AuditBoard, the leading cloud-based platform transforming audit, risk, compliance and ESG management, has announced the results of its third-annual 2024 Digital Risk Report: Opportunities and Challenges of the AI Frontier, which found that 78 percent of organizations are tracking AI as an emerging risk while simultaneously adopting the technology themselves. More than half of enterprises surveyed reported using AI to improve efficiency and enhance their digital risk posture. The report’s findings are being announced in conjunction with IT Risk Now 2024, AuditBoard’s virtual event that brings together cybersecurity and IT risk management leaders to discuss how to handle today’s most urgent challenges, from navigating the risks and opportunities of AI to conveying the importance of security initiatives.  The annual report, based on a survey of over 400 security professionals in the U.S. involved in their organization’s approach to cybersecurity and digital risk, reveals organizations are making significant strides in digital risk management compared to previous years. The data shows organizations in 2024 are 2.5 times more likely to be in the later stages of digital risk maturity than last year, showcasing a solid trend toward proactive risk management. The AI Frontier: Digital Risk and Opportunity Overall, a majority of organizations are tracking AI risks (78%), with more than half using AI in multiple ways to enhance their digital risk posture, indicating a crucial shift towards leveraging advanced technologies.  Two-thirds of organizations prioritize AI risk assessment using existing internal processes (65%) and/or guidance and best practices from professional organizations (63%). Another 55% say they use current and pending laws/regulations to prioritize risk. Over half of organizations surveyed use AI to improve team productivity (57%) and enhance threat detection (56%). Nearly half say they use it in reporting (48%) and automating action and response plans (42%). Nearly half of respondents describe their risk tolerance towards AI as very high (17%) or high (29%), while only 12 percent report a low (9%) or very low (3%) AI risk tolerance. This indicates the growing acceptance of AI as an emerging technology that presents both benefits and risks.   Digital Risk Management: More Mature, Integrated, and Technology-Driven The report findings also highlight the rapid evolution of digital risk management practices and the importance of solid organizational collaboration to enhance risk management strategies. 87 percent of companies use reportable metrics to manage digital risk. Of this group, nearly all (97%) consider their metrics to be effective, with 59% saying the metrics they use are very effective — underscoring the importance of data-driven decision-making.  Strong collaboration across teams managing digital risk matters. Those with solid collaboration are more than two times more likely than all others to describe their reportable metrics as very effective (87% vs. 41%) Organizations continue to move away from manual approaches like spreadsheets and shared drives, with four out of five saying they use cloud-based risk management software to manage digital risk.   “The findings from this survey underscore the importance of evolving digital risk management practices,” said Richard Marcus, Chief Information Security Officer at AuditBoard. “As organizations mature in their approaches, integrating advanced technologies and fostering strong collaboration will be key to staying ahead of emerging threats and protecting digital assets.”Report MethodologyTo produce the 2024 Digital Risk Report: Opportunities and Challenges of the AI Frontier, AuditBoard collected data from 404 respondents to an online survey conducted in May 2024 by Ascend2 Research. Respondents were security professionals in organizations based primarily in North America, representing a diverse group of industries and company sizes. To see the full report, please visit AuditBoard.com.

BNP Paribas, an early adopter of CobaltFX's Dynamic Credit, further expands its engagement with CobaltFX, part of United Fintech, to address regulatory and industry concerns, setting a new standard for precision and effectiveness in market operations.  Following the onboarding of Dynamic Credit, BNP Paribas has expanded the solution to simplify and streamline the allocation of credit for FX transactions between banks and improve access to liquidity. Now covering over 100 counterparty banks, BNP calculates Dynamic Credit across 12 Electronic Communication Networks (ECNs), optimising global credit and eliminating carve-outs. This strategic expansion underscores BNP Paribas's commitment to innovation and efficiency in credit allocation, enhancing market access for Financial Institutions worldwide. By harnessing the power of CobaltFX's Dynamic Credit and the newly developed CobaltFX Analytics, BNP Paribas addresses regulatory concerns and sets a new standard for precision and effectiveness in market operations. Joe Nash, Head of Global Macro Digital at BNP commented "We see this as an important initiative to address regulatory and industry body concerns about the over-allocation and inefficiencies of credit distribution on dealer to dealer venues. Moreover, this approach, combined with CobaltFX Analytics allows us to right size our limit for each counterparty whilst improving market access with them” Darren Coote, CEO of CobaltFX, part of United Fintech expressed: "This systemic problem has been long over-looked but there are a group of leaders in the industry that understand the benefits of this unique approach. We are very grateful for BNP's leadership in this regard.”

Temenos (SIX: TEMN) today announced it has signed an agreement with Tech Mahindra (NSE: TECHM), a leading global provider of technology consulting and digital solutions, for Tech Mahindra to provide a core banking offering on Temenos SaaS specifically designed for Electronic Money Institutions (EMIs) in the UK and Europe. By leveraging Temenos composable banking capabilities and Tech Mahindra services, EMIs will benefit from faster time to market, lower operational costs, scalable architecture and access to over 100 curated Temenos Exchange fintech partners, to offer customized and differentiated services to their end customers. This new offering on Temenos SaaS is designed to offer EMIs a cost-effective, scalable, and secure banking platform, enhancing their ability to launch operations swiftly with a suite of pre-configured, composable banking capabilities that cater specifically to the EMI sector - with features such as multi-currency accounts, virtual and physical cards, client onboarding checks, domestic and international payments orchestration and routing, transactions screening, and regulatory reporting. Moreover, the service facilitates dynamic scaling, cost efficiency, and sustainability. It also provides the flexibility to incorporate additional banking functionalities as EMIs evolve, supporting their growth and future-proofing their operations. This SaaS offering is designed to be a springboard for financial innovation, which can also be leveraged by start-up/challenger banks, smaller established banks, and building societies as a cost-effective yet functionally rich and robust foundation to rapidly develop and deploy financial products and services. Currently being rolled out at an EMI in the UK, this service is set to initially cater to the UK market – home to approximately 250 EMIs – and will subsequently extend its reach across the European Union. In total there are just under 600 EMIs across Europe, holding an estimated €35bn in client funds. Mark Yamin-Ali, Managing Director - Europe, Temenos, said: “With almost 600 EMIs in Europe, this partnership opens a large new addressable market for Temenos, and combines our market-leading SaaS banking capabilities with Tech Mahindra’s technology services expertise. This collaboration will help us to bring the agility, cost-efficiency and sustainability benefits of Temenos SaaS to even more financial institutions. Together, we can help EMIs launch innovative payments services faster, reduce operational costs and gain greater speed to market.” Pankaj S Kulkarni, Head for BFSI - Europe, Tech Mahindra, commented: “Our collaboration with Temenos creates an unparalleled value proposition in the fiercely competitive financial services sector. The joint offering combines the agility of Temenos' open, composable banking platform with our comprehensive suite of services, including customised implementation and managed support. This aligns with our focus on delivering next-generation technology services that achieve ‘Scale at Speed’ to meet the distinct requirements of our customers."

The Stock Exchange of Thailand (SET) introduces the "21-Day Challenge: Unlock Global Investment through the Thai Stock Market" campaign. Participants will gain an understanding of global investment through various products available on the Stock Exchange of Thailand (SET), such as Depositary Receipt (DR), Fractional Depositary Receipt (DRx), Exchange Traded Fund (ETF), and Derivative Warrants (DW) over 21 days. The campaign offers diverse learning materials focusing on practical application tailored to meet demand of new-generation investors seeking opportunities for investment returns. Over 10,000 participants are expected to join the learning experience this year. SET President Pakorn Peetathawatchai said that the fast-changing financial investment landscape, coupled with increasing product diversity in the capital market and unavoidable volatility and risk factors, makes investment knowledge crucial. This knowledge helps investors make appropriate investment decisions aligned with their needs and risk tolerance. SET initiated the "21-Day Challenge" campaign in 2021, providing knowledge packages for novice stock and mutual fund investors. The campaign applies the "21 days to form a habit" theory to investing, aiming to foster behavior change towards knowledge-based investing. Since its inception, the campaign has been well-received, with over 25,000 participants, 100,000 accumulated guidebook downloads, and a 25 percent increase in participants' knowledge. SET aims for the campaign to serve as a crucial learning source, triggering the behavioral change in investors. By fostering a keen interest in enhancing their knowledge and investment skills, the campaign will enable investors to select products and methods that best fit with their personal profile, and thereby gaining more investment confidence.     "SET invites investors interested in foreign investment to learn from basic to advanced topics. Participants will explore characteristics and investment options, methods of investing abroad through diverse products in the Stock Exchange of Thailand (SET) such as DR, DRx, ETF, and DW, as well as trading procedures, information sources, and investment tools. Currently, diversifying investment to overseas market is an option to help mitigate risk and widen opportunities to receive attractive returns in a long run amid the fluctuating situation," added Pakorn. The campaign offers easy step-by-step learning through a Playbook that compiles various content and educational media, including articles, short clips, and SET e-Learning courses. Additionally, live sessions with expert gurus will provide tips and answer questions weekly. Interested individuals can register for the campaign from now until August 31, 2024. For more details and free registration, please visit www.setinvestnow.com/th/21day-foreigninvestment. For further inquiries, contact SET Contact Center at +66 (0) 2009 9999.

In addition to the fees outlined in the June 28, 2024 Alert, effective July 1, 2024, MIAX Options will assess a monthly fee of $1,000 per dedicated Firm Test Bed Extranet cross connect used by Members and non-Members accessing the MIAX Options Firm Test Bed Environment. Firms will be able to utilize a single cross connect to reach the Firm Test Bed Environment for each exchange as the test beds are added to the Firm Test Bed Extranet. Each dedicated Firm Test Bed Extranet cross connect will initially provide access to the Firm Test Bed Environments for MIAX Options and MIAX Sapphire Options. Access to the MIAX Pearl Options and MIAX Emerald Options Firm Test Bed Environments will be made available via the Firm Test Bed Extranet in the third quarter of 2024. Members and non-Members may continue to access the MIAX Options Test Bed Environment through VPN access at no cost. Complete details will be contained in the July 2024 MIAX Options Exchange Fee Schedule, when posted on the MIAX website at MIAX Options Fee Schedule.For additional information, please contact MIAX Sales at Sales@miaxglobal.com or (609) 897-8177.If you need assistance, please contact MIAX Trading Operations at TradingOperations@miaxglobal.com or (609) 897-7302.

