Euronext Securities Porto has in place a process for constant maintenance of its Business Continuity Plan, according to the best international practices, in order to ensure that the strategy and the procedures defined within the plan are capable to address any foreseeable crisis situation allowing, thus, the good functioning of the Market.

On the 30th of October 2021, Euronext Securities Porto carried out a global external test of business continuity with the activation of its disaster recovery center, allowing financial intermediaries to verify Interbolsa’s recovery capacity, acting normally from their own offices. This test is part of the plan for the verification of the adequacy and of the operation of the recovery procedures and necessary resources as described in the Business Continuity Plan of Euronext Securities Porto.

Euronext Securities Porto took advantage of the availability of the T2S platform during a non-working day to test with external participation the activation of the Business Continuity Plan. This availability was made possible by ECB extending the real time settlement window after the NTS settlement on the night from Friday to Saturday until Saturday afternoon.

The test was open to the voluntary participation of all financial intermediaries affiliated to Euronext Securities Porto, and ten institutions participated in this test of the disaster recovery center by accessing from their own offices, namely Banco Comercial Português, S.A., Novo Banco, S.A., Novo Banco Açores, S.A., BEST – Banco Electrónico de Serviço Total, S.A, Banco Finantia, S.A., BNP Paribas Securities Services, S.A., Citibank International, PLC – Sucursal em Portugal, S.A., Caixa Geral de Depósitos, S.A., ABANCA Corporacion Bancária, S.A. – Sucursal em Portugal and Banco de Portugal (DMR).

The test began on Saturday morning with a simulated incident, which left its main data center unavailable, with the consequent activation of the disaster recovery center and the re-routing of the communications decided after a meeting of the Crisis Management Team, thus allowing all participants to access the recovery system.

Immediately after the activation of the disaster recovery center, the Support and Recovery Teams activated the applications in the disaster recovery site and proceeded with the verification of the existence of information that resulted from the previous processing, as well as the accessibility to the services. After this the services were made available to the participants that they carried out testing activities using their terminals in their offices. These activities consisted of queries and data entry operations as well as information upload and download using the file transfer functions and real time messages of the STD system.

During the tests no critical issues were identified that could jeopardize the functioning of Euronext Securities Porto’s backup systems in a real disaster situation. This asserts the adequacy of the Business Continuity Plan of Interbolsa, as well as, of the disaster recovery data center.

All the activities executed according to a predefined test plan, which was thoroughly carried out. The testing was concluded with success, which was recognized by all internal and external participants.

This result reinforces once more the engagement of Euronext Securities Porto in satisfying international recommendations and good practices for Business Continuity, thus contributing to the mitigation of the risks associated with possible disasters. This achievement contributes to the continuity of the business and the safety and reliability of the market structures, strengthening the trust of the investors and the participants and benefiting, in the end, the whole Portuguese Financial Market.

In celebration of International Organization of Securities Commissions (IOSCO) World Investor Week 2022, Euronext colleagues from all seven exchanges joined The World Federation of Exchanges “Ring the Bell for Financial Literacy”. 

#WIW2022 is a week-long, global campaign promoted by International Organization of Securities Commissions (IOSCO) to raise awareness of the importance of investor education and protection.  We, at Euronext, are at the heart of European financial markets and communities, and are committed to improving financial knowledge, skills and attitudes beyond our organization.

What is an ETF and how do I invest in one?

Silvia Bosoni, Group Head of ETFs at Euronext, explains what an ETF is, how ETFs work and how to invest in them.

Listen to the full interview. Watch the video.

What is an ETF?

ETF stands for Exchange Traded Fund. An ETF is a fund that can be traded on an exchange just like a traditional financial instrument, and is made up of a basket of securities such as stocks, commodities, bonds, or a mixture of these.

ETFs opportunities

ETFs offer great diversification and risk management opportunities, which are typical of funds, together with flexibility and transparency of information, typical of shares. For this reason they are often a popular choice of investment for both institutional and retail investors. 

How do ETFs work?

ETF providers, or ETF issuers as they are commonly known, create ETFs and then list them on an exchange, making them available to investors for trading. 

