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13 October 2011

This week in "Brussels"
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Articles from 06 October 2011 - 13 October 2011

Banking

ECON Committee published an assessment of the cumulative impact of various regulatory initiatives on the European banking sector
Among other regulatory measures, the report considered the CRAs, short sales and credit default swaps, MiFID and EMIR. The reports concluded that the overall joint impact of the discussed measures will lead to an increase in financial stability.  View Article
Assessment of the macro-economic impact - report issued by the Basel Committee and the Financial Stability Board
The Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) released an assessment of the macro-economic costs and benefits of proposals for higher loss absorbency for global systemically important banks (G-SIBs).   View Article
ECON Committee hearing on CRD IV
Mr Enria, EBA's chairman, called for a closer cooperation during the legislative process with the EBA so they will be able to adapt the drafting of the standards to the evolution of the debate in the EU institutions.   View Article
EACT: Presentation to Committee on Economic and Monetary Affairs of the European Parliament
Mr Richard Raeburn, chairman of the European Association of Corporate Treasurers, focused on two aspects of the CRD IV proposals: the importance of consistency between EMIR and CRD IV; and the wider impact that CRD IV will have on the real economy – large companies and SMEs.  View Article
EBF: Key messages on the European Commission's CRD IV proposals
The EBF submission explains the key concerns which the European banking industry has with the European Commission's proposals on the basis of those guiding principles.  View Article
ESBG: SME lending to be hindered by Capital Requirements Directive review
The European Savings Banks Group (ESBG) fears that the implementation of the Basel III regulatory framework via review of the Capital Requirements Directive review will dramatically hinder retail bank lending to small and medium-sized enterprises (SMEs).  View Article
FT: Regulators stand up for new capital rules
In an assessment of the impact of the Basel III rulebook, the Financial Stability Board and the Basel Committee on Banking Supervision concluded that the reforms would only slow gross domestic product by 0.34 per cent over the eight-year period during which the rules are being implemented.  View Article
Paul N Goldschmidt: The recapitalisation of the banking sector - a dilemma intimately linked to the sovereign debt crisis!
The latest meeting between Chancellor Merkel and President Sarkozy seems to confirm that – at last – the leaders of the main EMU members have woken up to the urgency of the situation.   View Article
FBF says there is no solution without restoring confidence in the eurozone
The French banks reiterate that while the regulatory framework governing their activities and their organisational structure must ensure the stability of the financial system, it must also allow banking groups to continue with their role of financing the economy.  View Article
ABBL: The Belgian, French and Luxembourg states provide strong support to Dexia in the implementation of the restructuring plan
The Board of Directors examined various measures in line with the decisions taken by the French, Belgian and Luxembourg states aimed at stabilising the Group's liquidity situation.  View Article
ABBL: Precision Capital acquires KBL epb, KBC's private banking subsidiary
The KBC group ('KBC') has reached an agreement with Precision Capital for the sale of its dedicated Private Banking subsidiary, KBL European Private Bankers ('KBL epb') for a total consideration of €1,050 billion, €50 million of which depend on the results of KBL epb ('conditional earn out').  View Article
ECB Vice President Vítor Constâncio: Contagion and the European debt crisis
Contagion is one of the mechanisms by which financial instability becomes so widespread that a crisis reaches systemic dimensions. Mr Constâncio argues that contagion phenomena play a crucial role in exacerbating the sovereign debt problems in the euro area.  View Article
FN: Why are our regulators so anti-European?
In almost every aspect – increased capital requirements, a leverage ratio and increased long-term funding requirements – Basel III will hit European banks far harder than those in the US.  View Article
Commissioner Almunia: Europe's future payments market
Almunia stressed that the SEPA initiative has achieved some appreciable results. However, the take-up of traditional instruments has been too slow. In August, SEPA credit transfers accounted for only 20.1 per cent of all such transactions in Europe, and direct debits for a negligible 0.1 per cent.   View Article
ECON Committee released a study: 'Responsible lending – Barriers to Competition'
This study analyses the main barriers to effective competition in the provision of mortgage credit. It considers and discusses barriers affecting both the supply and the demand side of the market.  View Article
EMF: ECBC launches its Label Initiative
The European Covered Bond Council (ECBC) announces its Label Initiative, which highlights to investors the value and quality of covered bonds and further enhances the recognition of, and trust in, the covered bond asset class.  View Article