Trading Technologies International, Inc. (TT), a global capital markets technology platform provider, announced today that it is now offering its clients access to Abaxx Exchange, a global commodity futures exchange and clearinghouse based in Singapore. The market launched on June 28, with the first trade executed through the TT® platform by StoneX Financial. Clients are able to use TT to trade the exchange's energy and carbon derivatives contracts. Products currently offered on Abaxx include five new commodity benchmark futures contracts. These first-of-their-kind, centrally cleared, physically deliverable contracts better enable market participants to execute their energy transition strategies, providing improved price discovery and enhanced risk management tools in liquefied natural gas (LNG) and carbon markets, to be soon followed by solutions for battery metals. Alun Green, EVP Managing Director, Futures & Options for TT, said: "Trading Technologies offers the world's leading financial institutions and professional traders access to all major listed derivatives markets globally, and we're delighted to bring our clients access to this unique new marketplace from day one of trading. We're also a trusted partner to global and regional energy suppliers and commodity firms looking to hedge their risks in both physical and derivatives markets. Abaxx will bring new risk management capabilities with the option of physical delivery or offset through the sale of the contracts before delivery." Dan McElduff, Abaxx Exchange President, Strategy & Development, said: "We are thrilled to partner with Trading Technologies to offer our clients seamless access to smarter markets. By combining the advanced TT platform with our industry-leading, physically deliverable commodity futures contracts, market participants can now leverage our shared expertise and resources to access the price discovery and risk management tools essential for meeting the commercial needs of the energy transition and unlocking the investment capital required for a low-carbon economy." TT recently announced connectivity to the European Power Exchange (EPEX SPOT), the largest power exchange in Europe, through the TT platform. The connection gives clients the ability to trade the European physical power markets for the first time on TT. In collaboration with a large European energy supplier, the firm offers the new continuous intraday power trading capability to clients globally as a fully co-located service.

Click here to download Shenzhen Stock Exchange's market bulletin, issue 19.

The Federal Reserve Board on Monday fined Silvergate Capital Corporation and Silvergate Bank $43 million for deficiencies in Silvergate's monitoring of transactions in compliance with anti-money laundering laws. The Board's action was taken in coordination with an action by the Department of Financial Protection and Innovation of the State of California, the state supervisor of Silvergate. The penalties announced by the Board and state total $63 million. The U.S. Securities and Exchange Commission separately announced a penalty against Silvergate Capital Corporation. Silvergate separately announced last year that it was voluntarily winding down its operations, and has now paid back all deposits to its customers.  Attachment (PDF)

