transferring 100K without any documentation nor live fund (we returned the cash). We are still wondering how he knew where to transfer to.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/australian-fintech-company-profile-122-unhedged/

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Fintech

Listen: Bot attacks on rise in US, LexisNexis says

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Automated bot cyberattacks are on the rise, while human-initiated attacks are down. Bot attacks increased by about 100 million last year, Kimberly Sutherland, vice president of fraud and identity strategy for data analytics company LexisNexis Risk Solutions, tells Bank Automation News in this episode of The Buzz. Human-initiated attacks, by comparison, were down by about […]

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://bankautomationnews.com/allposts/secur-risk/listen-bot-attacks-on-rise-in-us-lexisnexis-says/

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