Securities

Keynote speech by ESMA Executive Director Verena Ross at City of London Brussels Annual Reception
Ms Ross talked about a step change that has been taken in terms of European financial services regulation with the creation of the ESAs.  View Article
ESMA highly automated trading environment consultation
ESMA publishes the responses received to the Consultation on the Guidelines on systems and controls in a highly automated trading environment for trading platforms, investment firms and competent authorities.  View Article
FSB published progress report on implementing OTC derivatives market reforms
The report summarises progress made toward implementation of the G20 commitments concerning standardisation, central clearing, exchange or electronic platform trading, and reporting of OTC derivatives transactions to trade repositories.  View Article
Meeting of the OTC Derivatives Regulators' Forum
The OTC Derivatives Regulators' Forum (ODRF) met to discuss its ongoing work in the context of over-the-counter (OTC) derivatives reform being put into place in different jurisdictions.  View Article
ESMA Stakeholder Group elects Guillaume Prache as chair, Judith Hardt and Peter de Proft as vice-chairs
The Securities and Markets Stakeholder Group (SMSG) of ESMA elected Guillaume Prache as its first chair. Prache, Managing Director of the Federation of European Investors (“EuroInvestors”), will chair ESMA's SMSG for two years.   View Article
Vítor Constâncio: Securities settlement in 2020 – T2S and beyond
In his speech, Vítor Constâncio focused on the importance of strengthening the Single Market, the various initiatives currently being pursued for this purpose, and how T2S fits into the wider picture  View Article
SIFMA Statement on FSOC proposal for designation of non-bank financial companies as SIFIs
Kenneth E Bentsen Jr, executive vice president, said that “today's proposal is another step towards strengthening the safety, soundness, and resiliency of financial institutions and for improving the government's capacity to monitor and reduce systemic risk".  View Article
FN: FESE opens the door to MTFs
The Federation of European Securities Exchanges, one of Europe's most powerful lobby groups, is considering opening its membership to alternative trading platforms as part of a drive to modernise the association.  View Article
Ian Williams: MiFID Review and Retail Products
With the official publication of the Commission response to the MiFID Review, this briefing summarises the key issues impacting the retail investment community. It identifies the policy orientations set out in the consultation process and provides a checklist to frame the response of the Commission as it publishes its own course of action.  View Article
FT: Regulators to tackle high-speed trading
Automated trading firms would be forced to post prices in key markets "on a regular and ongoing basis" even in times of extreme volatility, under draft proposals to be unveiled by the European Commission next week.  View Article
FN: High-speed traders warn ESMA over new rules
Europe's most influential high-frequency trading firms have warned European regulators that a “one size fits all” policy on computer-driven trading would harm the quality of the market, and have called for greater flexibility over new trading rules.  View Article
EBF response to ESMA's guidelines on systems and controls in a highly automated trading environment for trading platforms
The EBF acknowledges the need for coordinated regulatory involvement to determine the adequate organisational arrangements for trading platforms and investment firms in relation to issues raised by highly automated trading.   View Article
FN: Nasdaq outlines clearing reform plans
Nasdaq OMX has said it will introduce two new clearing houses to its European market by April next year. The announcement comes as competition among trading platforms and post-trade infrastructure intensifies amid declining margins in the equities trading business.  View Article