Thank you, Lukasz [Chyla],for that introduction. And thank you to the Jagiellonian University and to Catholic University for hosting this conference. Let me begin by stating that my views are my own as a Commissioner and not necessarily those of the U.S. Securities and Exchange Commission or my fellow Commissioners. The last time I was in Poland was approximately three decades ago. It was a brief but memorable stop on an unfocused American student’s hop across Europe. Among other things, Poland provided me my only hitchhiking experience. Some kind soldiers in a military jeep driving through the richly beautiful, deeply wooded Polish countryside picked my traveling companions and me up in the early morning hours. They were ferrying, in addition to us weary travelers, freshly baked bread, the smell of which still lingers in my memories. On that trip I did not get any of that bread and I did not make it to Krakow, despite the allure of both. All those years ago, I never would have guessed that a conversation about environmental, social, and governance (“ESG”) issues would allow me to visit Poland again. I certainly never would have imagined that I would be a securities regulator spending much time thinking about these issues. A hitchhiker, as I was that one time in Poland, is someone who “travel[s] by standing on the side of the road and soliciting rides from passing vehicles.”[1] Today, we are seeing a lot of ESG hitchhikers—people hopping into one of many passing ESG vehicles without much thought for where they are going. As some of these hitchhikers have discovered, however, they are in for a wild, expensive, unpredictable, and unending ride. Asset managers, companies, and governments are embracing ESG without considering the long-term consequences to, respectively, their clients, shareholders, and citizens. So today I step out on the side of the road, not to hitch a ride, but to wave a cautionary flag. ESG is a hopeless muddle. The divisiveness of the ESG conversation in today’s capital markets stems in part from fuzziness around what ESG means. Greater precision might narrow the differences or at least focus discussions on the issues where views really do differ. In the meantime, some bad behavior hides behind that ambiguity. ESG encompasses everything that sounds good in the moment: climate, biodiversity, clean water, oceans, employee well-being, labor rights, community engagement, the circular economy, the list goes on. No firm could identify—let alone evaluate—every issue that might fall under the elastic definition of ESG. The fluctuating views on whether something garners ESG cheers or derision further complicates any analysis. What is ESG-friendly one year may not be the next. After Russia invaded Ukraine, for example, assessments of whether weapons manufacturers were consistent with an ESG investment strategy changed.[2] Whether natural gas or nuclear ranks well on ESG scales differs over time as well.[3] Some of the issues on today’s ESG list historically factored into assessments of the long-term financial value of companies without a special label or a special set of regulatory mandates to spur their inclusion. Companies, striving to be profitable by pleasing customers, employees, and communities, considered a wide range of environmental and social factors. Investors, trying to maximize their returns, looked at how companies in which they were investing approached these issues. Whether and to what degree an issue mattered was company-specific, so government needed only to provide the broad framework within which companies could share the factors they considered material to their long-term financial value. ESG debates would be fewer if each ESG item once again could rise or fall on individual market participants’ assessments of its link to long-term financial value at a particular company, not on its prominence in societal debates of the day and its consequent ESG label. ESG becomes most divisive when it mutates into short-hand for forcing companies to ditch long-term value maximization and cater to the current, loud demands of so-called “stakeholders”—that amorphous collection of non-investors clamoring for a say in how all public companies operate and how their resources are spent. This version of ESG is political, not financial. Samuel Gregg explains that today’s ESG’s “goals and methods are characterized by an incoherence sufficient to call into question not just specific features of ESG but the conceptual integrity of the entire ESG endeavor.”[4] Lumping disparate items into a single ESG bucket creates an analytical muddle. Claims about the efficacy of corporate sustainability programs or the success of ESG investment strategies are suspect because something as imprecise as ESG cannot be studied with precision. Running a test to demonstrate a linkage (or sometimes simply identify a correlation) between one or several ESG factors and a company’s profitability does not support a conclusion that ESG broadly or other unrelated ESG factors specifically will have the same effect. Nor does the fact that one set of ESG managers performs well mean that we can extrapolate their results to any other manager that claims to use an ESG methodology, which may be entirely different even though it shares the ESG label. The difficulty of determining whether and how ESG links to financial value makes it easier for people to make sweeping claims that it does. Moreover, a convenient invocation of reputational risk sometimes stands in when a linkage proves elusive. ESG targets are also ambiguous. Obtaining accurate and comparable data to assess whether an ESG objective has been met is difficult. Greenhouse gas emissions are one example, but methodological ambiguity around other more esoteric or newly popular ESG metrics is even more pronounced. Even if the relevant data are available, people may come to different conclusions about whether meeting a particular target is positive. For example, a company’s decision to move a factory to a location with abundant hydro-power may lower carbon emissions from production but increase them from transportation. The ambiguity surrounding ESG serves people trying to use corporate or investor assets for their own ends. Asset managers, companies, and governments, often at the prompting of interest groups with a clear stake in a particular issue, do things in the name of ESG that they otherwise could not get away with doing. Asset managers sometimes hide behind ESG ambiguity to evade their obligation to investors. Asset managers sometimes have hidden behind ESG’s ambiguity to justify behavior that may not align with their fiduciary duty. Investors care about many things aside from financial returns, but the objective that unites investors is maximizing risk-adjusted financial returns. Absent a directive from or assent by its client to consider other factors, an asset manager should focus on financial returns. ESG commitments can interfere with this singular focus. In seeking maximum financial returns, asset managers serving investors routinely consider ESG factors that they believe affect financial returns. Asset managers are not serving investors well, however, when they make an unsupported claim of a causal connection to financial returns so they can consider an ESG factor that they want to consider for other reasons. Sometimes an asset manager does so to fulfill a promise to a third party to manage money consistent with ESG objectives.[5] Or sometimes a large asset manager has multiple clients, some of whom care a lot about non-financial objectives, and these clients end up driving how the asset manager serves all clients. A large asset manager, for example, might centralize voting and engagement decisions rather than entrusting these decisions to its many funds’ portfolio managers. Such a centralized voting and engagement model may serve some funds well, but run roughshod over other funds’ objectives. Consider an asset manager that advises both a massive passive index fund and a tiny renewable energy fund. If the asset manager’s centralized sustainability team visits a portfolio company that is considering a foray into the oil business, advocating against oil may be consistent with the renewable fund’s objectives, but not with the passive fund’s simple objective of tracking the index. Ironically, the company is likely to listen to the asset manager precisely because it manages such a large passive fund, not because it manages a small renewable energy fund. The passive index fund, likely unbeknownst to its shareholders, is used to give voice to the renewable energy fund. Asset managers of course do cater to investors who have objectives other than or in addition to maximizing financial returns. An investor might want, for example, to minimize the carbon footprint of her investment portfolio or invest only in companies with a unionized workforce. She should be able to try to invest in a way that is consistent with those goals and find professional financial advice to facilitate her chosen investment approach. Asset managers should be able to serve this kind of investor as she wishes without dragging other investors unwittingly into supporting her non-financial causes. Asset managers need to state clearly whether and how they will invest in, vote in, and engage with portfolio companies on behalf of their individual and fund clients. Then investors can select an adviser or fund that accords with their objectives. For example, if an asset manager claims that prioritizing particular ESG factors is consistent with or conducive to long-term value maximization, it should have a basis for that claim. Alternatively, if investors might be sacrificing financial returns to meet an ESG target, the asset manager should make that clear. On voting, a manager of a passive index fund could pledge to vote the fund’s shares with management, not to vote, to delegate voting authority to fund shareholders, to follow a third-party’s voting directions, or to vote consistent with a set of non-financial ESG objectives.[6] If an asset manager will use a passive fund’s votes to add heft to a sister fund’s efforts to change a company’s behavior, it must tell the passive fund investors of the fund’s activist plans.[7] Many fund managers are making helpful disclosures already, but ambiguity regarding investment, voting, and engagement processes remains. Having different options available—some of which focus only on financial returns and others that also or instead concentrate on ESG targets—is fine, but asset managers should explain their plan clearly and stick to it. Companies sometimes hide behind ESG ambiguity to evade their obligations to shareholders. Companies sometimes have hidden behind ESG ambiguity to avoid accountability to shareholders. Shareholders generally want company boards and managers to focus on maximizing the long-term value of the corporation, a focus that may include issues bearing an ESG label in today’s parlance. A value-maximizing company is keenly attuned to meeting a societal need for a product or service effectively, and that objective often requires consideration of issues that fall within the ESG label. Companies, for example, might ask: How can we outcompete our rivals by offering better benefits to attract the best employees? If we can clean up our production processes and drill water wells to serve the local population, will more communities welcome our factories? Would putting better windows in our office buildings and instituting a product return program cut costs? Would expanding job fairs beyond universities as prestigious as this one provide access to a richer talent pipeline? Companies sometimes target ESG goals that are inconsistent with financial returns. They point to the interests of an expansive set of stakeholders to justify doing things, some of which may conflict with shareholder interests. Catering to non-shareholder interests, which at bottom is what stakeholders represent, if not done to maximize long-term value, weakens board and management accountability and enhances management’s discretion. A pliable set of ESG metrics gives corporate managers more latitude than an unyieldingly objective profitability metric.[8] Moving beyond the numbers in favor of malleable ESG metrics dilutes managerial accountability to shareholders. Managers that prioritize ESG metrics garner acclaim from non-shareholder beneficiaries of the ESG priorities, members of the public seduced by high-sounding ESG rhetoric, and a growing sector of ESG specialists who work to elevate the importance of ESG considerations in corporate decision-making. This acclaim can be short-lived, as there is always another ESG target for a company to meet. Companies sometimes acknowledge the ESG objectives to investors, but claim—sometimes without a sound basis—that they are linked to financial returns. And sometimes, in a phenomenon called greenhushing, companies spend time and resources on achieving ESG goals without telling investors that is what they are doing. Even a decision to collect and report on ESG metrics without an attendant commitment to achieving ESG targets can divert substantial resources from uses that would contribute to corporate value maximization. The direct costs of ESG disclosures include tracking, analyzing, and assuring data. Building the requisite data collection, information technology systems, internal controls, and assurance systems around all the new data elements is more challenging than similar efforts in financial reporting, because ESG data are harder to come by, people have not had centuries of experience thinking about these metrics, and ESG data lack the precision and consistency in measurement that characterizes commonly reported financial data. Companies routinely hire ESG specialists, require other employees to devote some of their time to ESG data collection, and assist suppliers with ESG data collection.[9] Further, emphasizing ESG reporting could harm financial reporting, about which investors care very deeply, by diverting corporate attention or normalizing the weaker standards and looser practices that are accepted by necessity in ESG reporting.[10] A company that sets up an elaborate ESG data collection infrastructure, whether for regulatory or other reasons, threatens its own dynamism. Integrating ESG data collection efforts into financial reporting, corporate internal controls, audits, firm structure, performance incentives, employee job descriptions, and supply chains not only changes how companies operate day-to-day, but adds inflexibility to corporate decision-making. The ESG processes that companies are integrating into everything they do today will impede their ability to react to changing market conditions. ESG data management and ESG target-setting bureaucracies within companies become one more obstacle to change, sometimes just slowing it down and other times preventing it altogether. Want to build a new factory? Add the internal ESG team to the list of required sign-offs. Want to sign on a new supplier? You will need to add a whole new set of due diligence questions related to the supplier’s ability to provide good ESG data. Want to pivot your product line to meet an emerging consumer demand? Not so fast; the ESG department needs to analyze its effect on the company’s greenhouse gas, water, and biodiversity metrics. Green tape within companies will become as paralyzing as red tape. Governments sometimes hide behind ESG ambiguity to evade their obligations to citizens. Governments too have figured out how to hide behind ESG ambiguity for their own ends. By mandating increasingly granular ESG disclosures, securities regulators draw boards’ and managers’ attention away from objectives that would maximize corporate value and toward objectives in line with government objectives. ESG disclosure mandates fill company prospectuses with information regulators want to highlight. Requiring companies to consider ESG factors or even merely to collect and report data on ESG issues encourages boards and managers to devote resources to considering ESG matters and facilitates activist pressure by non-shareholder groups on companies to pursue ESG objectives.[11] The effect here is to provide the government with indirect control of corporate resource allocation decisions. Prescriptive disclosure requirements for companies are sometimes paired with required or encouraged investor consideration of ESG issues in making their investment decisions. In this way, detailed ESG mandates have become a subtle mechanism for conforming corporate behavior to regulatory objectives and shifting capital flows. Claims that all manner of socially and politically contentious items are linked to financial returns have provided securities regulators the cover to demand more granular disclosures about a growing list of issues. These disclosure mandates often lack a traditional materiality trigger.[12] As ESG metrics multiply and become increasingly attenuated from metrics that a company would otherwise use to manage its business, their effect on capital allocation will intensify. For example, the Corporate Sustainability Reporting Directive (“CSRD”) will require almost 50,000 European companies[13] to report approximately 1200 ESG-related data points across twelve broad categories.[14] ESG data challenges with respect to certain mandated elements could cause companies to produce different products and services than they otherwise would, switch to a supplier that can comply with data demands, or slow their product and service innovation. Intense regulatory ESG disclosure demands are altering companies, including by driving decisions and making them more brittle and less able to respond to changing conditions in the marketplace. Sometimes regulators point to investor demand as a basis for their ESG prescriptions. Yet when I talk to companies, they often cite a decided lack of investor interest in the issues on which regulators seem most focused. Retail investors themselves, as distinct from asset managers, do not seem willing to sacrifice financial returns to achieve non-financial objectives[15] and may care about ESG data primarily if it influences a company’s financial returns.[16] In the United States, traditional securities disclosures have focused on supplying investors with financially material information they need to understand companies through the eyes of management. An investor-centric, principles-based disclosure regime rooted in the concept of financial materiality (as opposed to double materiality) provides investors with tailored, relevant information, rather than mechanical responses to a set of items prescribed for all companies. Under a principles-based approach, ESG items that factor meaningfully into value-maximizing decisions are reported in the same way other items are. Public companies, for example, already disclose material risks, which may include rising sea levels, a more fragile supply chain, or shrinking water access, and litigation, which may give investors insight into employee and consumer product safety issues. A principles-based disclosure regime does not need to change with every new issue that captures societal attention and accommodates many types of companies, each facing its own unique set of issues. The goal of principles-based disclosure is to get investors the information they need to make decisions, which can vary by company and over time as a company’s circumstances change. Some ESG advocates argue that externalities—the costs imposed on society by inadequate corporate and investor attention to issues like climate change—justify ESG disclosure mandates. If the market will not force internalization of such externalities on its own or solve the underlying problem with technological advances, government intervention to address them should come by way of direct lawmaking through a transparent political process that targets the particular externality of concern, not indirect attempts to use ESG reporting to shift capital flows away from the offending activity. Legislative bodies have ready access to the expertise helpful to identify and weigh difficult trade-offs and to design tools narrowly tailored to address the externality at issue. More importantly, unlike securities regulators, legislative bodies hold the democratic legitimacy and legal authority to enact legislation designed to address the issues. Legislatures also have a broader perspective than specialized regulators, which enables them to consider how a well-functioning, prosperous economy forms the basis for better schools, a cleaner environment, a more effective social safety net, and stronger civil society institutions. It is time to stop hiding behind the ambiguity and confront the high stakes of the ESG endeavor for global well-being. The global embrace of corporate ESG reporting and target-setting comes at a price: reduced economic growth, which in turn makes it harder to improve society. As the world unites in a mandatory ESG regime of unparalleled intricacy, global economic prosperity will suffer. Driving my concern is the role that even a mere reporting framework, divorced from what matters to a company’s long-term economic value, can have in changing the responsiveness of the economy to real people’s needs. Mandated ESG metrics reflect the regulator’s view of what should be important to decision-making. But the regulator sees only a small sliver of what markets observe. Markets composed of countless people making independent decisions based on their daily experiences are better than regulators at identifying important information and, thus, directing money toward its best use. They also adapt more quickly to changing market conditions. People, whether acting individually or jointly through companies, respond to what they and others value.[17] For example, I love honey, but, having recently donned a beekeeping suit for the first time, I realize that I have to rely on others to satisfy my sweet tooth. If, however, someone discovers a new use for honey that drives its price up, I might cut my consumption and intensify my effort to join the ranks of producers to help meet the increased demand. That sweet example is but one of the countless decisions that undergird our economy. The beauty is that nobody needs to plan anything other than her own activities for this free economy to work. An economy that draws on everyone’s knowledge and experience can do much more important things than supply me with honey; it can solve hard technological problems and generate the prosperity that improves people’s everyday lives and then creates the demand for an even better world for everyone.[18] When regulatory codes, instead of popular demand, drive corporate behavior, we lose the dynamism of the unplanned economy. Because of the direct and indirect costs, jurisdictions that have adopted stringent ESG mandates will find themselves competitively disadvantaged. To blunt these adverse competitive effects, an effort is underway to standardize ESG reporting and ESG practices so that companies everywhere bear the same reporting burden. We see that in the United States where California has adopted stringent ESG reporting rules, which it plans to impose on companies outside California too. Most notably, Europe is trying to impose the costs of its particularly draconian regime on foreign companies so that European companies do not suffer alone. I care about these developments because they affect many American companies, but I also care because increasing the rules’ reach will make it easier to fool people about the costs of an intense ESG regime on economic growth. Consider: The previously mentioned CSRD will require companies to report across their value chain—which includes suppliers and buyers—on ESG issues ranging from climate-related disclosures, like Scope 3 emissions levels and recycling practices, to workforce disclosures such as those relating to demographics, collective bargaining, and “adequate wages.”[19] Companies must report on a double-materiality basis, meaning in assessing materiality they must think about how their activities influence the community and environment around them.[20] Approximately 3,000 American companies must eventually comply.[21] The European Taxonomy Regulation will require companies to classify environmentally sustainable economic activities with an explicit goal of “reorient[ing] capital flows towards sustainable investment in order to achieve sustainable and inclusive growth.”[22] The 3,000 American CSRD-reporting companies arguably must eventually comply.[23] The European Commission also invites other non-EU companies to comply to satisfy alleged eventual demands from “financial institutions,” “EU companies,” and “EU investors.”[24] The Corporate Sustainability Due Diligence Directive (“CSDDD”) “establishes a corporate due diligence duty” for companies to “identify[] and address[] potential and actual adverse human rights and environmental impacts in the company’s own operations, [its] subsidiaries and, where related to [its] value chain(s), those of [its] business partners.”[25] CSDDD companies must “integrate due diligence into their policies and risk management systems,”[26] end or minimize “actual adverse human rights and environmental impacts” in “its own operations and those of its subsidiaries,”[27] and “periodically” assess their due diligence measures.