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28 November 2013

This week in "Brussels"
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Articles from 21 November 2013 - 28 November 2013

Banking

ECON Committee: Candidate for boss of EU bank supervisor quizzed by MEPs
Danièle Nouy, the ECB's nominee for the new post of EU bank supervisor, was quizzed about her views on banks' exposure to sovereign debt, the accountability of the future supervisor, and the need to develop all the pillars of Banking Union.  View Article
EP President Schulz: Europe's path out of the crisis
Schulz addressed i.a. the need for an effective SRM under the authority of the Commission, and criticised those who have been calling for national resolution funds.  View Article
ECB/Draghi: Opening speech at the European Banking Congress "The future of Europe"
"Once the SSM is established, it offers a real possibility to take a new, European approach towards governance of the financial sector – and hence to reverse the harmful financial fragmentation we have seen during the crisis."  View Article
Bundesbank/Lautenschläger: The stress tests will be strict
In an interview with Handelsblatt, Lautenschläger highlighted the importance of rigorous stress tests and warned that she expected some banks to lie below the required core capital ratio.   View Article
Bruegel/Wolff: Europe rightly pursues the road to a Single Resolution Mechanism
A purely national solution would severely undermine financial stability and lower growth, writes Wolff.  View Article
CEPS: The new European framework for managing bank crises
This Policy Brief describes and discusses the proposals for a European SRM for banks and for a Directive on Bank Recovery and Resolution. It makes a number of key recommendations.  View Article
EBA consults on draft RTS on own funds (part IV - multiple dividends and preferential distributions)
These RTS are aimed at setting harmonised criteria for instruments with multiple distributions that would create a disproportionate drag on capital, as well as clarifying the meaning of preferential distributions. Comments are requested by 24 January, 2014.  View Article
Bloomberg: EU risks violating bank capital pact, Basel member says
The EU risks violating international bank capital standards and its implementing law should face a rigorous review by global regulators, warned Uldis Cerps, executive director for banking at the Swedish Financial Supervisory Authority.  View Article
FT: EU banks likely to increase CoCo issuance in 2014
European banks are expected to issue more convertible bonds to meet regulators' capital requirements intended to protect against losses.   View Article
ECB opinion on proposed Directive on basic bank accounts
The ECB submitted its opinion on the proposed Directive on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features.  View Article
The Economist: Global banking - You break it, you own it
The US should give the FSB's global banking rules — and Europe's dilatory regulators — one last chance, argues this Economist article.  View Article

Securities

Reuters: EU watchdog pushes for clearing house resolution plans
ESMA has urged swift action on plans to wind down central derivatives clearing houses (CCPs) that run into trouble, to help limit potential damage to the global financial system.  View Article
Bloomberg: EU says Gensler swaps rule clashes with transatlantic pact
EU regulators have accused the US CFTC of reneging on a transatlantic pact on swaps regulation, saying new curbs on EU-based units of US banks clash with efforts to align rules.  View Article
Risk.net: OTFs and SEFs - Equivalence in doubt
European legislators are close to finalising their derivatives execution rules, but trading platforms are concerned that the OTF framework may be sufficiently different from US SEF rules to scupper any chance of equivalence determinations.  View Article
IFR: CFTC opens door to agency swaps model
Newly issued guidance from the CFTC has given the nod to an agency-style business model for dealers in OTC derivatives that will dramatically alter the way banks interact with clients and profit from swaps trading.  View Article
CFTC staff issues time-limited no-action letter on the applicability of transaction-level requirements in certain cross-border situations
The letter provides relief to swap dealers registered with the CFTC that are established under the laws of jurisdictions other than the US (non-US SDs) from certain transaction-level requirements under the Commodity Exchange Act.  View Article
Fed/Powell: OTC market infrastructure reform - Opportunities and challenges
Powell said that new rules to improve the functioning of markets, such as those that require greater transparency of OTC derivatives markets through trade repositories and swap execution facilities, would strengthen financial institutions and infrastructures alike.  View Article
ESMA: Technical Advice to European Commission on network of small and medium CRAs
ESMA has finalised its Technical Advice to the European Commission on the feasibility of a network of small and medium-sized credit rating agencies, in order to increase competition in the market.  View Article
Reuters: EU reaches outline deal to cap dark pool share trading
The EU has reached an outline deal to try to shine a light on shadowy areas of the financial markets by capping off-exchange share-trading, known as dark pools, a senior EU lawmaker said. The parties also agreed not to introduce a separate category of trading venue for equities.  View Article
FN: Australian regulator to report on dark pool curbs
The Australian Securities and Investments Commission is to commence an analysis of its anonymous trading restrictions and expects to publish its findings in the new year. European and US regulators will be watching closely.  View Article
Bloomberg: Europe market structure debate needs more consensus
FESE chairman Christian Katz has said that European bourses should focus on how to implement new rules, after a wave of global regulation.  View Article
Fed/Tarullo: Shadow banking and systemic risk regulation
Tarullo spoke about short-term wholesale funding, especially the pre-crisis explosion in the creation of assets that were thought to be "cash equivalents".  View Article