Insurance

EIOPA published report on the cross-border cooperation mechanisms between Insurance Guarantee Schemes in the EU
Among the conclusions, the Report states that cooperation between home and host state IGSs and between IGSs and supervisors is vital to ensure that policyholders are protected effectively if an insurance undertaking fails.   View Article
FSA updates Solvency II implementation in line with Europe
Following discussions in Europe, the United Kingdom Financial Services Authority (FSA) has decided to split the implementation dates for Solvency II and will only revisit the issue if there is a significant change in the dates after 2014.  View Article
Lexology: Which will happen first – the end of the FSA or the introduction of Solvency II?
The FSA's revised implementation assumption that Solvency II will not come into force for firms until 1 January 2014 is a belated acceptance of the delay in the negotiation of the Omnibus Directive and the European legislation which has been known in Brussels for months.  View Article

Asset Management

FN: Fund worlds fight for their lives
A two-part revolution in hedge fund managers' investor base has led them into direct competition with mainstream asset managers – and the hedge funds have not been having it their own way.  View Article
FN analysis: Hedge funds offer risk-sharing bridge
New financial regulations have created a gulf between those who need capital and those who have it. On one side stand the banks; on the other side are the pension funds, insurance companies and family offices.  View Article
FN: Hedge funds poised for worst quarter since 2008
Hedge funds are poised to deliver their worst quarterly performance in almost three years, after grappling with market volatility driven by the escalating sovereign debt crisis, economic weakness in the US and concerns about a slowdown in China's growth.  View Article
IVSC and IPEV to cooperate on valuation standard-setting
The International Valuations Standards Council (IVSC), the international standard-setter for valuations across a wide range of assets, today signed a memorandum of understanding (MoU) with the International Private Equity Valuations (IPEV) board.  View Article
FN: Pension funds shun gold and hedge funds
Pension funds are avoiding gold, hedge funds, private equity and exchange traded funds in their search for alternatives to fixed income returns, according to a report from UBS and Lane, Clark & Peacock.  View Article
UK pension funds call for emergency meeting to discuss impacts of quantitative easing
UK pension funds are calling for an urgent meeting with the Pensions Regulator to discuss ways of protecting UK pensions from the negative effects of quantitative easing.  View Article

Corporate Governance/Accounting

IFAC urges G20 to pursue coordinated, long-term approaches to global economic stability and fiscal sustainability
IFAC urged the G20 leaders at their November 3-4, 2011 meeting in Cannes, France, to focus on institutional change in public sector financial management, adoption and implementation of global standards, and support for integrated reporting.  View Article
FRC: Changes to UK Corporate Governance Code
The FRC announced its decision to amend the UK Corporate Governance Code to strengthen the principle on boardroom diversity which was first introduced into the Code in June 2010.  View Article
ACCA: Global accounting standards grow in popularity
Support for global standards amongst CFOs and investors has increased since the start of the economic crisis in 2008, finds an international survey. The new independent study, 'Towards greater convergence', gauges the value that investors and CFOs see in IFRS and other global standards.  View Article
FASB adds agenda project to consider deferring certain aspects of ASU No. 2011-05, Comprehensive Income
The FASB announced the addition of an FASB agenda project to consider deferring certain aspects of Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income.  View Article
EFRAG Planning and Resource Committee: Summary of meeting held in September
The EFRAG PRC decided on the process to finalise its comment letter to the IASB, taking into account the comments received both in the form of comment letters and those raised in the various outreach events.  View Article
IASB: Hans Hoogervorst addresses AICPA / IFRS Foundation conference in Boston
Hans Hoogervorst, Chairman of the IASB, addressed the AICPA / IFRS Foundation conference, held in Boston, USA. Mr Hoogervorst focused on the possibility of the SEC adopting IFRSs.  View Article
ESMA's comment letter to IASB regarding Exposure Draft on Improvements to IFRSs
The ESMA published a comment letter to IASB regarding ED on Improvements to IFRSs. ESMA believes that the proposals set out in the ED contribute to improving financial reporting  View Article
ESMA's comment letter to EFRAG regarding IASB's Exposure Draft on Improvements to IFRSs
The ESMA published a comment letter to EFRAG regarding IASB's ED on Improvements to IFRSs. ESMA believes that the proposals set out in the ED contribute to improving financial reporting but does not share EFRAG's position on borrowing cost and tax effect.  View Article
ECIIA: Insight and oversight
The oversight role of the Audit Committee includes asking management the right questions to be assured that risk management processes and internal control systems have been fully considered in the strategic and business planning processes and operations.  View Article
FRC criticises French auditors
French auditors have been criticised by the UK's leading accountancy regulator for their performance during the Greek debt crisis. French banks and insurers had been allowed by their auditors to post smaller losses on Greek government bonds than some European rivals.  View Article

