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31 March 2011

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
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Articles from 24 March 2011 - 31 March 2011

Banking

ECB Bini Smaghi: Banking supervision and corporate governance in the European architecture
Commenting on stress tests, Bini Smaghi said that the success of these new tests depends on them being fully understood by market participants. It is thus essential that supervisory authorities coordinate their communication strategy closely within the EBA.   View Article
Deutsche Bank Dr Josef Ackermann: Drawing up lists of SIFIs would be conceptually wrong
Speaking at the Frankfurt Finance Summit, Dr. Ackermann stressed that it will be crucial to keep cumulative effects and unintended consequences in mind, in order to prevent damaging our economies and the welfare of society.  View Article
Paul Goldschmidt: Need for clarification on scope of stress tests
Restricting the inclusion of sovereign exposure to the trading book as opposed to the banking book can only be justified if the securities held in the banking book cannot be pledged as collateral for the purpose of borrowing from the ECB.  View Article
European Bank funding threatened as Basel III meets Solvency II
Bloomberg reports that European banks are being forced to sell more long-term bonds as regulators seek to prevent another financial crisis. European insurers say their own regulator will stop them from buying such debt.  View Article
State aid: Commission approves Austrian State support for the restructuring of Kommunalkredit
The EC has approved measures in favour of Kommunalkredit Austria AG, consisting inter alia of state guarantees of more than €10 billion and a split of the bank through the separation of strategic and non-strategic activities.  View Article

Securities

European Parliament approves Verena Ross as ESMA's first Executive Director
The approval by the EP follows an open hearing on 17 March for the three nominees for Executive Director of the new European Supervisory Agencies. Verena Ross was nominated as Executive Director by the ESMA Board of Supervisors on 22 February, subject to the EP confirmation process.  View Article
ISDA: SEF rules should provide greater choice, access and liquidity to OTC derivatives market participants
The International Swaps and Derivatives Association, Inc. (ISDA) outlined its views on the role, impact and optimal structure for Swap Execution Facilities (SEFs) in the global over-the-counter derivatives markets.  View Article
IMF publishes report ‘Making OTC Derivatives Safe - A Fresh Look‘
This paper looks at the possibility that central counterparties (CCPs) may be 'too-big-to-fail' entities in the making. The present regulatory and reform efforts may not remove the systemic risk from OTC derivatives, but rather shift them from banks to CCPs.  View Article
Advanced Trading: OTC derivatives coming under regulatory scrutiny
After operating for years in the shadows, over-the-counter derivatives are coming under scrutiny from regulators. While some critics fear fragmented markets will dry up liquidity, others worry about the details of clearing.  View Article
New York Times: Official warns of regulatory arbitrage
Bart Chilton, a commissioner at the Commodity Futures Trading Commission, warned that if financial regulators in the US and Europe enact conflicting rules for the derivatives industry, banks and other financial firms will be free to skirt the new rules.  View Article
Revised compromise text on short selling and CDS
Restrictions on uncovered short sales and the issue of sovereign debt, together with ESMA’s intervention powers in exceptional situations, are key unresolved issues.  View Article
FN: Spain still slow to embrace MiFID
According to Javier Tordable, chief executive of Spain's multilateral trading facility, PAVE, the slow pace of change is partly due to the regulator prioritising robustness over access, meaning there are few failed trades in Spain but that it is expensive for international investors to participate.  View Article
ECMI brief: NYSE Euronext – Deutsche Börse Merger: Let the dance go on
The author finds that the liberalisation process and regulatory changes brought about by the financial crisis have revived this long-term process.  View Article
Publication of the ESMA data on prospectuses approved and passported
ESMA published the tables compiling the data on prospectuses approved and passported for the period July 2010 to December 2010 (with a quarterly disclosure).  View Article

Insurance

EIOPA: QIS5 presentation at stakeholder hearing
The European Insurance and Occupational Pensions Authority (EIOPA) published slides presented at a stakeholder hearing on the results of the fifth quantitative impact study (QIS5) of the Solvency II capital rules.  View Article

Asset Management

EFAMA: FPSG report
The aim of the recommendations is to increase efficiency in processing fund orders. The report was prepared by EFAMA’s Fund Processing Standardisation Group. It consolidates the recommendations published in 2005, and extends the recommendations in two key areas: transfers and corporate actions.  View Article
FN: Proxy voting agencies attack AMF proposals
The Autorité des Marchés Financiers has proposed that any recommendation from proxy agencies should give companies a minimum of 24 hours to read their draft report, accept any corrections the company requires and insert any commentary the company may wish to add, before it is sent to shareholders.  View Article
IPE: Markets telling us 'eurozone is safe' – Schroders
While some peripheral economies are heading for default or restructuring of their debt, UK-based asset manager Schroders thinks this risk is already priced into markets, and that markets are signalling the fact that contagion via Spain into Belgium and Italy is unlikely.  View Article
IPE: Asset managers must 'rediscover' meaning of fiduciary duty
FairPensions published a report into fiduciary duties of both pension trustees and those who manage scheme assets, arguing that many now only view a fiduciary’s duty as guaranteeing returns.  View Article
FN: Buyout-backed bonds will 'lower credit quality'
Ratings agency Fitch has warned that the growing use of high yield bonds to finance buyouts and refinance private-equity portfolio companies will end up reducing the overall credit quality in Europe.  View Article