[28] Other requirements include that firms seek contractual assurances from direct business partners,[29] consult with “relevant stakeholders,”[30] and provide “remediation” to those harmed by the firm’s adverse human rights or environmental actions.[31] Generally, any American firm with more than 450 million Euros in net turnover must eventually comply.[32] Similarly, the International Sustainability Standards Board (“ISSB”) was formed in 2021, among other things, “to develop standards for a global baseline of sustainability disclosures.”[33] The ISSB issued its first two sustainability standards last summer and then embarked on a global public marketing tour to encourage global adoption of the new standards.[34] The International Organization of Securities Commissions (“IOSCO”), in an unusual move to push global convergence, issued a swift directive to member jurisdictions to embrace the ISSB standards.[35] A single global disclosure framework would ease compliance costs for companies that otherwise would be subject to multiple regimes, but it also would aggravate the problems created by such a mandatory ESG framework. If common a global framework guides companies world-over to prioritize things other than corporate value maximization, creates a convergence in global decisions about capital flows, and imposes a universal layer of rigidity on corporate and investor decision-making, markets will lose the heterogeneity and adaptability that they need to fund innovative solutions to new and intractable problems. If every hitchhiker gets in the same jeep, we might all drive off the cliff together. Conclusion Asset managers, companies, and governments too often use the ambiguity swirling about ESG to their advantage and to the disadvantage of the constituencies—investors, shareholders, and citizens, respectively—they serve. What can we do to free ourselves of the ESG constraint on economic growth? First, we can reject the highly prescriptive ESG frameworks that so many jurisdictions are imposing on companies today in favor of a return to a principles-based disclosure regime that does not isolate and elevate an issue simply because it bears the ESG label. Second, we can insist that asset managers, corporations, and governments using other people’s assets to further an ESG objective show the link to financial value of that particular ESG objective or explain clearly that obtaining the ESG objective comes at a financial cost. Third, let us heed another hitchhiker’s guide, this one to the galaxy: Don’t Panic![36] We can solve the panoply of very serious problems we face. The best way to do so is to allow capital to flow in response to all of humanity’s input, rather than in response to regulatory directives, even ones calling themselves ESG. A free economy encourages people to think carefully about what is important to them and to care deeply about what other people need and want. Corporations will survive or fail depending on whether they serve others well. A sprawling maze of standardized and inflexible ESG mandates is likely to undermine, not add to, companies’ natural inclination to meet the needs of others quickly and effectively. These ESG metrics only divert their attention to issues that regulators care about. Let me close with another hitchhiking story, this one not about me, but about a family I know. On vacation, the family had hiked seven miles out of town. While the parents were investigating non-walking options for getting the exhausted family back to town, their two pre-teen daughters took matters into their own hands. The older one, without explaining why, urged her little sister to stick her thumb out. A car stopped, and the driver offered the family a ride. The girls’ parents, not aware that their daughters had hitched the ride, after an assessment of the situation, gratefully accepted the seemingly unsolicited kindness of a stranger. My friends are savvy travelers, and I am happy to report that their inadvertent hitchhiking adventure worked out well, but inadvertent ESG hitchhiking, where people have hopped into the ESG-mobile without much thought, has led us to a bad place. Conferences like this one are an opportunity to stop and think about whether there is a better way of getting to our goal of a safer, cleaner, healthier, more prosperous world. [1] Hitchhike, Collins, https://www.collinsdictionary.com/us/dictionary/english/hitchhike (last visited June 25, 2024). [2] See, e.g., Brooke Sutherland, Weapons Makers Targeted by Student Protests Show Up in ESG Funds, Bloomberg (May 31, 2024), https://www.bloomberg.com/news/newsletters/2024-05-31/esg-funds-invest-in-weapons-makers-targeted-in-college-protests-over-israel (“ESG fund managers in both the US and Europe have grown more willing to hold stocks of military contractors, an attitude shift that stands in notable contrast with the divestment demands of student protestors across college campuses this spring. Among US domiciled funds that invest based on environmental, social and governance principles, about 130 – or 36% – held positions in the aerospace and defense sector as of the end of the first quarter, according to data from Morningstar Direct. That’s up from 99 funds – or 35% of the total at the time – as of the end of January 2022, roughly a month before Russia’s invasion of Ukraine sparked a debate about how manufacturers of weapons used both to kill people and to defend democracy might fit into an ESG paradigm. The transition in Europe and the UK has been even starker: About 30% of ESG funds domiciled in those regions had some exposure to the aerospace and defense sector as of the end of March, up from only about a quarter at the start of 2022, the Morningstar data shows.”); Polly Bindman, Why ESG funds are full of weapons, Capital Monitor (Jul. 20, 2022 1:40 PM), https://capitalmonitor.ai/strategy/responsilbe/how-exposed-are-esg-funds-to-weapons/ (finding that in light of the war in Ukraine, analysts from J.P. Morgan and Citigroup are calling for a re-evaluation of the negative ESG status of defense stocks); Ed Ballard, Sweden’s SEB Changes Course on Defense Stocks as War Tests ESG Rules, WSJ (Mar. 2, 2022), https://www.wsj.com/articles/swedens-seb-changes-course-on-defense-stocks-as-war-tests-esg-rules-11646253384 (reporting that given the war in Ukraine, “Sweden-based financial-services company Skandinaviska Enskilda Banken AB said it would permit some of its funds to buy shares of weapons makers and defense companies, reversing a position it adopted just a year ago as part of its commitment to investing based on environmental, social and governance principles.”). [3] See, e.g., Sanne Wass & Camilla Naschert, ESG investors warm to nuclear power after EU green label award, S&P Global (Mar. 8, 2022), https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/esg-investors-warm-to-nuclear-power-after-eu-green-label-award-69002267 (“A shift in investor attitude is already underway, with only 37% of funds with exclusions now barring nuclear assets, according to a Berenberg ESG survey of more than 200 fund managers in Europe and North American. That is down from 43% in a similar survey a year earlier, the investment bank said[.]”). [4] Samuel Gregg, Why Business Should Dispense with ESG, Harwood Econ. Rev., Am. Institute for Econ. Rsch., Feb. 2024, at 4, https://www.aier.org/article/why-business-should-dispense-with-esg/#:~:text=Another%20ESG%20problem%20is%20its,dysfunctionality%20in%20these%20agencies'%20operations. (“One of ESG’s many difficulties, however, is that its goals and methods are characterized by an incoherence sufficient to call into question not just specific features of ESG but the conceptual integrity of the entire ESG endeavor. Another ESG problem is its tendency to blur ethics and sound business practices with the promotion of particular political causes. This mindset has spilled over into the outlook of financial regulators, and consequently threatens to facilitate widespread dysfunctionality in these agencies’ operations. Lastly, the adoption of ESG risks corroding understanding of the nature and proper ends of commercial enterprises—a development that has broader and negative implications for society as a whole.”). [5] See, e.g.,About Climate Action 100+, Climate Action 100+, https://www.climateaction100.org/about/(last visited Jun. 20, 2024). Asset managers that sign onto Climate Action 100+ agree to “work with the companies in which [they] invest to encourage them to work towards the global goal of halving GHG emissions by 2030 and delivering net zero GHG emissions by 2050 . . . .” Climate Action 100+ Signatory Handbook, Climate action 100+, at 7 (Jun. 2023), https://www.climateaction100.org/wp-content/uploads/2023/06/Signatory-Handbook-2023-Climate-Action-100.pdf.Recently, some asset managers have abandoned these pledges in favor of more client-tailored approaches. See, e.g., Simon Jessop, Invesco joins list of US asset managers to exit CA100+ climate group, Reuters (Mar. 1, 2024),https://www.reuters.com/sustainability/invesco-joins-list-us-asset-managers-exit-ca100-climate-group-2024-03-01/(“Invesco on Friday became the fifth major U.S. investor to exit or scale back their involvement with the Climate Action 100+ coalition of investors . . . . Invesco said in a statement it had‘decided to withdraw from the Climate Action 100+ initiative as we believe our clients’ interests in this area are better served through our existing investor-led and client-centric issuer engagement approach.’”).  [6] For more on this point, see Commissioner Hester M. Peirce, There’s a Fund for That: Remarks before FINRA’s Certified Regulatory and Compliance Professional Dinner, (Nov. 15, 2022), https://www.sec.gov/news/speech/peirce-finra-remarks-111522. [7] With index funds in particular, asset managers often have defended activist engagement by arguing that the fund cannot sell its position in companies in the index and so should try to maximize the value of those companies. The exit point loses force because shareholders in a passive index fund can exit if they do not like the companies in the index. These dissatisfied investors can move instead to an actively managed fund or a fund that combines passive index tracking with active voting and engagement. [8] See, e.g., Ryan Flugum & Matthew E. Souther, Stakeholder Value: A Convenient Excuse for Underperforming Managers?, J. Fin. and Quantitative Analysis (Sept. 7, 2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3725828 (“Firms falling short of earnings expectations are more likely to cite stakeholder-focused objectives in their public communications around earnings announcements. This behavior suggests that managers push to be evaluated by subjective stakeholder-based performance criteria when falling short on objective shareholder-based measures. This relation between underperformance and stakeholder language becomes stronger after the 2019 Business Roundtable statement and appears unrelated to a firm’s actual ESG-related activity. Stakeholder language appears to influence the evaluation of CEOs; turnover-performance sensitivity is lower for managers citing stakeholder value. Collectively, our findings suggest that the push for stakeholder-focused objectives provides managers with a convenient excuse that reduces accountability for poor firm performance.”). [9] ESG-related advisory and assurance businesses and ESG specialists, which are proliferating, have an incentive to lobby for more ESG disclosure mandates to induce a larger market for their products and services. [10] While some argue “sustainability adds soul” to financial reporting, I fear it will simply dull the passion of accountants and auditors for reliable financial reporting. See, e.g., Leadership in a New Era of Accountability and Sustainability, ESG Talk Podcast (May 17, 2024), https://www.youtube.com/watch?v=YPfuRZo-6BU (discussing the concept of sustainability as the soul of financial reporting). I have previously written about the meaningful differences between these standards. See Commissioner Hester Peirce, Statement on the IFRS Foundation’s Proposed Constitutional Amendments Relating to Sustainability Standards, SEC (Jul. 1, 2021), https://www.sec.gov/news/public-statement/peirce-ifrs-2021-07-01 (“Accounting and sustainability standards are fundamentally different from one another. . . . The singular focus of financial reporting—to paint an accurate financial picture of a company for investors—lends itself to objective, auditable, quantifiable, and comparable metrics. Assets, liabilities, revenue, and expenses can be measured, reported, and audited. Preparing and auditing a company’s financial statements entails judgment and there are cross-jurisdictional differences in accounting standards, but the purpose of financial reporting is not up for debate. . . . By contrast, not only is the term ‘sustainability’ imprecise, but the objective of sustainability standard-setting and sustainability reporting is not universally agreed upon and is not consistent over time. Sustainability standard-setting is an inherently more subjective, less precise, less focused, more open-ended activity than financial accounting standard-setting.”). [11] See, e.g., Paul Mahoney & Julia Mahoney, The New Separation of Ownership and Control: Institutional Investors and ESG, 2 COLUM. Bus. L. REV. 840, 851-2 (2021) (Political activists push “for the SEC to require an expanded and standardized set of ESG disclosures” so they can “prod companies to change policies in socially-motivated directions . . . . Such disclosures facilitate an ordinal ranking of companies that can serve as a focal point to organize boycotts, demonstrations, and social media campaigns against ‘brown’ companies.”). [12] For example, while the recent public company climate rule, which is being challenged in court, liberally references materiality, some disclosure requirements lack this clarification. Item 1501(a) requires companies to disclose how they oversee climate-related risks without reference to materiality. While Item 1501(b) requires disclosure of how company management handles material climate-related risks, companies must provide such information regardless of whether the management information itself is material. See The Enhancement and Standardization of Climate-Related Disclosures for Investors, 89 FR 21668 (Mar. 24, 2024), https://www.federalregister.gov/documents/2024/03/28/2024-05137/the-enhancement-and-standardization-of-climate-related-disclosures-for-investors. See also Commissioner Hester M. Peirce, Green Regs and Spam: Statement on the Enhancement and Standardization of Climate-Related Disclosure for Investors (Mar. 6, 2024), https://www.sec.gov/news/statement/peirce-statement-mandatory-climate-risk-disclosures-030624. Elsewhere, under the Commission’s recent public company cybersecurity rule, companies must disclose granular details about how they address cybersecurity risk, regardless of whether this information is material. See 17 CFR §229.106(c)(2)(i) (requiring companies to disclose the “relevant expertise” of persons who manage cybersecurity risk “in such detail as necessary to fully describe the nature of the expertise”); 17 CFR §229.106(c)(2)(ii) (requiring companies to disclose “[t]he processes by which such persons or committees are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents”); 17 CFR §229.106(b)(1) (requiring companies to disclose their use of “assessors, consultants, auditors, or other third parties” relating to cybersecurity and processes for monitoring threats from “third-party service provider[s].”). See also Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, 88 FR 51896 (Aug. 4, 2023), https://www.federalregister.gov/documents/2023/08/04/2023-16194/cybersecurity-risk-management-strategy-governance-and-incident-disclosure. The phenomenon of mandated disclosures without a traditional materiality trigger also persists outside of the U.S. See, e.g., European Commission, Sustainable finance: Political agreement on Corporate Sustainability Reporting Directive will improve the way firms report sustainability information (Jul. 26, 2022), https://ec.europa.eu/newsroom/fisma/items/754701/en (“The CSRD incorporates the concept of ‘double materiality’. This means that companies have to report not only on how sustainability issues might create financial risks for the company (financial materiality), but also on the company’s own impacts on people and the environment (impact materiality).”). [13] Jones Day, Who, What, When: The Impact of the EU CSRD on Non-EU Companies at i (Sept. 2023), https://www.jonesday.com/en/insights/2023/09/who-what-when-the-impact-of-the-eu-csrd-on-noneu-companies (“Who, What, When”). [14] These data points are specified by the European Sustainability Reporting Standards. See Bird & Bird, ESG Reporting Legal Update (Nov. 2, 2023), https://www.twobirds.com/en/insights/2023/global/esg-reporting-legal-update?ref=csofutures.com#:~:text=EFRAG%20published%20on%2025%20OctoberEuropean%20Sustainability%20Reporting%20Standards. [15] A study of retail investor views by the FINRA Investor Education Foundation found that “financial factors impact investment decisions about twice as much as the governance or social aspects of a potential investment [while] . . . environmental aspects are the least important considerations.” Gary Mottola, Olivia Valdes, & Robert Ganem, Investors say they can change the world, if they only knew how: Six things to know about ESG and retail investors at 4, FINRA Investor Education Foundation (Mar. 2022), https://www.finrafoundation.org/sites/finrafoundation/files/Consumer-Insights-Money-and-Investing.pdf. The study, which asked retail investors to rank order investment factors, resulted in a “relative importance” score of 45% for financial factors, 23% for governance factors, 18% for social factors, and 14% for environmental factors. Id. at 5. The study also found that “only 24 percent of study participants [could] correctly define ESG investing,” while a quarter of retail investors thought “ESG stands for ‘Earnings, Stock, Growth.’” Id. at 2. [16] See, e.g., Austin Moss, James Naughton, and Clare Wang, The Effect of ESG Press Releases on Retail Investors, (June 12, 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3604847 (“Our tests do not detect any retail investor response to ESG press releases, suggesting that these disclosure events do not inform retail trading decisions. In contrast, we find statistically significant portfolio adjustments to non-ESG press releases and to earnings announcements.”); Qianqian Li, Edward M. Watts, and Christina Zhu, Retail Investors and ESG News at 1, (Apr. 29, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4384675 (“[We investigate] the aggregate trading patterns of retail investors around a comprehensive sample of key environmental, social, and governance (ESG) news events for U.S. firms. . . .We show that ESG news events appear to be an important factor in retail investors’ portfolio allocation decisions. Yet, inconsistent with arguments about retail investors’ nonpecuniary preferences, our evidence shows that retail investors mainly trade on this information when they deem it financially material to a company’s stock performance. We also find their net trading demand predicts abnormal returns in the subsample of financially material events, consistent with retail traders benefiting from incorporating ESG-related information into their decision-making when it influences firm value. Overall we conclude that the average U.S. retail investor cares about firms’ ESG activities but primarily to the extent these activities matter for company financial performance.”). Rather than investor demand, government bodies may be driving the ESG movement. See Allen Mendenhall and Daniel Sutter, ESG Investing: Government Push or Market Pull? 22 SantaClaraJ. Int'lL. 75 at 116 (2024), https://digitalcommons.law.scu.edu/scujil/vol22/iss2/2 (concluding that “[f]rom the origin of the term to the clean energy transition and mandated reporting, governments have driven ESG.”). Lest I too hide behind ESG ambiguity, I underscore that extrapolation from ESG studies must be undertaken with care. [17] For a nice explanation of how this process works, see Donald J. Boudreaux, The Super Market: A Historical Perspective on the Supermarket Industry, Am. Inst. for Econ. Rsch. (Jun. 12, 2024), https://www.aier.org/article/the-super-market/. [18] See, e.g., Bruce Yandle, Maya Yijayaraghavan, and Madhusudan Bhattarai, Environmental Kuznets Curve: A Primer, PERC, (May 2018), https://www.perc.org/wp-content/uploads/2018/05/environmental-kuznets-curve-primer.pdf (noting that country’s environmental conditions can improve as its economy improves, so policies that harm economic growth also may exacerbate certain environmental concerns).  [19] See European Parliament and the Council of the European Union , Directive 2022/2464, of the European Parliament and of the Council of 14 Dec. 2022 at “Whereas” paras. 47, 49 and Article 29b(2), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464 (“Directive 2022/2464”); see also Who, What, When at 3-4. [20] See Directive 2022/2464 at “Whereas” para 29; see also Who, What, When at 5. [21] Dieter Holger, At Least 10,000 Foreign Companies to Be Hit by EU Sustainability Rules, WSJ (Apr. 5, 2023), https://www.wsj.com/articles/at-least-10-000-foreign-companies-to-be-hit-by-eu-sustainability-rules-307a1406. Generally, this requirement will apply to any non-EU company with a parent company with at least 150 million Euros in net turnover and a subsidiary with least 40 million Euros in net turnover. Directive 2022/2464 at “Whereas” para. 20. The term “turnover” is similar to “revenue.” [22] See European Parliament and the Council of the European Union, Regulation 2020/852, of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, “Whereas” para 6, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0852. For an overview of the taxonomy, seeEuropean Commission, Frequently Asked Questions about the Work of the European Commission and the Technical Expert Group on Sustainable Finance on EU Taxonomy & EU Green Bond Standard (Jan. 2021), https://finance.ec.europa.eu/system/files/2021-01/200610-sustainable-finance-teg-taxonomy-green-bond-standard-faq_en.pdf. [23] A&O Sherman, Does the EU’s Taxonomy Regulation Really Apply to Third-country Issuers? (Dec. 13, 2023), https://www.jdsupra.com/legalnews/does-the-eu-s-taxonomy-regulation-2902085/. [24] European Commission, A User Guide to Navigate the EU Taxonomy for Sustainable Activities at 49 (Jun. 2023), https://ec.europa.eu/sustainable-finance-taxonomy/assets/documents/Taxonomy%20User%20Guide.pdf. [25] European Commission, Corporate Sustainability Due Diligence (last accessed, Jun. 29, 2024), https://commission.europa.eu/business-economy-euro/doing-business-eu/corporate-sustainability-due-diligence_en; see also Cooley LLP, EU Adopts Mandatory Rules on Corporate Sustainability Due Diligence That Will Apply to Many US Companies (Apr. 24, 2024), https://www.cooley.com/news/insight/2024/2024-04-24-eu-adopts-mandatory-rules-on-corporate-sustainability-due-diligence-that-will-apply-to-many-us-companies.  [26] European Parliament, Text Adopted, 24 Apr. 2024, Corporate Sustainability Due Diligence, Consolidated text at “Whereas” para. 38, https://www.europarl.europa.eu/doceo/document/TA-9-2024-0329_EN.html. [27] Id. at “Whereas” para. 53. [28] Id. at “Whereas” para. 61. [29] Id. at “Whereas” para. 46. [30] Id. at “Whereas” para. 75. [31] Id. at “Whereas” para. 20. [32] Id. at “Whereas” para. 29. [33] International Financial Reporting Standards Foundation, International Sustainability Standards Board (2024), https://www.ifrs.org/groups/international-sustainability-standards-board/. [34]The ISSB has recently attempted to raise participation in its Sustainability Disclosure Standard. See International Financial Reporting Standards Foundation, Progress Towards Adoption of ISSB Standards as Jurisdictions Consult (Apr. 2024), https://www.ifrs.org/news-and-events/news/2024/04/progress-towards-adoption-of-issb-standards-as-jurisdictions-consult/ (“ISSB Chair Emmanuel Faber said: ‘We welcome consultations by jurisdictions around the world including most recently in Canada, Japan, and Singapore. The consultations demonstrate the momentum towards a global baseline of sustainability-related disclosures so that investors have access to high-quality, comparable information.’”); see also Sue Lloyd, Vice Chair, ISSB, Adoption of global sustainability standards gains steam around the world, Thompson Reuters (Jun. 3, 2024), https://www.thomsonreuters.com/en-us/posts/esg/forum-global-sustainability-disclosure-standards/ (“In the future, companies are likely to use ISSB Standards as the equivalent of a passport to travel between different jurisdictions without a visa. The ISSB will seek to support jurisdictions’ adoption and use of the Standards by working with public authorities, including with the colleagues at both the FSB and IOSCO.”). [35] IOSCO, IOSCO endorses the ISSB’s Sustainability-related Financial Disclosures Standards (Jul. 25, 2023), https://www.iosco.org/news/pdf/IOSCONEWS703.pdf (“IOSCO has determined that the ISSB Standards are appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information in both capital raising and trading and for the purpose of helping globally integrated financial markets accurately assess relevant sustainability risks and opportunities.”). [36] Douglas Adams, The Hitchhiker’s Guide to the Galaxy at 27, Harmony Books (1980).