Financial Services Policy

Letter from Van Rompuy and Barroso on the key issues of the G20 summit
Van Rompuy and Barroso call for a "renewed collective G20 spirit" and stress that "the fact that France holds the G20 Presidency this year gives Europe a special responsibility".  View Article
EFR letter ahead of G20 Finance Ministers' meeting on 14/15 October 2011
In a letter addressed to French finance minister François Baroin, The European Financial Services Round Table (EFR) says the G20 meeting comes at a crucial time for the economy as well as for the regulatory reform process. EFR renews its offer to engage in a meaningful debate on all relevant issues.  View Article
ECON Committee: Germany's Jörg Asmussen takes first steps towards joining ECB Executive Board
MEPs overwhelmingly recommended Jörg Asmussen to become Jürgen Stark's successor on the ECB Executive Board. In discussion, Mr Assmussen insisted that the EU bailout fund should not call on ECB liquidity to enhance its firepower.   View Article
FEE leads the debate on the future of tax policy
During the FEE Conference, Commissioner Semeta highlighted the Commission's priorities, in particular the Common Consolidated Corporate Tax Base (CCCTB), the need to prevent further double taxation in the EU and move away to a definitive VAT regime.  View Article
IFAonline: Advisers have just three months before ‘real’ RDR deadline
Advisers who have not started studying for Level 4 before the end of this year could be in danger of missing the 31 December 2012 RDR deadline, according to the Institute of Financial Services (IFS) School of Finance.  View Article

Financial Stability - Policy Analysis

ECON Committee briefing paper: How effective and legitimate is the European Semester?
The paper argues that a strong role for the European Parliament will increase the effectiveness of EU economic governance; even if the paper suggests that the EP involvement is limited to specific stages along the Semester cycle.   View Article
George Osborne: Ring-fence, recapitalise, resolve
Osborne said that there is a need for a comprehensive solution which ring-fences vulnerable eurozone countries. He also stressed that it is important to recapitalise Europe's banks and resolve the uncertainty about Greece.   View Article

