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20 June 2013

This week in "Brussels"
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Articles from 13 June 2013 - 20 June 2013

Banking

ECON Committee: Banking reform - Banks should operate on behalf of the real economy
The banking sector should be reformed so that retail banking activities such as taking deposits, operating bank accounts and granting loans are separated from riskier activities such as trading with financial instruments and derivatives, says a report adopted by the ECON committee.  View Article
S&D: Euro MPs call for fundamental shake up of banks' structures
ECON vice chair Arlene McCarthy said: "Today's vote is a clear message in favour of structural reform of the EU banking sector by ensuring that banking services that are essential to the real economy are separated from the excessively risky activities of traders and investment bankers".  View Article
Commission publishes Liikanen FAQs
The Commission published an FAQ document regarding its May 2013 consultation on the Structural Reform of the EU Banking Sector (the Liikanen Reforms). The FAQs have been drafted in response to requests for clarification about the data templates published as part of the May consultation.  View Article
Bank of Finland/Liikanen: Banking after the regulatory reforms – Business as usual?
Liikanen looked at research findings and the rapid growth in the EU banking sector. He then elaborated on the HLEG proposals and the rationale behind the HLEG's proposal for mandatory separation, and gave a comparison with other suggested structural reform.   View Article
BoE/Tucker: Banking reform and macro-prudential regulation - Implications for banks' capital structure and credit conditions
Speaking at the SUERF/BoF conference in Helsinki, Tucker tried to dispel some commonly-held misconceptions of how macro-prudential variations of capital requirements would affect credit conditions. He outlined some thoughts on how the reforms might influence the shape of the financial system.  View Article
ECB/Asmussen: Prospects for a European banking union
In his speech, Asmussen discussed what the ECB saw as the current risks to European financial stability. He stressed the need for a banking union, and elaborated on the SSM and the SRM.   View Article
FT: EU struggles to unlink banks from states as summit looms
As banking union has moved from a concept to the nitty-gritty of political negotiation, a complete severing of the link between banks and national governments - i.e. making bank oversight and rescues the responsibility of the EU rather than its Member States - has proven harder than many anticipated.  View Article
Reuters: Eurozone ministers to discuss bail-in rules in bank rescues
Eurozone finance ministers will discuss how to decide which creditors will lose money and in what order during future bank rescues by the bloc's bailout fund, the European Stability Mechanism.  View Article
Handelsblatt: Berlin "categorically" rejects common eurozone resolution mechanism
The German government would like to prevent the planned EU authority for the resolution of ailing banks by any means. If necessary it would take legal action against an EU solution, it was said. The Commission however is trying to speed things up.  View Article
Schäuble fights against EU resolution authority
Schäuble reiterated his demand for a two-stage approach, under which first a network of national resolution authorities would be established, followed then by a treaty change.  View Article
ECB/Asmussen: Reintegrating financial markets
Speaking at the General Assembly of the ESBG, Asmussen referred to the problem of financial fragmentation as being "a key issue in all parts of the euro area". His approach to the problem came from three angles: the roles of governments, the ECB and the future banking union.  View Article
ECB/Mersch: Monetary policy in an environment of low growth and interest rates
Speaking in Copenhagen, Mersch said that the ECB had not 'run out of ammunition', and that more tools and measures could be employed whenever they were needed.  View Article
Bruegel/Wiedemann: Overview of the Karlsruhe Hearing on OMT – Summary
The hearing included an exchange of opinions as to whether or not the ECB's OMT was compatible with its mandate and with German basic law, as well as a debate with expert witnesses, most of them sceptical about the OMT programme.  View Article
De Grauwe & Ji: Fiscal implications of the ECB's bond-buying programme
The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB's OMT bond-buying programme. This column argues that most analyses are deeply flawed by the misapplication of private company default principles to the central bank.  View Article
EBA publishes its 2012 Annual Report
The Report provides an overview of the major achievements and activities performed by the Authority in its second year of existence.  View Article
EBA publishes good practices for responsible mortgage lending and treatment of borrowers in payment difficulties
Both Opinions are addressed to competent authorities and aim at promoting common practices, with the ultimate view of enhancing consumer protection and contributing to the stability, integrity and effectiveness of the financial system.  View Article
ESBG response to EBA consultation on draft RTS on the content of recovery plans
ESBG expressed its concerns about developing RTS at such an early stage before there is a finalised legal framework.   View Article
UK Banking Commission publishes report on changing banking for good
The UK Parliamentary Commission on Banking Standards published its Final Report, 'Changing banking for good'. The report outlines the radical reform required to improve standards across the banking industry.  View Article
BBA response to Parliamentary Commission on Banking Standards
Responding to the Parliamentary Commission on Banking Standards' report, 'Changing Banking for Good', BBA Chief Executive Anthony Browne said: "This is the most significant report into banking for a generation".  View Article
TheCityUK responds to the report of the Parliamentary Commission on Banking Standards
Welcoming the Commission's 'invaluable' work, chairman Gerry Grimstone said: "Getting London's house in order is vital if we are to retain our position as Europe's financial centre serving the globe. The Commission's recommendations will help us all achieve this."  View Article
CII response to the Banking Commission
CII CEO Dr Sandy Scott said: "It is clear from the Commission evidence and recommendations that the level of ethical and professional conduct in investment banking has been deficient".  View Article
Carsten Schneider: Europe remains open to bankers' blackmail
The priority is to put in place the means to wind up insolvent lenders, writes Schneider in this FT article.  View Article

