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25 April 2013

This week in "Brussels"
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Articles from 18 April 2013 - 25 April 2013

Banking

ECON Committee: Breathing room and rate cut on the cards as ECB readies for slowdown
MEPs quizzed ECB VP Vítor Constâncio on what more can be done to help credit flow to businesses and households, whether austerity is the right recipe, ECB transparency, and possible interest rate cuts at Wednesday's ECON Committee meeting on ECB activities in 2012.  View Article
ECB/Constâncio: Presentation of the ECB Annual Report 2012 to the ECON Committee
Constâncio gave an overview of the economic and monetary developments in 2012, set out ECB's assessment of economic policies and governance, and commented on future steps towards establishing a banking union.  View Article
Bank supervision: Council confirms agreement with EP
The Permanent Representatives Committee approved a compromise agreed with the EP on the establishment of a single supervisory mechanism (SSM) for the oversight of credit institutions.  View Article
Reuters: G20 urges EU to complete banking union fast; Germany digs in heels
World financial leaders urged the European Union to complete its banking union quickly to help growth, but Germany stood firm that the next step towards such a union should be through a lengthy and risky process - a change of EU law.  View Article
Reuters: Most EU bank union work can be done without law change
Mr Dijsselbloem, president of the Eurogroup, said that the banking union will not be delayed for now by a row over whether it needs EU law changed, because most of the work can be done before this is settled.   View Article
ECON Committee: Home loans - Better protection for buyers
Property buyers would be better informed about the costs and consequences of taking on a mortgage, better protected from market swings while the contract lasts, and better protected if they cannot repay the loan, under a provisional deal struck by ECON Committee MEPs and EU Member State representatives.   View Article
Irish Presidency reaches agreement on new European mortgage rules
The Irish Presidency has today reached provisional agreement with the EP on new rules to benefit mortgage holders and consumers across Europe. Agreement on the new Mortgage Credit Directive will mean more information and better protection for consumers.  View Article
Statement by Commissioner Barnier following the agreement in trilogue on the Mortgages Directive
Barnier welcomed the agreement reached on the Mortgages Directive, saying: "This Directive will help put an end to excesses and foster responsible lending practices. Consumers will finally get the protection they deserve."  View Article
EBF: Banks welcome Mortgage Credit Agreement
"This agreement is particularly important in view of the importance of the mortgage credit markets for consumers and the economy in general", commented Guido Ravoet, Chief Executive of the EBF.  View Article
EFBS: Agreement on mortgage credits - 'Rationality has won'
EFBS welcomed the result of the trialogue negotiations on mortgage credits. Managing director Andreas J Zehnder said: "National characteristics which proved their value for consumers and credit institutions during the financial crisis are now still considered".  View Article
ALDE backs better protection for home buyers
After months of negotiations, an agreement was reached on the Mortgage Credit Directive, which aims to create a level playing field where minimum harmonisation requirements will apply to all EU countries and, most importantly, consumers will be guaranteed due protection.  View Article
EPP: EU standards on mortgage loans to protect consumers better
Shadow rapporteur Alfredo Pallone MEP said he was 'greatly satisfied' with the agreement reached yesterday on the Report on Credit Agreements - Residential Property: "This will introduce European-wide standards for the granting of mortgage loans for the first time".  View Article
Barnier warns US over 'radical' new bank rule
Commissioner Barnier has written a letter to US Federal Reserve chief Ben Bernanke, calling for a globally-coordinated response to regulation, criticising US unilateral regulation, and demanding that the US come forward with final rules to implement the Basel III reforms.   View Article
EBF: European banks express concerns over US reform of banking rules
EBF expressed serious concerns over the impact of US capital reform proposals on cross-border banking activities.  View Article
"Basel must not penalise trade" - Sharon Bowles MEP
ECON chair Sharon Bowles called on the BCBS to recognise the significant steps taken this week in the EU to alleviate the regulatory burden for trade finance, an issue she championed during negotiations.  View Article
ECB opinion on protection from risks and separation of banking businesses
On 25 February 2013, the ECB received a request from the German Federal Ministry of Finance for an opinion on a draft law on protection from risks and on the planning of recovery and resolution of credit institutions and financial groups (the 'draft law').  View Article
BIS: International banking statistics
Under the auspices of the Committee on the Global Financial System, BIS compiles and publishes two sets of statistics on international banking activity: 'Locational banking statistics' and 'Consolidated banking statistics'.  View Article
Gunnar Hökmark: Can a major bank really be allowed to fail?
Dealing with bank failures requires a delicate balance between managing expectations and finding a credible solution, writes the rapporteur for the Bank Recovery and Resolution Directive in this EV article.  View Article
CFTC/Gensler: Remarks at London City Week on benchmark interest rates
Gensler spoke about one of the most significant risks facing the capital markets today: the risk to market integrity and financial stability of the continued use of Libor, Euribor and similar benchmark interest rates.  View Article
BoE and HM Treasury announce extension to the Funding for Lending Scheme
The Bank of England and HM Treasury announced an extension to the Funding for Lending Scheme (FLS), including three specific changes. (Includes comment from Sharon Bowles.)  View Article
HM Treasury: Review of the Special Administration Regime for Investment Banks published
The Treasury presented Peter Bloxham's review of the special administration regime for investment banks (SAR) to Parliament. As expected, Bloxham recommends further work, and a fuller report will follow in the summer.   View Article
BBA blog: Banks must show they are now very different creatures
Banks are about the most unpopular industry in the UK, according to detailed new YouGov research. The poll demonstrates the scale of the challenge banks face in convincing customers that banks have been taking significant steps to reform their practices - just as they demand.  View Article
BBA: Swiss-British Round Table calls for open, consistently-regulated international markets
The need for consistent, proportionate regulation and open markets, and the dangers of over-regulation and protectionism, were the central issues at a City of London – Swiss Financial Round Table.  View Article
Swissinfo: Clock ticks on Swiss banking secrecy
The foreign assault against Swiss banking secrecy continues – after the EU and the US, the G20 has now joined the throng. Switzerland is becoming ever more isolated after Luxembourg dropped its opposition to sharing bank data with its partners.  View Article