Insurance

Council confirms deal with EP on rules for the insurance sector
The Permanent Representatives Committee approved, on behalf of the Council, a compromise reached with the EP on rules amending the Solvency II Directive and the Prospectus Directive in respect of the powers of EIOPA and ESMA.  View Article
EIOPA/Bernardino: Sound risk management enhances consumer protection, stability and reputation
Speaking at the CRO Assembly in Zurich, Bernardino outlined his vision for the insurance industry in 2025.  View Article
EU and US insurers support including financial services in TTIP
The American Council of Life Insurers, Insurance Europe and the American Insurance Association have called on US and EU officials to agree to include financial services, and in particular insurance, in the regulatory section of the TTIP.  View Article
Risk.net: Disclosure of Solvency II's long-term measures benefit risks 'misinterpretation'
Insurers have warned that rules mandating public disclosure of the capital benefits of using Solvency II's long-term guarantee measures could undermine the legitimacy of these parts of the Directive and increase reporting costs.  View Article
Risk.net: Insurers boost allocation to private equity
Insurers are increasing their investment in private equity as they look for higher yielding assets to make up for poor returns on their government bond portfolios.  View Article
Reuters: Some German insurers may fail under new capital rules – BaFin
Some German insurers may fail in the wake of tough new European capital rules for the industry which are due to come into force in 2016, Germany's top insurance supervisor said.  View Article
CRE: Insurers warn against rushed global capital standard
Participants at a conference organised by FFSA, France's insurance association, voiced concerns that the possible creation of a global capital standard for insurers could conflict with Solvency II and create extra costs and red tape.  View Article
CRE: Proportionality will be applied to captives, confirms Swedish regulator
Swedish risk managers have been reassured by their national financial supervisor that captives will receive proportional treatment after the introduction of Solvency II.  View Article

Asset Management

Parliament and Council negotiators close deal on keeping pension rights abroad
EP and Member State negotiators reached agreement on rules to allow EU workers who move to a different EU country to safeguard their supplementary pension rights. Negotiations had been deadlocked in Council for six years.  View Article
OECD: Pension reforms on track but the challenges of adequacy and inequality in old age remain
In its report, 'Pensions at a Glance 2013', the OECD says that recent reforms of pension systems have helped to contain the rise in future costs resulting from ageing populations and increasing life expectancy. (Includes Commission statement.)  View Article
IPE: No pressing need for changes to pension fund capital requirements – BaFin
Felix Hufeld, executive director at German supervisory body BaFin, also warned that the holistic balance sheet (HBS) accounting approach must not be introduced "through the back door".  View Article
NAPF: Pension funds drive market for stewardship and raise expectations of their agents
The ninth annual survey of pension funds' engagement with investee companies shows continued growth in the desire from pension funds for good quality stewardship of their investments. However, this does not appear to be mirrored in the pension fund adviser community.  View Article
Responses to FSB's 'Assessment Methodology' consultation: BBA, Deutsche Bank, ISDA et al
On 28 August 2013, the FSB published its consultative document on the Assessment Methodology for the Key Attributes of Effective Resolution Regimes for Financial Institutions.  View Article

Corporate Governance/Accounting

IASB publishes narrow scope amendments to IAS 19 Employee Benefits
The IASB published narrow scope amendments to IAS 19 Employee Benefits, entitled 'Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)'. The amendments are effective from 1 July 2014, with earlier application permitted.  View Article
Deloitte: The conceptual framework should be 'aspirational'
This paper, co-authored by former IASB member Warren McGregor, argues that the conceptual framework is the cornerstone of high quality financial reporting, and claims that the new framework should be 'aspirational'.  View Article

Financial Services Policy

State aid: Commission consults on modernising state aid policy through better evaluation
This guidance paper aims to help Member States better evaluate to what extent public support schemes have achieved their purpose, and what impact they have had on markets and competition. Comments can be submitted until 24 January, 2014.  View Article
Commissioner Šemeta: EU taxation - Taking stock and looking ahead
Šemeta discussed current and future developments in EU tax policy, including i.a. tax evasion, the Savings Directive, the CCCTB and the FTT.  View Article
PwC: FTT – The Impacts and Arguments – A Literature Review
This report, commissioned by the financial industry, offers an impartial view and provides an indication of the expected impact of the FTT across the financial services sector, as well as the spillover effects beyond the EU11 states.  View Article
CISI/BSI: Setting the standard for a safer, more trusted financial services sector
A new report finds that the financial services industry is failing to adopt voluntary standards crucial to rebuilding trust in banking, despite overwhelming support from those working in the sector.  View Article

European Council/Parliament

ECON/EMPL Committees: Commission beset by critics of Annual Growth Survey
Many MEPs disputed VP Rehn's claim that economies were improving, and criticised the Commission for continuing to administer more of the same medicine. German centre-right MEPs chided the Commission for having taken aim at their country in its latest assessment of EU economies.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: The Grand Coalition in Germany - Some implications
Finally, the two major German parties signed their coalition agreement – in just short of 200 pages with only 10 pages on Europe.  View Article





© Graham Bishop

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