Economic Crisis

Barroso outlines a roadmap for stability and growth
The Commission has presented a roadmap outlining the response to restore confidence in the euro area and the European Union as a whole. This response is designed to solve doubts over the sustainability of sovereign debt, the stability of the banking system and the European Union's growth prospects.  View Article
Verhofstadt insists on a single European bank recapitalisation plan
Addressing a debate in the European Parliament today on the urgent steps that the European Council must take to address the crisis in the eurozone, ALDE Group leader Guy Verhofstadt welcomed the roadmap of measures that the Commission had just adopted but underlined three important aspects.  View Article
Joint statement by President Herman Van Rompuy and President José Manuel Barroso on the recent political developments in Slovakia
Van Rompuy and Barroso call upon all parties in the Slovak Parliament to rise above the positioning of short term politics, and seize the next occasion to ensure a swift adoption of the new agreement.  View Article
Verhofstadt: Slovak vote proves need for majority decision-making in eurozone
Guy Verhofstadt (Liberal & Democrat group leader in the European Parliament) expressed his deep regret at the Slovak Parliament's rejection last night of the upgraded EFSF, which is seen as a key element of any emerging solution to the financial crisis now entering a critical phase.  View Article
S&D: Slovak opposition “ready to act in EU interest”
S&D group vice-president, Hannes Swoboda, today described last night's vote in the Slovak Parliament as “the rejection of a split and failed government”.   View Article
FT: Slovakia votes against expanded EFSF
Slovakia's government became the first in the eurozone to fall over opposition to bailing out indebted economies, after the country's parliament voted down approval for enhancing the bloc's rescue fund.  View Article
Van Rompuy convenes the European Council and the Eurozone Summit on 23 October 2011
Van Rompuy asked the Polish Presidency and the President of the Eurogroup to convene an ECOFIN Council and a Eurogroup meeting ahead of the European Council.  View Article
FT: EU sets deadline to resolve debt crisis
Herman Van Rompuy, the European Council president, said EU leaders would meet on October 23 to “finalise our comprehensive strategy”, allowing Europe to present its plan for restoring confidence in the euro to the G20 summit on November 3-4.  View Article
European Parliament leaders unite in call for decisive plan for eurozone crisis
The EP's political leaders today put aside any ideological differences in a joint call to the European Commission and EU leaders to agree a decisive and comprehensive plan for getting on top of the ongoing financial crisis that is dragging down both the European and the wider global economy.  View Article
FT: Trichet warns of ‘systemic’ phase of crisis
The European Central Bank president said delays in government action were "only contributing to aggravating the situation". Europe's institutions "must rise to the challenge and act together swiftly", he told the European Parliament.  View Article
Reuters: Greece loan talks advance as EU delays summit
The European Union postponed a summit to allow time for a broader solution to Greece's debt crisis, after Athens said it had concluded talks with international lenders on an aid payment needed to avert default.  View Article
Statement by the European Commission, the ECB and the IMF on the fifth review mission to Greece
Staff teams from the EC, ECB and IMF have concluded the fifth review mission to Greece to discuss recent economic developments. The mission has reached staff-level agreement with the authorities on the economic and financial policies needed to bring the government's economic programme back on track.  View Article
Reuters: Europe eyes bigger Greek losses for banks
Eurozone countries will ask banks to accept losses of up to 50 per cent on their holdings of Greek debt, officials said on Wednesday, as part of a grand plan to avert a disorderly default and stem a crisis that threatens the world economy.  View Article
WSJ: Merkel and Sarkozy say a deal is near
Angela Merkel and Nicolas Sarkozy said that the measures will include a plan for recapitalising eurozone banks where necessary, as well as proposals for deepening the coordination of national budget policies between the eurozone's 17 members.  View Article
WSJ: Spain and Italy hit by downgrades
Spain and Italy suffered debt downgrades, triggering a retreat in the euro as European governments scrambled to develop a common approach to restoring confidence in the region's banks.  View Article
FT: ECB boosts liquidity and holds rates
Europe's central banks have escalated dramatically their use of unconventional policy weapons, in a bid to calm nervous financial markets and prevent the continent's economies from sliding into recession.  View Article
FT: ‘Time short’ for eurozone, says Cameron
The UK prime minister wants France and Germany to bury their differences and to adopt before the end of the year what he claims would be a decisive five-point plan to end the uncertainty, which was having a “chilling effect” on the world economy.  View Article
Bruegel: Is Europe sliding into a double-dip recession? Focus on the long term
This op-ed by Shahin Vallée, published in the "Room for debate" section of the NY Times, highlights the immediate need of Europe to focus on a long-term strategy in order to restore growth and see through this economic crisis.  View Article
FT: Save Europe's unity now
The article claims the policies needed to end the crisis are hard, but feasible. Europe is on the brink because it is unable to muster the political will to do what it must.  View Article

International/G20

OMFIF: Bernanke is fighting the wrong battle
David Marsh writes that last week Fed chairman Ben Bernanke lectured the Chinese over alleged renminbi obduracy, claiming they were blocking worldwide recovery by refusing to allow the currency to revalue. But if Bernanke wished to bring about a currency realignment beneficial to the world economy, he'd push for a euro revaluation.   View Article