Securities

OTC Derivatives Regulators Group report to G20 meeting of Finance Ministers and Central Bank Governors of 18-19 April 2013
The principals of the authorities with responsibility for the regulation of the OTC derivatives markets in Australia, Brazil, the EU, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the US have held four meetings to discuss reform of the OTC derivatives market.  View Article
Letter to US Treasury Secretary Lew on cross-border OTC derivatives reform
The letter, signed by Barnier, Schäuble, Moscovici, Osborne et al, expressed concern at the lack of progress in developing workable cross-border rules as part of reforms of the OTC derivatives market.  View Article
ISDA: OTC derivatives markets poised for growth in Asia
According to the report, 57 per cent of Asian end-users believe their use of OTC derivatives will increase in the next couple of years, while 36 per cent said it will stay the same.  View Article
BIS: Implementation of PFMIs monitored by CPSS and IOSCO
CPSS and IOSCO have started the process of monitoring implementation of the Principles for financial market infrastructures (PFMIs).  View Article
IOSCO publishes report on technological challenges to market surveillance
IOSCO published a final report on 'Technological Challenges to Effective Market Surveillance: Issues and Regulatory Tools', which makes recommendations to help market authorities address the technological challenges facing effective market surveillance.  View Article
ESMA publishes updated statistical data on Credit Rating Agencies
ESMA has published the latest set of semi-annual statistical data on the performance of credit ratings, including transition matrices and default rates, in its Central Rating Repository (CEREP). This new set of statistics covers ratings data up to 31 December, 2012.  View Article
Paul Tucker: Central counterparties in evolving capital markets - Safety, recovery and resolution
Contribution by Paul Tucker to the Banque de France Financial Stability Review, launched in New York.   View Article
GreySpark: High-Frequency Trading - The Good, the Bad and the Ugly
This research shows that high-frequency trading can increase liquidity, reduce volatility and enhance price discovery and price improvement in global capital markets. HFT firms are failing to safeguard their operations if they do not correctly implement the necessary risk management measures.  View Article

Insurance

EIOPA: Stakeholder groups – Selection process 2013
The mandate for the current Stakeholder Groups (Insurance and Reinsurance Stakeholder Group, IRSG, and Occupational Pensions Stakeholder Group, OPSG) will soon expire. Currently EIOPA is in the phase of preparing the Call for Expression of Interest for both groups.  View Article
Risk.net: National regulators ramp up efforts to combat low rate threat
With protracted low interest rates being arguably the biggest challenge for life insurers, national regulatory authorities are taking steps to manage the threat posed to insurers' solvency levels and ability to meet guarantees.  View Article
Risk.net: Libor/OIS spread challenges insurers' risk management programmes
Moves to central clearing of many derivatives will mean hedge assets and margin will be valued using the overnight interest rate (yet reference to a Libor rate is used). For those insurers that are significant users of derivatives, the spread between these two bases presents risk management issues.  View Article
Risk.net: Systemic risk debate hots up over variable annuities and ILS
Regulators are targeting insurers' use of variable annuities and insurance-linked securities in their fight against global systemic risk. But insurers say these products are fundamental to the way the insurance industry works.  View Article
CRE: Insurance rates up globally but down excluding US - Marsh
The global insurance market continued to firm in the first quarter of this year, predominantly on the back of rate increases in the US, but overall were up by just 0.3 per cent, according to Marsh figures. Excluding the US, rates decreased on average by around 1 per cent.  View Article
Risk.net: 'Prescriptive' ComFrame criticised by American insurance industry
The international project to develop a framework for supervising international insurance groups is in danger of exceeding its original purpose and loading a new and unwelcome layer of standards and regulations onto insurers, the American Insurance Association (AIA) warns.  View Article
VoxEU: Systemically important insurers
An unintended consequence of tighter banking regulation is that businesses are looking beyond banks for their loans. This column argues that this arbitrage opportunity may create systemic risks, including amongst major insurance companies.  View Article