There are two types of ETFs:

• Passive ETFs track an index, generally called a benchmark index. They are known as "passive" because they simply track the index's performance. Investors usually pay a lower commission for passive ETFs because there is less cost involved in operating and managing this type of fund.
• Active ETFs have the aim of investing in a portfolio of securities directly selected by an active manager through a process called the "asset allocation" process. The asset manager continuously works to increase the performance of the fund. Unlike passive ETFs, the investment strategy of active ETFs is established by the fund manager following the manager's own investment strategy. Active ETFs are more sophisticated and therefore they can be more costly. 

How do I invest in an ETF?

Retail investors cannot directly access the stock market, so they need to go through a broker to buy and sell ETFs. There are several ETFs to choose from. 

Example: the CAC 40 ETF

For example, buying a passive ETF that has the Euronext CAC 40 as its benchmark index will give you exposure to the 40 largest companies in France. This means that you will obtain an average performance of all the stocks in the index. This not only mitigates the risk but is also cost-effective, as it would be much more expensive to buy all the stocks of an index separately. With one ETF, you can get exposure to all the securities in which the ETF is invested.

How to choose an ETF?

When you are looking to choose ETFs for your portfolio, you must first decide what you are interested in. What asset class do you want to invest in? Do you want to choose a specific geography? Or sector? A certain theme? For instance, if you are interested in investing in sustainable companies, it can be difficult as a retail investor to go through all the paperwork and research to find the right information about each company. Instead, by choosing an ETF tracking an ESG index, you can rely on the expert, the index provider, who will do this job for you. You can therefore buy ETFs tracking ESG indices to get your sustainable investment. 

What kind of ETFs are listed on Euronext?

At Euronext, we have over 1,500 ETFs listed on our seven European markets, covering a huge variety of themes, sectors and geographies. These are issued by leading and innovative asset management firms, that are continuously offering new ETFs to invest in. There is a lot of innovation out there to provide unique ETF products following the latest trends and supporting sustainable growth. Visit the Euronext website to discover our wide ETF offering and find out more about ETFs trading.

Sibos is the largest event for the securities post-trade industry. It brings together decision-makers, experts and peers from the global financial community.  

Teams from Euronext, Euronext Clearing and Euronext Securities will be present on our stand to showcase our complete Post-Trade offering.  Euronext is building the leading market infrastructure in Europe,  connecting trading, clearing and settlement through the expansion of our clearing house and our network of European CSDs. 

 

From 10 to 13 October Euronext will be joining the debate on “Progressive finance for a changing world”, this year’s conference theme, and discuss the need to embrace digital transformation and drive sustainability and ethical change.  

Throughout the week, come by our stand to learn how we intend to shape capital markets for future generations.  

Euronext Speakers at Sibos

Monday 10 October 2022, 12:30 

Is T+1 the goal or a step to instant securities settlement?

Pierre Davoust (Head of CSDs) 

Monday 10 October 2022, 16:00

Big Issue Debate: Hype vs reality: how can digital value solve real world problems? 

Emilie Rieupeyroux (Head of Innovation)

Tuesday 11 October 2022, 14:10 

Live interview on Sibos TV

Anthony Attia (Global Head of Primary Markets & Post-Trade)

 

With this issuance, Denmark becomes one of the first countries in the European Union (EU) to issue a green bond according to the new EU Taxonomy, a set of definitions and criteria the EU has defined for sustainable economic activities. Euronext Securities Copenhagen is proud to have been part of this historical issuance.

According to Martin Wagner Toftdahl, Head of Monetary Policy and Government Debt at Danmarks Nationalbank, the new green government bond will play a critical role in developing a financial market for Denmark’s transition to a green economy. “We believe it’s important that there is a well-functioning green capital market, where investors can find green projects in a transparent and effective manner. The state’s presence on this type of market is essential to its development.”  

Setting a high standard by following the EU Taxonomy

As a part of the issuance process, Danmarks Nationalbank and the Danish government decided to follow the recently adopted EU Taxonomy and identify green expenditures based on the EU’s upcoming climate change investment legislation. “To create the necessary transparency, the EU will play a critical role in defining, from a central place, what constitutes a green investment,” Martin Toftdahl comments. “That’s one of the reasons we’ve chosen to place so much emphasis on the EU Taxonomy. Having an established definition will make it easier for issuers and investors alike.”  



