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20 September 2012

This week in "Brussels"
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Articles from 13 September 2012 - 20 September 2012

Banking

Plenary Session: Quality and accountability vital for banking supervision
The envisaged EU banking supervision rules must be of good quality and provide for accountability. However the Member States' current preferences for establishing them risk sending the wrong message, as well as perpetuating inefficiencies, warned the Parliament in a resolution voted on Thursday.  View Article
Cyprus Presidency: Building on the reform of the EU's financial sector
The EU's ECOFIN ministers and central bank governors discussed the reform of the financial sector, focusing on the creation of a banking union, the establishment of a Single Supervisory Mechanism and the strengthening of the shadow banking sector.  View Article
Commission lays ground for banking union
Simple coordination is no longer enough – closer supervision and integration is now needed at EU level to avoid future banking crises, restore confidence in the financial system, and protect savers.  View Article
ECON Committee: Bank crisis resolution and ECB mandate - Opening salvoes
Draft EU bank crisis resolution legislation must reflect recent thinking on a banking union, and the ECB's mandate could be overhauled to match the new position of the institution, said ECON Committee MEPs in opening debates on these issues.  View Article
EurActiv: Banking union battle lines drawn
Negotiating stances on the EU's proposed banking union were nailed into the ground on the fringes of an informal European finance ministers meeting in Nicosia.  View Article
WSJ: Slow path to policing Europe banks
When eurozone leaders decided to equip the ECB with new powers to police banks in the currency union, the agreement appeared clear. When an effective single supervisory mechanism is established, they declared, the eurozone's bailout fund would have the possibility to recapitalise banks directly.  View Article
BCBS: Core principles for effective banking supervision - revised version endorsed by global bank supervisors
The BCBS has completed its review of the October 2006 Core principles for effective banking supervision and the associated Core principles methodology. The revised Core Principles were endorsed by banking supervisors at the 17th International Conference of Banking Supervisors held in Istanbul.   View Article
ICFR: European Commission fires first salvo in EU bank union battle
The International Centre for Financial Regulation highlights areas of concern with the Commission's two proposals relating to a single supervisory mechanism (SSM) for the euro area and the governance of the EBA.  View Article
IIF Market Monitoring Group welcomes moves on single supervisory mechanism for euro area banks
MMG members said that the recent announcements represented welcome and tangible steps towards restoring confidence in euro area sovereign debt markets and the European banking sector. They highlighted the impact of regulatory change on corporate financing.  View Article
CEPS: Banking union - A federal model for the European Union with prompt corrective action
This Policy Brief proposes a strengthening of the Commission package through the establishment of a truly federal system and the enlargement of its scope of application to the entire Union.  View Article
Bruegel: A five-step guide to European banking union
It is important that the European Commission succeeds with its tabled proposals for a single supervisory mechanism, write Jean Pisani-Ferry and Guntram B Wolff. They submit their five-point guide for the negotiators.  View Article
Bruegel: The fiscal implications of a banking union
Jean Pisani-Ferry and Guntram B Wolff prepared this report for presentation at the Informal ECOFIN in Nicosia on 14 September.  View Article
Douglas J Elliott: Banking union faces long road ahead
The European Commission's detailed proposal for a "banking union" also underscores just how much still needs to be done, and how many political disputes need to be fought before such a union can be implemented.  View Article
VoxEU: The Commission's proposal on bank supervisory powers for the ECB
The European Commission is planning a shake-up in financial supervision in Europe. This column argues that time will tell whether or not this is a good idea – for now all we have for certain is uncertainty.  View Article
Ralph Atkins: Bank union key for European bonds dream
Common bank supervision will help break the link between banks and individual sovereigns, removing national barriers that deter debt market investors, comments Atkins in this FT article.  View Article
ICFR Regulatory Briefing: Basel III - The basics
In its review of the latest set of banking guidelines issued by the BCBS, ICFR says that some stakeholders have noted that the new Basel III standards continue to rely on banks' internal models and credit rating agencies, which will continue to encourage a "gaming" of risk weighted assets (RWAs).  View Article
EPC: ECB publishes Fact Sheets on national implementation of SEPA Regulation
The European Central Bank (ECB) has published fact sheets providing country-specific information related to the SEPA Regulation.  View Article
EPC: SEPA Direct Debit - Migration is manageable; the time to act is now
The SEPA Regulation defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes will be replaced by SCT and SDD.  View Article
EPC: Fourth progress report on migration towards SEPA in Belgium
The fourth progress report on migration towards SEPA in Belgium was published in September 2012. Belgium remains a front runner regarding migration to harmonised SEPA payment schemes.   View Article
Bundesbank/Dombret: The role of the state in the financial system
In his speech at the ifo/CESifo/Bundesbank Conference, Dombret said: "The crisis has shown that, like it or not, the state is needed as the ultimate guarantor of systemically important functions of the banking sector".  View Article
FN: Infrastructure turns to capital markets as banks cut lending
Ratings agency Standard & Poor's expects capital market financing for US infrastructure projects to double in the next two years, as banks cut back on lending due to regulatory requirements to hold more capital.  View Article