Asset Management

Commission launches consultation of third pillar retirement products (individual pension plans)
The consultation focuses on consumer protection, more specifically on the pre- and post-contractual information given to consumers, as well as the selling practices covering marketing, inducements and advice given in the sector. Comments are requested by 19 July, 2013.  View Article
EIOPA: Database of pension plans and products in the European Economic Area (EEA)
The Database is a unique resource providing a comprehensive snapshot of the European pensions' landscape, and helps towards a better understanding of pension systems in Europe.  View Article
FT: EU pension proposals alarm local schemes
Brussels has a seemingly unquenchable desire to harmonise everything from interest rates to chocolate, but fresh analysis of the state of Europe's pension schemes graphically exposes the scale of the challenge when it comes to retirement provision.  View Article
IPE: UK to publish details of 'pot follows member' consolidation
It has been confirmed that the Department for Work & Pensions' (DWP) plans for UK pension savings to follow employees to each new occupational scheme are set to exclude defined benefit (DB) funds.  View Article
NAPF: UK Government's 'small pots plan' puts savers at risk
Pension funds have warned that a Government announcement today to transfer pension pots automatically when a worker moves jobs would put savers at risk.  View Article
OECD: Reforms essential to make Ireland's pension system fairer
According to this report, Ireland should make its pension system simpler and fairer so that everyone has sufficient income for a decent standard of living in retirement.  View Article
IPE: Danish pensions association blasts government for lacking compass
The Danish pensions industry has urged the government to get to grips with pensions policy, and said the latest piece of pensions legislation was nothing more than a bid for short-term tax revenue.  View Article
PwC: The asset manager's new normal - Responding to tax risks and transparency
There is an increased emphasis on transparency and cooperation between governments. Extensive tax reforms are emerging from many countries, including the US Foreign Account Tax Compliance Act (FATCA), EU FATCA, EU Savings Directive and bilateral exchange of information.  View Article

Corporate Governance/Accounting

JURI Committee: Reforming EU audit services to win back investors' confidence
Obliging companies to switch auditors regularly and prohibiting auditors from supplying certain non-auditing services are among the changes voted by the Legal Affairs Committee to a draft law to open up the EU audit services market and improve audit quality and transparency.  View Article
ACCA welcomes the balanced approach on the audit package adopted by the JURI Committee
ACCA welcomes today's vote on MEP Karim's report on the audit package in the EP's Legal Affairs (JURI) Committee, and commends the compromise efforts of the rapporteurs and shadow rapporteurs.  View Article
ALDE: Mandatory rotation of audit firms is essential to ensure their independence
Ahead of the key vote on rules for improving the quality and independence in the auditing of major companies (especially banks), Liberals and Democrats underline the need to establish some time limits on the contractual relationship between auditors and their clients.  View Article
Audit reform: S&D Group warns of new potential Parmalat or Enron scandals
Ahead of the legal affairs committee vote, the S&D Group warned against a useless audit reform that may pave the way to new potential Enron or Parmalat scandals.  View Article
IFAC: Recent Developments in Auditing - The Importance of Audit Quality and Auditor Reporting
IAASB chairman Prof Arnold Schilder presented the IAASB's view on the importance of audit quality and auditor reporting and how could they be achieved.  View Article
FT: PCAOB urges end to auditor anonymity
James Doty, chairman of the PCAOB, has made a fresh call for senior auditors to be stripped of their anonymity, as details continued to emerge from the KPMG insider trading scandal.  View Article
EBF commented on country-by-country reporting – Capital Requirements Directive
EBF published its comment letter in response to the European Parliament on country-by-country reporting – Capital Requirements Directive – article 86a.  View Article
EFRAG's newsletter on the European Conceptual Framework
EFRAG, FRC, ANC, ASCG and OIC have published the third issue of their new newsletter, 'Keep up with getting a better framework', informing European constituents on the latest developments regarding the progress of the Conceptual Framework project with the IASB and other stakeholders.  View Article
EFRAG's comment letter on the IASB's ED/2012/7 Acquisition of an Interest in a Joint Operation
EFRAG published its comment letter in response to the IASB's Exposure Draft ED/2012/7, 'Acquisition of an Interest in a Joint Operation'.  View Article
EFRAG: Feedback statement on the Disclosure Framework Discussion Paper
EFRAG, ANC and FRC released the summary of comments received on the DP, 'Towards a Disclosure Framework for the Notes'. The DP discussed ways to improve the quality of information in the notes to the financial statements and reduce the excess of immaterial disclosure.  View Article
FASB: Preparation of statements using the liquidation basis of accounting
The FASB's ASU No. 2013-07, 'Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting', improves financial reporting by clarifying when and how public and private companies and not-for-profit organisations should prepare statements using the liquidation basis of accounting.  View Article
Deloitte commented on acquisition of an interest in a joint operation
Deloitte commented on the IASB's proposals in ED/2012/7 'Acquisition of an Interest in a Joint Operation'. Deloitte agrees with the application of the principles of IFRS 3 Business Combinations, but supports the IFRS Interpretations Committee in producing additional guidance on the 'business' concept.  View Article
PwC IFRS blog: Impairment - What is the right answer?
Both the FASB and IASB have published their proposals on the recognition and measurement of expected credit losses for financial instruments. The good news is that they are available for comment; the bad news is that the proposals are not only different, but arguably both depart from the underlying economics in favour of operational shortcuts.  View Article