Corporate Governance/Accounting

EFRAG´s outreach events on the main IASB projects
EFRAG and European National Standard Setters will organise outreach meetings on the main IASB projects, scheduled to be finalised in June 2011. The purpose of the events is to provide useful input to the IASB for finalisation of the standards, and to ensure that they are suitable for use in Europe.  View Article
IFAC: UNCTAD-IAESB Accountancy Education Forum identifies areas of focus for accountancy education programmes
The AEF's Building Human Capacity and Professional Accounting Education for High-Quality Corporate Reporting was organised by PAO and hosted by UNCTAD and IAESB. Standards revision, guidance/implementation support and technology were identified as areas of focus for accountancy education programmes.  View Article
IAASB Annual Report 2010
The Annual Report 2010 highlights the IAASB’s ongoing work to promote the adoption and implementation of its clarified ISAs, and the issuance of a number of proposals in areas where there is demand for new and innovative assurance and related services, other than audits of financial statements.  View Article
House of Lords called for a competition probe into the Big Four auditors’ oligopoly
House of Lords Economic Affairs Committee report found the ‘complacency’ and ‘dereliction of duty’ of auditors contributed to the financial crisis.  View Article
FRC: House of Lords Economic Affairs Committee’s report on auditors
The FRC welcomed the House of Lords Economic Affairs Committee’s report on ‘Auditors: market concentration and their role’. The FRC will respond in full to the Economic Affairs Committee’s report in due course.  View Article
ACCA: House of Lords Economic Affairs Committee’s report on auditors
ACCA welcomed many of the observations and recommendations of the House of Lords' Select Committee on Economic Affairs' report 'Auditors: Market Concentration and their Role'.   View Article
APB: Revised guidance on 'The Audit of Banks and Building Societies in the United Kingdom'
The Auditing Practices Board of the FRC published a revision of Practice Note 19, 'The audit of banks and building societies in the United Kingdom'. An exposure draft of the revised Practice Note was issued in July 2010 for public comment.  View Article
APB published a revision of SIR 2000
The APB of the FRC issued a revision of Standards for Investment Reporting (SIR) 2000 ‘Investment Reporting Standards Applicable to Public Reporting Engagements on Historical Financial Information’.  View Article

Financial Services Policy

European Council conclusions: The ESM will have an effective lending capacity of €500 billion
EU leaders adopted a comprehensive package of measures which will strengthen the economic governance of the European Union, and ensure the lasting stability of the euro area as a whole.  View Article
Commissioner Šemeta: "Setting out the tax agenda for a fairer contribution of the financial sector”
Šemeta stressed that both the European Parliament and the Council are willing to examine the possibility of innovative financing at global level.   View Article
EC proposal on mortgages: Better protection for European consumers
The aim of the Commission proposal is to create a responsible, efficient, healthy and competitive pan-European market that works to the benefit of consumers. It should also promote customer mobility and the cross-border activity of creditors and intermediaries.  View Article
EFBS: Mortgage credit rules are counterproductive
The European Federation of Building Societies (EFBS) comments that the proposal for a Directive for the regulation of mortgage credit in Europe is counterproductive for the internal market and makes it more difficult to compare cross-border financial offers.  View Article

Economic Crisis

CRIS committee: Beyond economic governance: the EU needs new growth model
The first draft of what is to become the final report by the CRIS committee suggests that to ensure the EU's future competitiveness and sustainable growth, a European Treasury, tax harmonisation, euro bonds and increased EU expenditure to finance investments in research and development are needed.  View Article
S&P downgraded Portugal and Greece due to permanent bail-out fund agreement
Standard and Poor's said the downgrades came after the agreement by European leaders last week to replace the European Union's bailout fund with the European Stability Mechanism in 2013.   View Article
Bruegel paper: Is it EMU 2.0 or 1.7.3?
Jean Pisani-Ferry, director of Bruegel, stressed that successive new versions of EMU have been introduced at a frantic pace - only to discover remaining vulnerabilities shortly afterwards.  View Article
Wolfgang Münchau: A grand bargain that cannot end the crisis
Münchau argues that there is good news, bad news and really bad news on the outcome of the EU summit. He stressed that the good news is that a new permanent crisis resolution mechanism has been put in place, starting in 2013.   View Article




© Graham Bishop

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