Securities

Irish Presidency reaches breakthrough on new proposals for safer and more open financial markets
The MiFID/MiFIR proposals signal a significant step forward by the EU towards enhancing transparency levels and limiting the growth of 'dark pool' trading in particular.   View Article
Markets in financial instruments: Council sets out its position
The Permanent Representatives Committee today agreed, on behalf of the Council, its position on new rules on the provision of services for investments in financial instruments and on the operation of regulated financial markets.  View Article
WSJ: EU agrees on tighter oversight of dark pools
European Union states reached a tentative deal to tighten regulation of derivatives markets that sets finance ministers on a collision course with the European Parliament, opening the prospect of months of haggling over a compromise deal.  View Article
Per Loven: European MiFIR regulation revision could risk savings
Writing for the FT, Loven says that if passed in its current form, MiFIR II could bolster high-frequency trading companies that trade on public stock exchanges at the expense of the individuals the regulation aims to protect – namely, millions of Europeans who invest in pension funds.  View Article
Commission extends deadline for ESMA's equivalence work under EMIR
The Commission extended the deadlines for ESMA's advice on the equivalence of third-countries under EMIR. ESMA's advice on the US and Japanese regimes is now due on 1 September, 2013; advice for other third-countries is due on 1 October, 2013. The original deadline was 15 June, 2013.  View Article
FN: ESMA pledges to fast-track fresh guidance on derivatives rules
ESMA has promised to fast-track official guidelines covering new derivatives rules, after industry complaints that it was being left in a fog of uncertainty.  View Article
EACH urges regulators to exempt CCPs bail-in provisions of BRR framework proposal
The Association of European Clearing Houses is fully supportive of including a clause which stipulates the exclusion by resolution authorities of liabilities arising from derivatives cleared and settled through an authorised central counterparty.  View Article
European Commission: Stricter rules for credit rating agencies to enter into force
As of 20 June, credit rating agencies will have to follow stricter rules which will make them more accountable for their actions. The new rules also aim to reduce over-reliance on credit ratings, while at the same time improving the quality of the rating process.   View Article
ESMA clarifies boundary of CRA Regulation
ESMA has published its Guidelines and Recommendations on the Scope of the CRA Regulation. The Guidelines aim to clarify for market participants and the wider public those activities which fall under ESMA's CRA supervision and require its authorisation.  View Article
ESMA/Maijoor: Keynote speech at ISLA's 22nd Annual Conference
Maijoor began his speech with some general remarks on the issue of shadow banking, and then looked at the recent UCITS guidelines, short selling and collateral.  View Article
ESMA publishes Compliance Table for Guidelines on Market Making
The European Securities and Markets Authority (ESMA) has published a Compliance Table in relation to its Guidelines on Exemption for market making activities and primary market operations under the Short Selling Regulation.   View Article
Reuters: Britain wins safeguard in EU market rules deal
Britain won backing from its European Union partners to prevent parts of its financial services sector potentially having to relocate to the eurozone.  View Article
IRSG response to Commission Green Paper on Long-term Financing of the EU Economy
The International Regulatory Strategy Group welcomes the opportunity to comment on the Commission's Green Paper on long-term financing of the European economy. Forecasts predict substantial funding needs and long-term investment will be crucial to achieving future productivity gains.  View Article
CFTC/Gensler: "International Swaps Market Reform - Promoting transparency and lowering risk"
In an article for the Banque De France's April 2013 Financial Stability Review, Gensler writes that regulators around the globe are making great progress, but the task of bringing transparency to the markets and protecting the public should be completed.  View Article
APG explores swap futures to cut cost of central clearing
APG is studying the possibility of using swap futures – a derivative instrument under development in the US – as a means of cutting the cost of initial margins in central clearing.  View Article
FT: Bid to relaunch synthetic CDO unravels
JPMorgan Chase and Morgan Stanley have scrapped a plan to sell "synthetic collateralised debt obligations" – pools of credit derivatives – after failing to find investors willing to take on all of the deal's different pieces.  View Article
Washington Post: House passes bill that could exempt trillions in foreign derivatives trades from US regulation
The House of Congress passed legislation that would exempt the trading of derivatives from federal oversight if it occurs outside the United States.  View Article
CISI and the Dutch Securities Institute agree programme of collaboration
The Chartered Institute for Securities & Investment (CISI) and the Dutch Securities Institute (DSI) have signed an MoU to increase opportunities for cooperation between their organisations through a programme of collaboration.  View Article
Bloomberg: EU said to raise no objections to ICE takeover of NYSE Euronext
European antitrust regulators have lodged no objections to IntercontinentalExchange Inc's takeover of NYSE Euronext as a decision on the transaction approaches.  View Article
Bruegel/Mariniello: Euribor and the limits of antitrust
Without bold moves from EU and national legislators and more stringent supervision, Euribor-style scandals could happen again.  View Article