Securities

ESMA consults on market maker and primary dealer exemption for short selling
ESMA published a paper on Exemption for market making activities and primary market operations under the Short Selling Regulation, which contains draft Guidelines on market making and the application of exemptions for market making activities and primary market operations under the Regulation.  View Article
Consob: Short selling ban lifted on sales of "covered" bank and insurance securities
On 14th September, the ban expired on short selling - even if "covered" by debenture loans - of bank and insurance securities, adopted on 23 July 2012 and extended on 27 July 2012.  View Article
Guardian: Britain opposes MEPs seeking ban on high-frequency trading
High-frequency trading (HFT) faces possible extinction in Europe, as politicians from across the political spectrum join forces to impose restrictions on a practice blamed for two market crashes in recent years.  View Article
ECBC publishes 2012 edition of the European Covered Bond Fact Book
The book provides a detailed explanation of covered bond fundamentals, including reviews of some of the current European regulatory changes that are bound to have a direct and significant impact on covered bonds, mainly the Commission's CRD IV Proposal, Solvency II and MiFIR.  View Article

Insurance

Reuters: EU insurers' capital regime deadline still achievable – regulator
The European Union could avoid an embarrassing delay to its Solvency II capital regime for insurers by agreeing to phase in parts that have become bogged down in political wrangling, the head of its insurance regulator said on Thursday.  View Article
Reuters: EU may delay tough new capital rules for insurers
The European Union could postpone strict new capital rules for insurers because of wrangling between member countries over the final shape of the new regulations. Michel Barnier, the EU commissioner in charge of regulation, has suggested delaying the so-called Solvency II regime by one year.  View Article
Reuters: Solvency regulations for insurers are disproportionate – report
Regulations that require insurance companies to hold much higher capital reserves to remain in the black following a natural disaster are out of proportion to the actual losses to which they are exposed, a report has said.  View Article
IPE: Bernardino baffled over Solvency II capital fears
Gabriel Bernardino, chairman of insurance and pensions supervisor EIOPA, has dismissed the ongoing debate over whether capital requirements under Solvency II would hurt European insurance companies.  View Article
Insurance Journal: Heightened regulation forcing insurers to focus on modelling risks: Conning
The growing level of activity among regulatory bodies and quasi-regulatory agencies focused on strengthening insurance solvency protection systems, particularly regarding increased risk capital and enhanced risk management, will force insurers to focus more attention on modelling their risks.  View Article
FT: Insurance principles - Hurdles towards insurer harmony
The UK's Generally Accepted Accounting Principles (GAAP), which are used by private companies, are being phased out in favour of a version of the globally recognised International Financial Reporting Standards (IFRS). Listed UK companies have already switched to IFRS.  View Article
Risk.net: Reinsurers urged to expand equities allocation amid 'fixed-income bubble' fears
Reinsurers need to increase their investment in equities to hedge the interest rate and inflation risks on their large fixed-income portfolios, according to reinsurance broker Guy Carpenter.  View Article
Risk managers face potentially tougher liability renewals as Munich Re vows to 'adjust' underwriting strategy
Torsten Jeworrek, Reinsurance CEO of Munich Re, used the Monte Carlo Rendez-Vous to warn customers that it is adjusting its underwriting strategy to help it cope with the impact of increasingly scary existing and potential economic scenarios.  View Article
Insurance industry must take client-focused approach to emerge from current storm, says Michel Liès
The risk transfer industry is in the 'eye of a storm' and must change the way it does business towards a more innovative and client-focused approach in order to emerge from its current predicament in better shape, said Michel Liès, Group Chief Executive Officer at Swiss Re.  View Article
CRE: XL CEO warns insurers are becoming less relevant to corporate
The chief executive of XL Group, Michael McGavick, has warned that insurers are becoming less relevant and must change their ways or risk long-term decline.  View Article

