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07 March 2013

This week in "Brussels"
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Articles from 28 February 2013 - 07 March 2013

Banking

Bank capital rules: ECOFIN Council endorses agreement with EP
The ECOFIN Council today broadly endorsed the outcome of the most recent political trilogue of 27 February 2013 with the EP on stricter capital requirements for banks ("CRD IV" package).  View Article
Schulz deeply regrets lack of decision on CRD IV and bankers' bonuses in the Council
EP President Martin Schulz issued a statement on the postponement of a decision in the ECOFIN Council on CRD IV (capital requirements), and in particular bankers' bonuses.  View Article
S&D Euro MPs "outraged" at the lack of decision on CRD IV and bankers' bonuses
"Today, by delaying the decision, the Council has supported the bankers at the expense of defending a strong banking sector working for the real economy and for citizens. This is very regrettable."  View Article
EBF welcomes the breakthrough on CRR/CRD IV
EBF welcomes the fact that there is an agreement by the Irish Presidency and the European Parliament with a view to eliminating the final obstacles to the adoption of the Basel III agreement into European law.  View Article
ALDE: MEPs close deal on stricter controls over the banking sector
ECON chair Sharon Bowles commented: "Like economic governance measures passed last year, this will be an equivalent 'stability and growth package' for banks".  View Article
EPP Group fully backs compromise on new EU banking rules
"The banks' first job is to finance the real economy. This is why the new banking law is not only a piece of banking regulation, but a real economy financing act", said Othmar Karas MEP. In a separate statement, Karas said he did not see any reason to re-open the political compromise package.  View Article
FT: Five essential questions on the bonus cap
This FT blog answers five key questions on the cap: how it works, how you can avoid it, whether it will really pass and what it means for Britain and the City.  View Article
TheCityUK responds to EU's decision to cap bankers' bonuses
Chief Executive Chris Cummings commented: "This decision could have a negative impact on the international competitiveness of the UK, and the EU as a whole".  View Article
BNE/Rudd: "Even I, as a pro-European, am against an EU cap on bankers' bonuses"
BNE chairman Rudd writes that the latest EU rules to cap bank bonuses have the potential to do severe damage to a strategic sector, one that Britain leads in Europe.  View Article
Paul N Goldschmidt: Limiting bank bonuses - Why the choices of the new Regulation are flawed
The final EU agreement on CRD IV should be hailed as an important step forward in improving the prudential regulatory framework of the banking industry.  View Article
Wolfgang Münchau: Bonus issue marks start of a long battle
It is in the eurozone's collective interest to stop London from acting as its main financial centre, comments Münchau in his FT column. The bonus issue is only the first warning shot in what will become a long drawn-out fight.  View Article
Risk.net: Banks fear capital swings if Basel III kills bond filter
Bank capital numbers will be exposed to swings in the value of huge bond portfolios if a Basel III footnote appears in final US and European rules – and with interest rates still at record lows, the initial swing can only go one way.  View Article
Risk.net: Europe edges towards three-pronged credit valuation adjustment (CVA) exemption
European banks are on the verge of being granted a sweeping exemption to the CVA capital charge contained in Basel III, after the EU's finance ministers this week endorsed the result of drawn-out three-way wrangling between the Council of EU, members of EP and EC.  View Article
ESMA and EBA warn investors about contracts for difference
The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have published a warning to retail investors about the dangers of investing in contracts for difference (CFDs).  View Article
Bloomberg: Constâncio says Barnier plan not enough for bank failures
The EU needs a plan for cross-border bank failures that goes beyond Commissioner Barnier's proposed cooperation measures, ECB VP Constâncio said.  View Article
Bundesbank/Dombret: Statement on the occasion of the expert consultation of the German Bundestag's Finance Committee
Dombret said he was fundamentally open to the Liikanen Report's plans to separate banking activities but also drew attention to their inherent problems.  View Article
Bank of Finland/Hakkarainen: Remarks at the Future of Banking Summit
The Deputy Governor commented on key talking points in the debate, "Re-evaluating the universal banking model: Can the Volcker, Vickers or Liikanen rules make banks safer?"  View Article
ECB/Mersch: Financial stability policies in central banks
Mersch said that one of the ECB's priorities was to help decision-makers find the appropriate policy responses to the build-up of excessive systemic risks, and thus to prevent the real economy, and ultimately the taxpayers, from the potential adverse impacts of unsustainable financial imbalances.  View Article
BIS: International Journal of Central Banking (IJCB)
The International Journal of Central Banking (IJCB) is an initiative of the central banking community. Published quarterly, the journal features articles on central bank theory and practice, with a special emphasis on research relating to monetary and financial stability.   View Article
UK Government announces Libor administrator tendering committee
The Government announced the membership of the independent committee which will recommend a new administrator for the London Interbank Offered Rate (Libor). The Committee's work is now underway. (Includes link to FSA response to TSC's report, 'Fixing Libor'.)  View Article
FSA publishes its Internal Audit Report: Review of the extent of awareness within the FSA of inappropriate Libor submissions
The Financial Services Authority (FSA) has published its Internal Audit Report (the Report) on the London Interbank Offered Rate (Libor).  View Article
Hungarian Prime Minister Viktor Orbán nominates György Matolcsy to the post of Central Bank governor
Prime Minister Viktor Orbán announced Minister György Matolcsy as the nominee for Central Bank governor. The Ministry for National Economy will be headed by Minister without portfolio Mihály Varga, who was responsible for liaising with certain international financial organisations.  View Article