Financial Services Policy

Commission report underlines importance and urgency of financial sector reforms as a basis to restore long-term growth
The Commission published the European Financial Stability and Integration Report (EFSIR), which was presented at a joint conference with the ECB. This event brings together policymakers, financial market leaders and academics for discussion on financial stability and integration in Europe.  View Article
Fighting tax evasion: Commission sets up a Platform for Tax Good Governance
The new Platform for Tax Good Governance will monitor Member States' progress in tackling aggressive tax planning and clamping down on tax havens, in line with the Recommendations presented by the Commission last year. (Includes link to statement from Commissioner Šemeta.)  View Article
Joint letter on tackling tax fraud and tax evasion from Minister Noonan and Commissioner Šemeta to ECOFIN Ministers
Noonan and Šemeta stated: "Action to tackle tax fraud and evasion is demanded of us by our citizens". The letter also identifies seven key areas where concrete action can be delivered in the short term. (Includes link to letter from PM Cameron to the European Council.)  View Article
IIF CAIM raises concerns that proposed EU Financial Transaction Tax could hurt savers and pensioners
The IIF's Council on Asset and Investment Management (CAIM) today released a position paper on the proposed EU Financial Transaction Tax, warning that the potential impact on market liquidity could be severe.   View Article
BBC: Financial transactions tax - UK launches legal challenge
The UK Chancellor, George Osborne, has mounted a legal challenge at the European Court of Justice over the decision to allow 11 EU Member States to impose a Financial Transaction Tax. (Includes EBF and IMA statements.)  View Article
AFME comment on legal challenge to EU financial transaction tax
Chief executive Simon Lewis said: "This is a tax that will damage markets beyond the 11 states that are considering it, across Europe and also internationally. It will act as a brake on economic recovery by increasing costs to investors."  View Article
TheCityUK supports UK Government's legal challenge on Financial Transaction Tax
Chief executive Chris Cummings said: "We fully support the UK Government's legal challenge to the proposed financial transaction tax, and welcome the messages of support received from Luxembourg and other countries that are likely to be affected by the FTT".   View Article
Open Europe: UK Government launches legal challenge against controversial EU FTT - what does it mean and what happens next?
Despite the British Government having chosen not to participate in the measure, UK financial firms that trade with an institution in a country that does participate will still be taxed. This, the UK claims, violates EU law and is inconsistent with international tax norms.   View Article

Graham Bishop’s Articles and Speeches

Graham Bishop's Blog: Pisani-Ferry to head France PM Ayrault economic planning - Great news for Europe (and for France)
Such an appointment makes it clear that France is setting its economic future in the context of its responsibilities to Europe rather than just a narrow, national policy.  View Article
Graham Bishop's Blog: Reflections after a visit to Berlin – German Politics, Banking Union, FTT, Economic Governance, UK
These notes and observations reflect conversations before and during a brief visit to Berlin on 14/15 April 2013.  View Article





© Graham Bishop

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