While the universe of securities is broad, the Securities Act of 1933 (“Securities Act”) generally requires that any offer or sale of a security to the public be registered with the Commission. For that reason, the Commission should take steps to ensure that registration statement disclosure is material and informative to prospective purchasers. By the same token, the Commission should avoid requiring disclosures that are irrelevant and distract readers from the important information. Purchasers of fund and insurance products have different disclosure needs than investors in operating companies. Previously, the Commission has adopted specific registration statement forms for these products. For example, open-end mutual funds, including exchange-traded funds, register on Form N-1A, closed-end funds register on Form N-2, separate accounts organized as unit investment trusts (“UITs”) that offer variable annuity contracts register on Form N-4, and separate accounts organized as UITs that offer variable life insurance policies register on Form N-6. When there is not a specific form, the default form for general registration is Form S‑1, which has been used by registered index-linked annuities (“RILAs”) to date.[1] While Form S-1 has specific disclosure requirements for securities such as capital stock and debt, it is not specifically tailored for products like RILAs. Thus, Form S-1 does not have specific disclosure requirements for RILAs and their complex features. However, Form S-1 requires the disclosure of extensive information about the registrant issuing the securities that may be less material to a RILA purchaser than information about the annuity contract’s features, risks, and expenses. Required information about the registrant includes management’s discussion and analysis of financial condition and results of operations, disclosure about executive compensation, and financial statements prepared in accordance with U.S. generally accepted accounting principles, which may be less important to RILA purchasers relative to disclosures about the product itself.[2] To date, RILA sponsors have been allowed variances from the express requirements of Form S-1 in order for the prospectuses to focus on disclosures most relevant to RILA purchasers.[3] Today, the Commission is adopting rule and form amendments to implement the bipartisan Registered Index-Linked Annuities Act of 2022 (“RILA Act”).[4] Accordingly, the Commission is amending Form N-4 and modifying that form to accommodate RILA offerings.[5] In response to comments received on the proposal,[6] the Commission also will require offerings of registered market-value adjustment annuities (“MVAs”) to register on Form N-4. RILAs and registered MVAs share similar features, and thus the amendments to Form N-4 will provide registered MVAs with a more tailored form to register these offerings. The Commission is also adopting other amendments to facilitate the registration of RILA and MVA offerings, including the use of optional summary prospectuses and calculation of filing fees.[7] As a member of the Senate Banking Committee staff during the 117th Congress, I was pleased to work with the offices of Senators Tina Smith and Thom Tillis when they introduced the RILA Act. While I am disappointed that the Commission did not meet the 18-month statutory deadline, I am pleased to support this rulemaking. The amendments to Form N-4 being adopted today provide RILA issuers – and more importantly, investors - with a form that elicits specific disclosure about these products. In addition, the package of amendments, including the ability to file post-effective amendments[8] and permitting RILA issuers to use a “free writing” prospectus under the conditions of rule 433 under the Securities Act, will help smooth the transition for RILA and MVA offerings. I recognize the staff’s efforts to identify and recommend “good government” technical amendments to update the rules and Forms as part of the rulemaking. These amendments may not generate headlines, but they are necessary improvements to keep the Commission’s regulatory infrastructure up to date. For example, the Commission is amending Form 24F-2, the form that permits investment companies – and now non-variable annuities – to pay the registration fees for an indeterminate number of securities. One of the Form’s legacy instructions dates back to when open-end funds and unit investment trusts transitioned to the Form. As such, this legacy instruction permits a credit for any non-claimed redemptions in a prior fiscal year that ends no earlier than October 11, 1995. It is long past time to remove that outdated instruction, and I laud the staff for their attention to these details. My thanks to the staff of the Division of Investment Management, the Division of Economic and Risk Analysis, and the Office of the General Counsel for their efforts. I also thank the Office of the Investor Advocate for their diligent work on investor testing which helped to inform this rulemaking. [1] See, e.g., General Instruction I of Form S-1 (“This Form shall be used for the registration under the Securities Act of 1933 (‘Securities Act’) of securities of all registrants for which no other form is authorized or prescribed.”) [17 CFR 239.11]. [2] See Items 11(h), 11(l), and 11(e) of Form S-1. [3] While a similar approach has been taken to certain other securities products, that has not been done with respect to issuers using Form S-1 to register the offer and sale of crypto digital assets. Many of these issuers and crypto digital assets have characteristics for which Form S-1 may technically require information that is not relevant or applicable, but does not require certain information that may be material. This approach for crypto digital assets is problematic because it neither facilitates capital formation nor protects investors. Consideration should be given to allowing variances from Form S-1 for crypto digital assets, similar to that given for fund and insurance products and other securities products. Such an approach may ultimately result registered offerings containing more tailored information that is relevant and material for crypto digital assets and their issuers and has the accompanying investor protection and remedies under the Securities Act. [4] The RILA Act was included as part of the Consolidated Appropriations Act of 2023. See Pub. L. 117-328; 136 Stat. 4459 (Dec. 29, 2022) (Division AA, Title I). [5] Registration for Index-Linked Annuities and Registered Market-Value Adjustment Annuities; Amendments to Form N-4 for Index-Linked Annuities, Registered Market-Value Adjustment Annuities, and Variable Annuities, Securities Act Release No. 11294 (July 1, 2024), available at https://www.sec.gov/rules-regulations/2024/07/rila#33-11294final. [6] See Registration for Index-Linked Annuities; Amendments to Form N-4 for Index-Linked and Variable Annuities, Securities Act Release No. 11250 (Sept. 29, 2023) [88 FR 71088 (Oct. 13, 2023)], available at https://www.sec.gov/files/rules/proposed/2023/33-11250.pdf. [7] The Commission is also amending Rule 156 under the Securities Act, which provides guidance as to when sales literature is materially misleading under the Federal securities laws. [8] See Rules 485(a) and (b) under the Securities Act [17 CFR 230.485(a) and 485(b)].