Think Tanks

Bruegel: How to stop fragmentation of the eurozone
In this op-ed, Jean Pisani-Ferry analyses how the risks of facing fragmentation in the euro area are becoming noticeable. The author points out how a stronger monetary union is necessary to avoid fragmentation and puts forward three possible responses to this state of affairs.  View Article
CEPR: Resolving the eurozone crisis - time for conditional eurobonds
While prominent observers are preparing the funeral rites for the eurozone, John Muellbauer, author of this CEPR Policy Insight 59, argues that the faulty machinery of the eurozone can be successfully retrofitted and that it can survive.  View Article
CER: Britain, the City and the EU - a triangle of suspicion
Senior Research Fellow Philip Whyte writes that the UK has abandoned its 'light touch' regulatory regime and signed up to greater supervisory integration at EU level. Yet far from narrowing, the Channel looks as wide as ever. So what went wrong?  View Article
CEPS: A liquid Europe?
In his latest Commentary, CEPS director Daniel Gros allows that the eurozone might just be stepping back from the brink. He attributes this welcome development to the inclusion of a key component that has been missing so far in any proposed framework to resolve the ongoing sovereign debt crisis, namely a liquidity backstop for the eurozone's fiscal authority.  View Article

Commentaries

Wolfgang Münchau: Eurozone quick-fix will create political monster
If the optimum is not attainable, we are tempted to settle for the second best. The optimal response for the eurozone would be to turn it into a fiscal union. But it might not happen – or not in time. In that case, the question naturally arises: what would constitute a minimally sufficient solution to the crisis?  View Article
Charles Grant: Eurozone ‘outs’ must stick up for the single market
The European commissioner responsible for the single market is blocking further liberalisation of services – even though the Commission as a whole is economically liberal. The biggest danger is that the euro crisis will lead to a two-speed Europe that fractures the single market.   View Article
Charles Grant: Resuscitating the euro
For almost two years, the eurozone has been stricken with a potentially fatal malaise. Every time EU leaders try to tackle the situation, they come up with solutions that prove to be too little, too late. The result of all this is that the euro's survival seems at risk.  View Article
OMFIF: Time to set up the Non-Eurogroup
Owen and Marsh say that whatever happens in the stand-off pitting Greece and other indebted countries against their creditors, the relationship between the European Union's members and non-members of economic and monetary union seems set for far-reaching change.   View Article
Stewart Fleming: The IMF rides to Europe's rescue?
Writing for European Voice, Fleming says that the ECB should not take the lead in tackling the sovereign debt crisis; there is another option.   View Article
Karel Lannoo: The European TARP Solution
Writing for the Wall Street Journal, CEPS's Lannoo says the eurozone needs a Continent-wide programme to stabilise its banks and keep them lending. The European Union should act rapidly to enact a eurozone TARP to strengthen the financial sector and maintain lending.  View Article
Gillian Tett: America’s six key lessons for a ‘euro TARP’
Writing for the FT, Gillian Tett says the obvious solution to some is what might be called euro TARP – or a eurozone version of the capital injections and stress tests that in effect halted the American banking crisis back in late 2008 and 2009.  View Article
John Plender: Governments and banks locked in fatal embrace
Writing for the FT, Plender wonders what it would take to persuade the banks to start lending to each other again and restore their access to funding markets. Something pretty big is the short answer, because the funding challenge ahead is formidable.  View Article
Steinmeier: Solving the European crisis – Money alone is not a solution
Frank-Walter Steinmeier argues for political union in Europe and the harmonisation of taxes.  View Article
Philip Stephens: Britain’s eurosceptics are right to call for a referendum
In his FT column, Stephens writes that for Britain's Tory-led government, the European Union has become one of those issues that falls into the category of lose-lose.   View Article

Graham Bishop's Webinars

Graham Bishop Webinar: Review of August and September 2011
Graham was joined online by Ruben Lee, Guy Sears (Investment Management Association), David Gardner (KPMG), Henri Olivier (FEE) and Richard Raeburn (EACT). Our thanks go to these outstanding Co-hosts.   View Article




© Graham Bishop

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