Asset Management

Commissioner Andor underlines urgency of addressing pension challenges
The need to implement measures urgently to ensure adequate, safe and sustainable pensions for the future was the main message from European Commissioner László Andor to the European Forum for Manufacturing's roundtable on pensions at the European Parliament.  View Article
NAPF: Multi-employer pension schemes gain stronger voice
The National Association of Pension Funds (NAPF) has created separate multi-employer scheme forums for Defined Benefit (DB) and Defined Contribution (DC) pensions. The DB forum will be chaired by Joyce Martindale from RPMI and the DC forum by Mark Fawcett from NEST.  View Article
FT: Cameron puts brakes on pension reform
David Cameron has demanded a rethink of flagship state pension reforms, amid fears they could alienate core Conservative supporters, including the electorally crucial "grey" vote.  View Article

Corporate Governance/Accounting

Euro MP Sharon Bowles hails tough new rules on corporate transparency
The European Parliament's Legal Affairs Committee has today voted through tough new amendments to the EU's Transparency and Accounting Directives, ensuring that certain industry sectors can no longer continue to hide profits made in the developing world.  View Article
IFAC: Policy position paper on global regulatory convergence
IFAC issued Policy Position Paper 6, Global Regulatory Convergence and the Accountancy Profession. IFAC believes that global regulatory convergence contributes i.a. to: promoting the comparability of financial information; minimising the effects of systemic economic risks; reducing information costs.  View Article
FEE: Towards simpler and more meaningful corporate reporting
The FEE published a short summary of their conference on Corporate Reporting of the Future.  View Article
FRC published Lab report on 'Net debt reconciliations'
The FRC has released the Financial Reporting Lab's project report on 'Net debt reconciliations (NDR)'. The Lab encourages readers of this report to comment on its content and presentation.  View Article
Public Finance International: Debt, deficits and democracy
According to Ian Ball, IFAC CEO, fiscal policy can't be outsourced to independent bodies in the same way that monetary policy can. Instead, politicians must be forced to be more accountable and transparent – to allow voters to make decisions based on accurate information.  View Article
IASB Chairman Hans Hoogervorst: The Concept of Prudence - Dead or alive?
Hans Hoogervorst, Chairman of the IASB, delivered a speech entitled The Concept of Prudence: dead or alive? at the FEE Conference on Corporate Reporting of the Future in Brussels. He explained that prudence also plays an important role in the development of new Standards.  View Article
Journal of Accountancy: Scope of appropriate content, structure in auditor’s report under debate
According to IAASB officials, there is clear demand for auditors to provide greater transparency about significant matters in the financial statements, as well as the conduct of audits.   View Article
WSJ: After the shareholder spring, how about an auditor autumn?
Andrew Peaple at the Wall Street Journal analyses regular auditor changes and improvement of audit quality.   View Article
FASB and ASBJ hold biannual meeting
Representatives of the FASB and the ASBJ met on September 13 and 14 in Tokyo. At this meeting, the FASB and the ASBJ provided updates on their recent activities, and exchanged views on the opportunities for continuing cooperation among the interested organisations.  View Article

Financial Services Policy

Financial watchdogs under Economic and Monetary Affairs Committee spotlight
The EU financial supervisory authorities must be given the right legal powers and resources for the job, their chairs chorused at Wednesday's ECON Committee meeting. MEPs airing ideas for banking union were warned by the banking authority chair that rules risked differing for "ins" and "outs".  View Article
Almunia: Competition control is one of the most important factors to achieve the ultimate goal of establishing a genuine Single Market
Almunia said that competition policy had been a major force for economic integration in Europe and for growth and competitiveness at every step of the process, and that he would make sure that it continued to support the regulatory process of market integration.  View Article
ICFR Regulatory Briefing: Systemically important financial institutions - A whirlwind tour
This briefing provides a whistle-stop tour of the multi-faceted regulatory work to address SIFIs.  View Article
Bundesbank/Dombret: Global rules for global financial markets
Dombret said he strongly supported the strengthening of existing bodies in the field of global financial regulation and the international monetary system - therefore the creation of a global regulatory authority did not seem practical at this point in time.  View Article
EEA EFTA Comment on the Commission's proposal on the modernisation of the Professional Qualifications Directive
Iceland, Liechtenstein and Norway have submitted an EEA EFTA Comment to the EU on the Commission's proposal on the moder­nisation of the professional qualifications rules, in which they welcomed the efforts of the EU to modernise and simplify the Directive on Professional Qualifications.  View Article




© Graham Bishop

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