The Office of the Comptroller of the Currency (OCC) today released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of June 1, 2024, through June 30, 2024. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings. The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance. Of the 21 evaluations made public this month, one is rated needs to improve, 14 are rated satisfactory, and six are rated outstanding. A list of this month's evaluations is available here. Click on the institution's charter number to view a PDF of the evaluation. The OCC's website also offers access to a searchable list of all public CRA evaluations. Copies of the evaluations may also be obtained by submitting a request electronically through the OCC's Freedom of Information Act website, or by writing to the Office of the Comptroller of the Currency, Communications Division, Suite 3E-218, Washington, DC 20219. When requests are made electronically, remember to include your postal mail address.

ISDA will proceed with the development of an industry-wide notices hub, following strong support from buy- and sell-side institutions globally. The new online platform will allow instantaneous delivery and receipt of critical termination-related notices and help to ensure address details for physical delivery are up to date, reducing the risk of uncertainty and potential losses for senders and recipients of these notices. The decision to move ahead with the ISDA Notices Hub follows an industry outreach initiative that began in April 2024, in which ISDA sought indications of support for the proposed platform from dealers and buy-side institutions. Of those firms that indicated they would use the ISDA Notices Hub in principle, 57% were from the buy side, including asset managers, insurance companies and hedge funds. In addition, two thirds of ISDA’s global primary dealer membership category stated their intent to adopt the platform in principle. Support was received from across the globe, with 39% of positive responses from the US, 47% from Europe and 14% from Asia Pacific. ISDA will now work with S&P Global Market Intelligence and Linklaters to build the platform, draft the necessary documentation and commission legal opinions in priority jurisdictions to confirm the validity of delivering notices via a central hub. The ISDA Notices Hub will be free for buy-side users and available via S&P Global Market Intelligence’s Counterparty Manager platform, with implementation targeted for 2025. Under the ISDA Master Agreement, termination-related notices must be delivered by certain prescribed methods including physical delivery, using company address details listed in the agreement. However, delays can occur if a company has moved and the documentation hasn’t been updated with the new details or if delivery to a physical location is not possible due to geopolitical shocks. Just a small holdup in the delivery of a termination notice – for example, from Friday afternoon to Monday morning – could result in an uncollateralized loss of $1 million[1]. Bigger portfolios and more volatile conditions could increase the risk significantly. The ISDA Notices Hub would act as a secure central platform for firms to deliver notices, with automatic alerts sent to the receiving entity. Multiple designated people at each firm would be able to access the hub from anywhere in the world, regardless of the situation at its physical location. The platform would also allow market participants to update their physical address details via a single entry. “We’re delighted that so many financial institutions recognize the benefit of having a secure digital platform that allows termination notices to be delivered and received in the blink of an eye. As well as increasing certainty for users, the ISDA Notices Hub will eliminate risk exposures and potential losses that can result from delays in terminating derivatives contracts,” said Scott O’Malia, ISDA’s Chief Executive. For more information on the ISDA Notices Hub, visit the ISDA Solutions InfoHub. [1] Based on a 99% value-at-risk calculation assuming an outright non-cleared derivatives portfolio with $10 million of initial margin and moderate volatility Documents (1)for ISDA Proceeds with Development of an Industry Notices Hub  ISDA Proceeds with the Development of an Industry Notices Hub(pdf)