Insurance

EIOPA publishes results of its Long-Term Guarantees Assessment
EIOPA published a report assessing a possible package of measures to facilitate the provision of insurance products with long-term guarantees under the new Solvency II insurance regulatory regime. (Includes link to separate BaFin LTGA for Germany.)  View Article
Commission welcomes EIOPA report on Long-Term Guarantee Assessment for insurance sector
The Commission considers that the findings of the report, along with the Commission's own report on it which will be available shortly, should form the basis for discussions to enable a deal to be found on Omnibus II. An agreement on Omnibus II is sought this autumn.  View Article
Insurance Europe: EIOPA assessment shows Solvency II adjustments are essential
Insurance Europe's preliminary review of EIOPA's proposed improvements to the Solvency II regulatory regime shows that adaptations are needed to avoid unnecessarily damaging insurers' ability to provide long-term guarantees and invest long-term.  View Article
ABI responds to EIOPA Solvency II LTG assessment
Hugh Savill, Director of Prudential Regulation at ABI, said: "The EIOPA report is a small step in the right direction. But there is still a long way to go before British pensioners can be confident of a reasonable deal on their annuities."  View Article
Fitch: New Solvency II proposals will not settle old argument
Friday's revised Solvency II proposals for European insurers offer no prospect of an end to the long-running dispute between regulators and insurers over suitable capital levels for products with long-term investment guarantees, Fitch Ratings says.  View Article
Reuters: Insurers, regulators at odds on bid to break capital rule deadlock
European insurance regulators remained at odds with the industry on Monday after proposals last week on how to supervise the long-term risks associated with life insurance products offering lengthy guarantees.   View Article
FT: Discord dogs EU insurance rules shake-up
From influencing how trillions of euros of assets are invested to shaping levels of retirement income for millions of consumers, a planned shake-up of how insurance companies are regulated will have repercussions far beyond the industry.  View Article
EIOPA publishes Annual Report 2012
In the foreword, Chairman Bernardino writes that it is now time to start reflecting on the further tasks, powers and resources needed to deliver a truly consistent supervisory process and, in particular, to provide for a more consistent oversight of cross-border insurance groups.  View Article
Insurance Europe: Report confirms insurers' vital investment role
A new study published by Insurance Europe and Oliver Wyman confirms the European insurance industry as the largest institutional investor in Europe, with an estimated €8.5 trillion of assets under management in 2012.  View Article
Risk.net: Restructuring gathers pace as insurers look to improve capital efficiency
The insurance landscape is evolving as firms begin to sell business units to non-insurers in their attempt to survive a changed financial climate.  View Article
Risk.net: Insurers call for more transparent infrastructure investments
Infrastructure investment products must become more transparent and standardised if insurance companies are to increase their allocations to the asset class, say chief risk officers and regulators.  View Article
IAIS concludes its 6th Annual Global Seminar
This year's programme included panels on each of the three pillars of IAIS activities: standard-setting, implementation and financial stability.  View Article