Securities

European Commission extends deadline for ESMA advice on equivalence of non-EU rules with EMIR
The European Commission extended for four months the deadline for ESMA advice on the equivalence between non-EU legal and supervisory frameworks and EMIR, the European Markets Infrastructure Regulation.  View Article
IPE: Clearinghouse launches industry group to measure EMIR impact
Clearinghouse CME Clearing Europe has launched an industry group looking into the impact of the European Markets Infrastructure Regulation's (EMIR) Article 47.3, arguing that the rules could "deeply" impact end-user clients of derivatives such as pension funds.  View Article
IOSCO identifies non-signatories to the MMoU on the exchange of information
The International Organisation of Securities Commissions published a list of its members who have yet to sign the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.  View Article
FT: Get technical to fix rating agencies
The three agencies that dominated the market before the crisis (S&P, Moody's and Fitch) still do so. Newcomers such as Kroll Bond Ratings, Egan-Jones and DBRS remain niche operators, notwithstanding the merits of their technical capabilities.  View Article
Trade matching for Exchange-traded Derivatives: Lessons learned from equities
DerivSource's Ted Leveroni explores the importance of trade matching for exchange-traded derivatives amidst regulatory reform, market change and previous success in automating this process for other asset classes.  View Article
Stewart Fleming: Coming in from the shadows
The European economy cannot rely on banks to provide corporate finance, writes Fleming in his EV column. Closing off other sources of lending would be a mistake. (Includes quote from Graham Bishop.)  View Article

Insurance

EIOPA recommends a coordinated supervisory response to the long-lasting low interest rates
EIOPA has published an Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment. EIOPA will coordinate an exercise to quantify the scale and scope of the risk arising from a prolonged low interest rate environment.  View Article
Risk.net: Matching adjustment ring-fencing provisions 'a threat' to mutual insurers
Mutual insurers have slammed the ring-fencing requirements of the matching adjustment, saying the versions of the measure being tested in the long-term guarantees impact assessment (LTGA) would damage their business model.  View Article
Risk.net: Technology providers look to the cloud to meet insurers' modelling challenges
Cloud technology potentially offers insurers an efficient way to undertake the huge amount of actuarial and risk modelling calculations that need to be performed. But with concerns around data security and reliability, is it really a fail-safe option?   View Article
Risk.net: FSA ramps up insurer Arrow visits
The UK's Financial Services Authority ramped up the number of intensive on-site inspections of insurance businesses last year, according to figures obtained under the Freedom of Information Act.  View Article
CRE: Spanish association calls for the development of insurance mediation
Spanish buyers still pay little attention to the advantages of dispute mediation when solving conflicts with insurers, experts said in Madrid yesterday. But speakers at a seminar on mediation expressed hopes that the practice could progress and gain popularity in the market.  View Article
Update on GIAJ activities
The General Insurance Association of Japan published an update of its major activities and industrial materials.  View Article