Today, the Commission adopted amendments to provide a tailored form to register the offerings of registered index-linked annuities (“RILAs”) and registered market value adjustment annuities (“registered MVA annuities”). I am pleased to support this adoption because it fulfills the congressional mandate to adopt a registration form specific to RILAs. RILAs are a complex product sold primarily to retail investors. While they’re generally linked to the performance of a market index, such as the S&P 500, their performance is not the same as the underlying index. Rather, investor returns often are subject to caps and floors set by the insurance company. Further, features such as these caps and floors may change over time, and investors can experience losses if they withdraw money early.  The market for these complex products has grown significantly in recent years. Sales of RILAs reached approximately $47.4 billion in 2023 alone, more than quintupling since 2017[1] It is important that investors receive the information they need—in plain English—to make informed investment decisions. Implementing Congress’s mandate, today’s rule will require RILAs to use Form N-4, the same registration form currently used for variable annuities. Thus, today’s final rule also amends Form N-4 to address the features and risks of RILAs. Today’s rule also will apply to registered MVA annuities. Similar to the amendments we are adopting for RILAs, these amendments will benefit investors by providing a tailored disclosure regime and permitting investors to compare and contrast different types of annuity contracts. These changes will streamline the registration process for issuers already using Form N-4 for other investment products. Further, this would make disclosures among similar investment products more consistent. This adopted disclosure regime is informed by investor testing conducted by the SEC’s Office of the Investor Advocate (OIAD). Finally, today’s rule will provide both RILA and MVA issuers guidance on when sales literature related to their offerings might be materially misleading under the Federal securities laws. In particular, today’s rule will require RILA issuers to comply with Rule 156, which addresses truth in advertising in sales literature.  Taken together, these amendments will improve the disclosure process for these complex products to benefit investors.  I’d like to thank members of the SEC staff for their work on this proposal, including: Natasha Greiner, Sarah ten Siethoff, Brian Johnson, Amanda Hollander Wagner, Brad Gude, Christian Corkery, Pamela Ellis, Rachael Hoffman, Michael Khalil, James Maclean, Amy Miller, Laura Harper Powell, Andrea Ottomanelli Magovern, Michael Kosoff, Elisabeth Bentzinger, Sonny Oh, Jenson Wayne, and Nicolina McCarthy in the Division of Investment Management; Felicia Kung, Todd Hardiman, Sean Harrison, Andrew Schoeffler, Adam Turk, and Ingram Weber in the Division of Corporation Finance; Shehzad (Shaz) Niazi, Chauncey Martin, Erin Nelson, and Steven Kenney in the Office of the Chief Accountant; Jessica Wachter, Alexander Schiller, Ross Askanazi, Dan Deli, Lauren Moore, Ricardo Lopez Rago, Samantha Croffie, Julie Marlowe, and Parhaum Hamidi in the Division of Economic and Risk Analysis; Megan Barbero, Elise Bruntel, Meridith Mitchell, Natalie Shioji, Monica Lilly, and Joseph Guerra in the Office of the General Counsel; Cristina Martin Firvida, Brian Scholl, Marc Sharma, John Foley, Katherine Carman, Alycia Chin, Jonathan Cook, and David Zimmerman in the Office of the Investor Advocate; Owen Donley and Jill Felker in the Office of Investor Education and Advocacy; and Daniel Chang in the EDGAR Business Office. [1] See Life Insurance Marketing and Research Association (LIMRA), “Fact Tank: Sales Data, Life Insurance Marketing and Research Association,” available at https://www.limra.com/en/newsroom/fact-tank/. Citation uses data from the U.S. Individual Annuity Sales surveys for Q4 for each year from 2016 through 2023.

The Commodity Futures Trading Commission today issued Supervisory Stress Test of Derivatives Clearing Organizations: Reverse Stress Test Analysis and Results, a report detailing the results of its fourth Supervisory Stress Test (SST) of derivatives clearing organization (DCO) resources. Among other findings, the 2024 report concluded the DCOs studied hold sufficient financial resources to withstand many extreme and often implausible price shocks. The Risk Surveillance Branch of the Division of Clearing and Risk conducts periodic SSTs to assess how DCOs might fare under extreme stress. Staff previously conducted SSTs in 2016, 2017, and 2019. The 2019 SST included a reverse stress test component, and this 2024 SST is a major expansion of that, which includes nine DCOs, representing 11 clearing services across four asset classes (futures and options on futures, cleared interest rate swaps, credit default swaps, and foreign exchange products). The purpose of the analysis was twofold: (1) to identify hypothetical combinations of extreme market shocks, concurrent with varying numbers of clearing member (CM) defaults, that would exhaust prefunded resources (DCO committed capital, and default fund), and unfunded resources available to the DCOs (this represents the reverse stress test component), and (2) to analyze the impacts of DCO use of mutualized resources on non-defaulted CMs. Staff analyzed both house and customer accounts of all CMs using actual positions as of September 1, 2023. Eleven volatile dates since 2020 were selected as base market stress scenarios. These dates captured a diversity of extraordinary market stresses associated with: the COVID-19 pandemic, the war in Ukraine, and the period of elevated inflation and related interest rate/banking impacts. These one-day market shocks were then expanded incrementally by multiples to well past plausible levels. In the process of conducting this reverse stress test, the interconnectedness of DCOs through clearing members was explored. The results of this 2024 stress test analysis show: All individual DCOs hold sufficient financial resources to withstand many extreme and often implausible price shocks, along with multiple defaults of their CMs. In some cases, DCOs can withstand the default of all CMs that have losses resulting from highly implausible price shocks. Potential costs to non-defaulting members do not appear to be problematic. Under a very extreme and likely implausible scenario, with shocks three times one of the most volatile days in recent years, concurrent with three synchronized defaults, costs at the clearing members paying the vast majority of default funds and assessments represented only 0.07% of the Tier 1 capital of their parent entities, on average. The effects of interconnectedness were muted across DCOs, except for extremely implausible scenarios. Extreme events for one DCO are not commonly extreme events at the other DCOs, nor are the extreme losses for clearing members at one DCO experienced to the same extent at other DCOs at which they are a member.   RELATED LINKS Supervisory Stress Test of DCOs: Reverse Stress Test Analysis and Results (2024) Assumptions and Methodology

The Securities and Exchange Commission today adopted tailored disclosure requirements and offering processes for offerings of registered index-linked annuities (RILAs) and registered market value adjustment annuities (registered MVA annuities, and collectively with RILAs, non-variable annuities). The final rule will require issuers of non-variable annuities to register offerings on Form N-4, the form currently used to register offerings of most variable annuities. This change will provide investors with tailored disclosures and key information about these complex products and modernize and enhance the registration, filing, and disclosure framework for non-variable annuities. “The market for these complex products has grown significantly in recent years. Sales of RILAs reached approximately $47.4 billion in 2023 alone, more than quintupling since 2017,” said SEC Chair Gary Gensler. “It is important that investors receive the information they need – in plain English – to make informed investment decisions. These amendments will improve the disclosure process for these complex products to benefit investors.” Non-variable annuities are annuity contracts offered by insurance companies and sold to retail investors. With RILAs, investor returns are based in part on the performance of an index or other benchmark over a set timeframe, subject to limits on potential losses and gains. Registered MVA annuity returns are based on a fixed and stated minimum rate of interest over a set timeframe. Both products typically impose certain charges and penalties for early withdrawals. The final amendments build on the Commission’s existing registration, filing, and disclosure framework for variable annuities to provide a tailored approach for non-variable annuities. These amendments are designed to provide investors with a better understanding of these products. They also will provide efficiencies for insurance company issuers that offer both variable and non-variable annuities as well as for the Commission in reviewing those filings. The approach to disclosure is informed by investor testing conducted in connection with the proposal. Under the amendments, non-variable annuities will be permitted to use a summary prospectus framework that highlights key information for investors while making additional information available for investors who want it. The Commission also is extending to non-variable annuity advertisements and sales literature a current Commission rule (Rule 156) that provides guidance as to when sales literature is materially misleading under the federal securities laws. In addition, the Commission is adopting amendments to Form N-4 that apply to offerings of variable annuities that are informed by the Commission staff’s historical experience in administering these forms as well as relevant investor testing. The Commission also is adopting technical amendments to other insurance product registration forms. The amendments will become effective 60 days after publication in the Federal Register. Filers will have until May 1, 2026, to comply with most of the final amendments to Form N-4 and the related rule and form amendments. For the amendments to Rule 156, insurance companies will be required to comply on the effective date. RESOURCES Rule Details Fact Sheet

The MIAX Exchange Group is issuing this regulatory alert to remind MIAX Exchange Group Members of the existence and role of the Cross Market Regulation Working Group (“CMRWG”), which was established under the U.S. Subgroup of the Intermarket Surveillance Group (“ISG”) to focus on ways to reduce unnecessary regulatory duplication.Click here to download the ISG CMRWG Regulatory Memorandum 2024-01 (“Notice”) that was issued by the participants of the ISG CMRWG.  Questions regarding the Notice should be directed to the Regulatory Department at Regulatory@miaxglobal.com or (609) 897-7309.