Asset Management

AMF consults on modification of Book III of its General Regulation transposing the AIFM Directive
Continuing its transposition of the Alternative Investment Fund Managers Directive (AIFMD), AMF launched a public consultation on modifications to Book III of its General Regulation, on services providers. Responses to the consultation must be sent before 7 July, 2013.  View Article
FCA: AIFMs
FCA published the Variation of Permission (VOP) application pack for full scope AIFMs to gather feedback on the form. The closing date for the feedback is 5 July, 2013. A final version will be available for applications from 22 July, 2013.  View Article
AMF position 2013-06: ETFs and other UCITS issues
AMF applies all the Guidelines issued by ESMA on ETFs and other UCITS issues. These guidelines have been enacted on the basis of Directive UCITS IV, transposed into domestic law in the Monetary and Financial Code and in the AMF General Regulation.  View Article
AEIP publishes contribution to OECD's draft High-Level Principles of Long-Term Investment Financing by Institutional Investors
The European Association of Paritarian Institutions (AEIP) called on the OECD to recognise the role of social partners when it comes to managing long-term investments, and asked for more research on the potential impact of accounting standards and market-consistent valuation.  View Article
PensionsEurope publishes survey on national policy actions relative to pensions
This survey shows that many governments consider pensions, pension scheme members and pension institutions as sources of capital that may be used to adjust fiscal imbalances and meet fiscal consolidation objectives.  View Article
IPE: Advisory panel sends pension reform recommendations to French government
A report released by a pensions advisory panel and commissioned by the French government recommends a series of measures – including a limit on indexation – for industry reforms president François Hollande is expected to tackle in 2013.  View Article
IPE: Small-scale DC pension funds should be discouraged in Ireland
Small-scale defined contribution (DC) funds should be "discouraged", according to Ireland's Pensions Board – with the regulator's chief executive considering recommendations to address the number of funds in the market.  View Article
IPE: New rules for Italian investment funds come into effect
New rules for Italian investment funds have come into force, affecting investment activities, limits and risk management.  View Article
IPE: DC pension plans should prioritise income risk
Pension funds thinking to switch from defined benefit (DB) to defined contribution (DC) could get the best of both worlds by managing for income risk rather than investment risk, according to Jan Snippe, pensions adviser at Dimensional Retirement Europe.  View Article
IPE: Switzerland releases draft report on pension fund voting rights law
The Swiss government, in its decree on the implementation of the so-called Minder Initiative, wants to force pension funds to exercise their voting rights but will allow them to abstain or not take part in votes in "certain cases".  View Article

Corporate Governance/Accounting

FEE commented on the system of governance in preparation for Solvency II
FEE issued a comment letter to EIOPA on EIOPA's Consultation on the Proposal for Guidelines on the System of Governance in preparation for Solvency II.  View Article
FT: Accounting standards changes create more uncertainty for insurers
Insurers in the EU and other territories using IFRS operate under stop-gap rules that have never been fully fleshed out, leaving large differences between countries. This is the reason to set up new accounting rules.  View Article
IFAC & CIPFA: Consultation on public sector governance
IFAC and CIPFA issued for public comment a Consultation Draft for an International Framework on governance in the public sector. Comments on the Consultation Draft are requested by September 16, 2013.  View Article
EFRAG feedback statements on topics related to associate, joint venture and joint operation
EFRAG has published feedback statements following publication of its final comment letters on three exposure drafts. The feedback statements summarise the main comments received by EFRAG in response to its draft comment letters, and explain how these comments were considered by EFRAG TEG.  View Article
FRC: Prohibition of direct assistance by internal audit staff on the external audit team
The FRC introduced a measure that creates a clearer division of responsibility between internal and external audit teams to safeguard against conflicts of interest. The prohibition comes into effect for audits of financial statements for periods ending on or after 15 June, 2014.  View Article
FT: Auditors let down shareholders
The Parliamentary Commission on Banking Standards' report said auditors and accounting rules "fell down in their duty" to ensure that shareholders received accurate information.  View Article
EFRAG: How IFRS 9 would affect the classification and measurement of financial assets
EFRAG has issued a field test report that summarises the findings received from participants in the field test on how IFRS 9 would affect the classification and measurement of financial assets.   View Article
Tighten up corporate risk reporting rules, urge Airmic and ICSA
Airmic and ICSA will urge the FRC to tighten up risk reporting when it updates the UK Corporate Governance Code. Although companies listed on the London SE are required to describe their risk management activities, Airmic and ICSA research reveals a wide disparity in the quality of risk reporting.  View Article
IFAC: Strong financial reporting infrastructure supports the integration of the ASEAN capital markets
More than 150 attendees from 14 countries, including ASEAN, gathered at a symposium to discuss strategies for building investor confidence through a strong financial reporting infrastructure that supports the integration of the ASEAN capital markets.  View Article