Asset Management

ECON opinion on an Agenda for Adequate, Safe and Sustainable Pensions
ECON points out that this will require Member States to consolidate their budgets and reform their economies under austere conditions, in order to provide a poverty-proof retirement income under the first pillar.  View Article
IPE: Pension funds planning new FoHF investments
According to a report by Preqin, pension funds are looking increasingly to make new commitments to funds of hedge funds (FoHFs), at a time when many other institutional investors cut back on allocations from the asset class due to poor returns.  View Article
IPE: Belgium opposes Solvency II-inspired measures in revised IORP Directive
Belgium is adding its voice to a growing chorus of opposition to European Commission moves to include Solvency II-inspired measures in revisions to the IORP Directive.  View Article
IPE: UK pensions minister calls for government-backed DC protection fund
The UK's pension minister has said that the establishment of a government-backed defined contribution (DC) protection fund could be the best way to allow for cheap guarantees due to the "challenges" posed by the solvency requirements for private sector approaches.  View Article
IPE: Netherlands to replace multi-scheme pensions vehicle with new API
Jetta Klijnsma, state secretary for the Dutch Ministry of Social Affairs, has announced that the new cross-border pensions vehicle API is to replace the "multi-scheme".  View Article
EFAMA: ECB policy measures heighten investor confidence, leading to strong demand for UCITS during Q4 2012
Strong growth over the last decade: total UCITS and non-UCITS assets at end 2012 stood 108 per cent higher than at end 2002 and 45 per cent higher than at end 2008.   View Article
IOSCO publishes principles of liquidity risk management for CIS
This report contains a set of principles, against which both the industry and regulators can assess the quality of regulation and industry practices concerning liquidity risk management for collective investment schemes (CIS).  View Article
IMA response to HMT consultation on AIFMD
The Investment Management Association (IMA) believes that existing UK AIFM do not have to be authorised in order to launch a new AIF post-22 July.  View Article
Telegraph: UK leads 12-state rebellion against EC hedge fund rules
Britain has been joined by 11 other countries in an extraordinary rebellion against the European Commission's high-handed approach to passing financial legislation.  View Article
ALFI condemns Financial Transaction Tax
ALFI rejects the European Commission proposal for a Council Directive implementing enhanced cooperation in the area of FTT. It believes the tax will not achieve the main objectives set out by the Commission, and ultimately the European market for investment funds as a whole will suffer considerably.  View Article