Choosing to apply the new Taxonomy with this first issuance also ensures that the appropriate framework is in place from the start. “We believe it will be crucial going forward that issuers actively benchmarks themselves against the Taxonomy. For us, being a part of creating a green capital market means that we set a high standard from the beginning, and that we have an issuance that is forward-thinking and takes into consideration the developments just over the horizon,” says Martin Toftdahl.  

Creating transparency around green investments

Proceeds from the bond will be used to finance renewable energy production, including wind and solar energy projects, and the green transition of the Danish transport sector. That investors can clearly see how their investment funds are being used is an important aspect of the green bond market, as Martin Toftdahl points out. “With this issuance, we give investors our commitment that we will use the funds generated in the way that is intended. This creates transparency around the state’s investment in green projects. What will be even more important is the reporting that we will provide, where we inform investors about the impact of the green projects we initiate.”

Choosing the right approach for investors

Another key aspect of the issuance process was choosing the right issuance model. “We had considered a certificate model before this, and we had some considerations along the way, where it was helpful to work together with Euronext Securities Copenhagen to find the right approach,” states Michal Christian Nielsen, Chief Dealer, Monetary Policy Operations and Government Debt with Nationalbank. “The entire project required that it could be done within Euronext Securities Copenhagen, so it was important that we worked together to find the right model.”

In the end, Denmark issued the green bond as a twin bond, based on a concept introduced by Germany in 2020. This model supports the green bond’s liquidity and allows investors to switch the 10-year green twin bond to the corresponding, and more liquid, conventional 10-year twin bond on a one-to-one basis. Martin Toftdahl explains the rationale behind their decision. “The Twin Bond model is a well-known and proven model in the market. It was important for us to choose an issuance model that investors are comfortable with, and to ensure the necessary liquidity.”

 Best government bond demand since 2008

The first auction for the 10-year green government bond was held on 19 January 2022, and the order book was oversubscribed to a value of DKK 23.5 billion, which was the largest show of interest in a new government bond in over 10 years. DKK 5 billion was issued at the first auction, corresponding to the maximum issuance target for the auction. The bond was listed on MTS Belgium, the professional market for primary dealers, where Danish government bonds are normally traded. 



The positive reception bodes well for future green government bond issuances. Contingent upon market conditions, the plan is to issue DKK 15 billion in green bonds this year alone. Martin Toftdahl believes that they have laid a solid foundation for these plans to be realised. “Now we’ve established a framework where we can issue green bonds, and our sense is that this form of issuance is here to stay. There are clearly limits to how much the total size of green bond issuance can be. We still have as our primary focus to maintain the national debt market’s liquidity, particularly in the primary 2-year and 10-year series.”

Financing the transition to a green economy

Bjørn Stendorph Crepaz, Head of Issuance & Issuer Services at Euronext Securities Copenhagen, also believes that the market will see more green bond issuances in the future. “The European Commission estimates that the EU needs to invest an additional €260 billion each year in order to cut carbon emissions by 55% by 2030. That well illustrates the level of investment in green energy projects we will need to see throughout the EU over the next eight years. As a part of the market infrastructure, it’s our responsibility to facilitate green investments and the transition to a more sustainable economy. This is why the Listing business in Euronext is actively creating ESG indices and all four CSDs in Euronext Securities are working actively to support the new requirements around issuance of green bonds. We’re proud to have been a part of this historic issuance and we look forward to working with Denmark and Danmarks Nationalbank on future green government bond issuances.”

ABOUT THE EU TAXONOMY

The EU Taxonomy is a classification system that establishes a list of environmentally sustainable economic activities. By providing a common language and a clear definition of what is ‘sustainable’, the taxonomy aims to create security for investors, protect private investors from greenwashing and help shift investments where they are most needed. 

Source: EU taxonomy for sustainable activities

Article source: Green bonds and Danmark er nu klar til at udstede grønne statsobligationer (Danish).