Financial Services Policy

ECON Committee: Financial Transaction Tax - MEPs push wide scope and attention to pension funds
The ECON Committee stood by its guns on Tuesday in supporting the Commission's proposal for a wide-scope financial transaction tax, with stocks and bond trades taxed at 0.1 per cent and derivatives trades taxed at 0.01 per cent in 11 EU countries.   View Article
EPP Group makes Financial Transaction Tax 'fit for real life'
"The transaction tax must not merely be a cash cow for national finance ministers, but must have a regulatory effect", said Othmar Karas MEP, Vice-President of the European Parliament.  View Article
S&D: Compromise reached on 'Tobin tax' in the European Parliament
S&D Euro MP Anni Podimata has won a cross-party majority in the European Parliament's economic and monetary committee for the introduction of a 0.1 per cent tax on stocks and bond trades and 0.01 per cent on derivatives in 11 countries in the EU from January 2014.  View Article
Finance Watch response to ECON coherence questionnaire
Finance Watch responded to the ECON consultation on ways to improve the coherence of EU financial services legislation. The consultation will help to establish legislative priorities for the remainder of this mandate and the new Parliament elected in 2014.  View Article
IRSG response to ECON consultation on the coherence of EU financial services legislation
The IRSG response to the ECON Committee's consultation on the coherence of EU financial services legislation covers legislative quality, implementation of legislation, the cumulative impact of financial services legislation, and priorities for the next European Parliament.  View Article
MoneyMarketing: Bowles - EU exit would be 'disaster' for UK financial services
Economic and monetary affairs committee chair and Liberal Democrat MEP Sharon Bowles says it would be a disaster for financial services if the UK voted to leave the EU.  View Article

European Council/Parliament

ECON Committee: Country-specific recommendations - Yes to breathing space, no to austerity theory
The extra economic reform "breathing space" granted to enable EU countries to meet deficit-cutting requirements and boost growth was welcomed by MEPs in Monday's joint economic affairs and employment committee debate with Commissioners Olli Rehn and László Andor.  View Article
Council gives green light to launch free-trade talks with the United States
EU trade ministers mandated the Commission to negotiate a sweeping EU–US trade and investment pact. The talks are expected to be formally launched at the G8 on 17 June. (Includes Commission press releases and comments.)  View Article

International/G20

Joint statement by Presidents Van Rompuy and Barroso after G8 Summit
Van Rompuy and Barroso represented the EU at this year's G8 summit chaired by UK Prime Minister Cameron in Lough Erne. "Overall, we are pleased that our ambitions for this summit have been broadly achieved", begins the joint statement.  View Article
Statement by IMF Managing Director Christine Lagarde on the G8 Leaders' Summit
Ms Lagarde said that a commitment to fair taxes, increased transparency and open trade would support the broader commitment to maintaining sound macro-economic policies and restoring stronger growth and job creation.  View Article
G8 Lough Erne Declaration
The leaders of the world's eight biggest economies all signed a 10-point Lough Erne Declaration, which calls for greater transparency into corporate profits around the world.   View Article
Presidents Barroso and Obama announce launch of TTIP negotiations
"Today is a special day for relations between the EU and the US. We are ready to start the negotiations of a comprehensive Transatlantic Trade and Investment Partnership agreement", said President Barroso in his statement at the joint EU–US press conference at the margins of the G8 summit.  View Article
G8 leaders work on improving trade
G8 leaders focused on trade and the economy, taxation and business corruption at their annual meeting on 17 and 18 June in Lough Erne. (Includes links to statements from Council President Van Rompuy and the UK Government.)  View Article
The European Union at the G8 summit in Lough Erne on 17-18 June 2013
This year's G8 summit will take place in Lough Erne in Northern Ireland and will be chaired by UK Prime Minister David Cameron. The EU is a full member of the G8 and is represented by Council President Van Rompuy and Commission President Barroso.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: Banking Union - Looking forward to the June 27/28 European Council?
The pieces are now falling into place for an unambitious Summit – but agreement on the RRD and opening the ESM to non-euro states could have profound results fairly quickly.  View Article





© Graham Bishop

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