Corporate Governance/Accounting

European Commission: Eurostat report on IPSAS implementation by EU Member States
Council Directive 2011/85/EU sets out the rules on Member State budgetary frameworks necessary to ensure compliance with the Treaty obligation to avoid excessive government deficits. In this context, it requested the EC to assess the suitability of the IPSAS for the Member States.  View Article
EU adopted amendments to IFRS 1
The EU published Commission Regulation No 183/2013 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards IFRS 1.  View Article
Insurance Europe: Fair value through OCI in IFRS 9 is step in right direction
Insurance Europe provided its statement to the IASB proposal to amend its accounting requirements for financial instruments in International Financial Reporting Standard (IFRS) 9.  View Article
IASB's proposals for amendments to IAS 39 Financial Instruments
The IASB published for public comment with a 30-day comment period an ED of proposed amendments to IAS 39 Financial Instruments: Recognition and Measurement. Corresponding requirements are proposed to be included in the forthcoming hedge accounting chapter in IFRS 9 Financial Instruments.  View Article
The National: IFRS must be adopted by all
Peter Beynon, the regional director of ICAEW Middle East, commented on the lack of commitment from the SEC on the adoption of IFRS in the United States. As the world's largest capital market, the direction that the US takes is bound to have an effect on other nations' decisions.  View Article
IFAC: Global accountancy leaders identify major themes for 2013
The IFAC released the results of its 2012 IFAC Global Leadership Survey of the Accountancy Profession. The survey elicited respondents' opinions regarding perceptions of the accountancy profession and the most significant issues facing global accountancy in 2013.  View Article
Insurance Europe's key messages on the EU Audit legislative package
Insurance Europe strongly supports high quality audit in Europe. However, it does not believe the proposals as presented by the EC on 30 November 2011 or the revisions following the discussions in the EP and Council will lead to improved audit quality.  View Article
EBF & AFME: Mandatory audit firm rotation requirement under the European Statutory Audit Directive
In a joint comment paper, EBF and AFME support efforts by European legislators to improve the quality of statutory audits and to reinforce auditor independence. However, they are concerned that the proposed mandatory rotation of audit firms would not achieve the desired objectives.  View Article
FRC: Financial Reporting Lab: 'Reporting of pay and performance'
This report analyses the views of investors and companies on two new aspects of the draft reporting regulations on remuneration.  View Article
FASB responds on segment reporting
The FASB will review the issues raised by the Post-Implementation Review of its business segment reporting standard with its stakeholders and the staff of the SEC, to determine whether further review of the standard is warranted.  View Article
IFAC: IPSASB encouraged by G20 delegates' focus on strengthening the public sector balance sheet
The IPSASB welcomes the G20 Finance Ministers' and Central Bank Governors' decision to address "transparency and comparability of public sector reporting" in the final communiqué issued for their February 15-16 meeting.  View Article

Financial Services Policy

Commissioner Šemeta: Speech on the Financial Transaction Tax at the Centre for American Progress
Šemeta looked at what the FTT is projected to deliver, and said he retained the hope that through the EU's example a global FTT would also become a reality some day.  View Article
Commissioner Almunia: Relying on the Single Market for the future of Europe
Speaking at the European Competition Forum, Almunia looked at the role that competition policy is playing in the financial sector today, and the role it will have in the financial industry that is emerging from the crisis.  View Article
FSA publishes discussion paper on transparency
The Financial Services Authority has published a discussion paper looking at how transparency and more effective disclosure could improve the accountability of the regulator and the financial services industry, and help consumers make more informed decisions.  View Article

European Council/Parliament

Main results of the ECOFIN Council: European Semester / EMU / Two-Pack
The Council held an exchange of views on the quality of public expenditure in the context of the current European Semester exercise. The meeting also included an agreed recommendation from the Council on the further development of EMU with the intention of developing a road map for the June Council.  View Article
Economic governance: Council confirms agreement with EP on "Two-Pack"
The Permanent Representatives Committee (Coreper) today agreed to a compromise reached with the European Parliament on 20 February on two draft regulations aimed at further improving economic governance in the euro area.  View Article
ECOFIN Council Conclusions on the quality of public expenditure
In view of the serious growth and debt challenges confronting the EU economy, the Council underlines the need to increase the efficiency and effectiveness of public spending, in support of growth-friendly fiscal consolidation strategies, while safeguarding essential social safety nets.  View Article

Graham Bishop’s Articles and Speeches

Financial World: Go, if you really must (Graham Bishop article)
Graham Bishop has been scouring the European continent in vain to find people willing to let the UK cherry-pick from the EU single market menu.  View Article

Financial Services Month in Brussels - Report

February 2013 Financial Services Month in Brussels - Report
Banking union is not yet agreed by the legislators but the practitioners and thinkers are already debating the mechanics of how it can be done. First of all, the SSM has to come into existence – with the SRM very close behind.  View Article





© Graham Bishop

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