Click here to download the ' Fixed Income Index Dashboard' for the month ended June 2024. 

The Chartered Institute for Securities & Investment (CISI), with over 50,000 global members in 100 countries, is delighted to continue collaborating with the ACI Financial Markets Association (ACI FMA) – a non-profit global trade association that represents the interests of the professional financial markets community with over 7,000 members in 60 countries. As of May 2024, both organisations will continue delivering educational tools to global financial markets and will now foster learning in ethical artificial intelligence through the distribution of the CISI Certificate in Ethical Artificial Intelligence (AI). The partnership, initially agreed upon in 2019, means the CISI and ACI FMA will collaborate using mutual networks, particularly relating to the recognition and promotion of the respective qualifications, membership offerings, promotion of integrity and ethics, and distribution of stand-alone products to both membership bases. The agreement also includes mutual recognition of some ACI FMA programmes as equivalent to one CISI examination unit in the CISI Investment Operations Certificate (IOC). This short course is important for anyone wanting to understand the fundamental ethical and management issues in the deployment of AI in financial and professional services. ACI FMA Diploma holders with three years of experience can become associate members of the Institute, and ACI FMA will offer a reduced fee for CISI members who wish to apply and are successfully granted ACI FMA Individual Membership. CISI CEO Tracy Vegro OBE said: “We value our partnership with the ACI FMA and are looking forward to strengthening our relationship with our renewed agreement, particularly through sharing the CISI Certificate in Ethical Artificial Intelligence (AI) – a valuable necessity for understanding ethical guidelines and regulations and the future of financial services.”   ACI FMA president Kim Winding Larsen (above) said: “ACI FMA truly appreciates this partnership. As valuable partners, the CISI and ACI FMA will continue to look for other initiatives that benefit the membership of both organisations.”

SIX publishes the monthly key figures of SIX Swiss Exchange and BME Exchange on trading and listing activities in Switzerland and Spain. Combined Key Figures SIX Swiss Exchange & BME Exchange Combined Figures* Month MOM Change YOY ChangeYTDYTD Change Turnover in CHF mn 129,537 -13.1% -6.6% 853,139 4.3% Turnover in EUR mn 133,837  -12.1%  -5.7%  881,463 5.2%  Transactions 5,853,582  -10.5%  3.4%  40,623,882 2.8% SMI 11,993.8  -0.1%  6.3%  n.a.  7.7%  IBEX 35 10,943.7  -3.3%  14.1%  n.a.  8.3%  *includes provisional figures for all respective trading segments for SIX Swiss Exchange and BME Exchange (except Financial Derivatives); for indices, ‘YTD Change’ refers to the change since beginning of the year. Exchange rate provided by the SIX currency converter. Key Figures SIX Swiss Exchange SMI index at 11,993.8 points at the end of the month (+7.7% YTD Change) Trading turnover of CHF 92,145 million (+14.3% YTD Change) 3,556,591 transactions (-1.7% YTD Change) Segment Month (in CHF mn) MOM Change YOY ChangeYTDYTD Change Turnover Equities** 64,072 -7.3% -6.8% 403,456 -8.1% Turnover Fixed Income 21,796  -26.4%  47.5%  192,898  131.4%  Turnover ETF 5,670  -13.6%  -0.7%  34,268  18.9%  Turnover Securitized Derivatives 608  -12.3%  4.7%  4,480  0.8%  Turnover Total 92,145  -13.0%  2.6%  635,102  14.3%                Month MOM Change YOY Change YTD YTD Change Transactions Equities** 3,308,012  -6.2%  -1.1%  22,602,700  -2.8%  Transactions Fixed Income 34,951  -10.7%  -13.3%  219,504  -5.6%  Transactions ETF 190,780  0.8%  16.3%  1,102,803  25.2%  Transactions Securitized Derivatives 32,848  -9.3%  9.3%  226,020  9.3%  Transactions Total 3,566,591  -5.9%  -0.3%  24,151,027  -1.7%  **incl. Funds + ETPs Product Listing Month MOM Change YOY ChangeYTDYTD Change Number Product Listings Fixed Income 50 -7.4% -13.8% 238 -2.1%  Volume Listed via Fixed Income  (CHF mn) 11,063 -32.9% -12.8% 64,713 -4.5% Number Product Listings Securitized Derivatives 8,216 -13.1% -4.9% 55,306 3.5% Swiss Indices Month End Reading Change Versus End of Previous Month Change Since End of Last Year SMI® PR 11,993.8 -0.1% 7.7%  SLI Swiss Leader Index®  PR 1,943.7 -0.6% 9.4% SMIM® PR 2,576.1 -1.9% 0.4% SPI® TR 15,919.3 -0.5% 9.3% SPI EXTRA® TR 5,185.4 -1.8% 4.5% SXI LIFE SCIENCES® TR 6,881.4 0.8% 12.4% SXI Bio+Medtech® TR 4,791.3 -1.3% 4.9% SBI® AAA-BBB Total Return 133.8 2.4% 1.7% Key Figures BME Exchange Turnover  in Equities amounted to EUR 29,061 million (+14.8% YOY Change) Fixed-income trading amounted to EUR 9,478 million (+1.5% MOM Change) IBEX 35® futures contracts traded grew by 10.9% in the month and energy derivatives contracts by 69.2% Segment Month (in EUR mn) MOM Change YOY ChangeYTDYTD Change Turnover Equities 29,061 -17.1% 14.8% 174,471 5.8%  Turnover Fixed Income 9,478 1.5%  -61.5% 50,125 -51.4% Turnover ETF 72 -18.0% -23.6%  542 -11.1% Turnover Securitized Derivatives 22 -17.5% -27.0% 137 -25.4%  Turnover Total 38,633 -13.2% -22.8% 225,276 -16.2%               Month MOM Change YOY Change YTD YTD Change Transactions Equities 2,276,361 -16.9% 9.9% 16,407,333 10.6% Transactions Fixed Income 1,945 -11.9% -47.1% 12,230,00 -29.3% Transactions ETF 4,823 3.9% -22.2% 31,571 -27.5% Transactions Securitized Derivatives 3,862 19.5% -22.4% 21,721 -24.8% Transactions Total 2,286,991 -16.8% 9.7% 16,472,855 10.3% Product Listing Month MOM Change YOY ChangeYTDYTD Change Number Product Listings Fixed Income 330 -11% -39% 2,089 -35%  Volume Listed via Fixed Income (in EUR mn) 41,047 61% 1% 201,596 -19% Number Product Listings Securitized Derivatives 1,216 143.2% -23.9% 4,567 -10.3% Financial DerivativesTraded Contracts Month MOM Change YOYChangeYTDYTDChangeTurnover(EUR mn) IBEX 35 Futures 364 10.9% -9.9% 2,209 -4.7% 40,364  Mini IBEX 35 Futures 50 27.1% -10.1% 303 2.2% 558 IBEX 35 Options 49 -58.0% 65.5% 433 39.7% 540 Stock Futures 1,235 -47.0% 47.3% 7,135 2.0% 659 Stock Options 865 15.6% -31.9% 5,000 -25.5% 949 Power Derivatives (MW) 702 69.2% 116.7% 4,048 62.2% 45 Spanish Indices Month-End Reading Change Versus End of Previous Month Change Since End of Last Year IBEX 35 10,943.7 -3.3% 8.3%  IBEX Medium Cap 14,552.5 -3.7% 7.4% IBEX Small Cap 8,489.2 -3.8% 6.8% IBEX Grow 15 1,661.6 -5.7% -8.0% VIBEX 14.8 30.9% 19.1% Detailed statistics on turnover and transaction volumes per segment compared with the previous month and previous year, on newly listed products and on the development of the most important indices can be found in the tables below. The website of SIX Swiss Exchange provides you with full access to our complete information offering. We provide you with the latest market data and comprehensive statistics for our entire securities universe. This includes order book information, prices, volumes and turnover figures as well as historical data and statistics. We also provide official notices of listed companies, management transactions and other relevant information to ensure safe and transparent trading. Discover more.   More Detailed Information   Statistical Monthly Report Statistical Monthly Report   Intraday Activity Intraday Activity

PNGX Group, operator of Papua New Guinea’s national stock exchange, has taken another step towards enhancing the PNG capital market. PNGX has released amendments to its Business Rules to modernise the management requirements for PNG’s stockbrokers.  This follows the improvement to the speed of settlement of trades which took effect in July 2023,  enhancing the overall efficiency of the market. The Business Rules govern the behaviour of stockbrokers on the PNGX market. The recent amendments now require each broker to be supervised by a person identified as a Responsible Manager, replacing the previous requirement of an Affiliate Director. The role of a Responsible Manager is crucial, as they must possess sufficient knowledge, seniority and authority within a broker to exert control, leadership, influence and supervision over its operations and processes.   Responsible Managers must have direct responsibility for significant day-to-day decisions about the operations of the stockbroker. Additionally, Responsible Manager’s are accountable to PNGX for ensuring the stockbrokers compliance to the business rules and all applicable regulations.  These amendments are interim measures, set to remain in place until the Business Rules are completely rewritten in late 2024.To aid this transition PNGX will be providing education sessions for stockbrokers in coming months. A copy of the amended Business Rules and the Guidance Note are available on the PNGX website.