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19 July 2018

This week in "Brussels"
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  Articles from 12 July 2018 - 19 July 2018

  Banking Union
 
 
ECB announces further steps in supervisory approach to stock of NPLs
ECB to address the stock of NPLs by setting bank-specific supervisory expectations for the provisioning of NPLs. Aim is to achieve same coverage of NPL stock and flow over the medium term. Bank-specific expectations are guided by individual banks’ current NPL ratio and main financial features in a consistent way across comparable banks.  View Article
ECB: Benefits and costs of liquidity regulation
This paper investigates the costs and benefits of liquidity regulation, as well as the output costs of introducing the LCR and NSFR using two macro-financial models. Authors find these costs to be modest.  View Article
Bloomberg: Europe told to boost firepower to deal with future bank failures
Weeks after agreeing on steps to shore up the currency union, politicians received a reminder that the arsenal to handle banks in trouble remains incomplete without the power to provide hundreds of billions of euros in emergency cash.  View Article
Financial Times: Banks’ approach to risk data is deeply inadequate
The world’s biggest banks are doing an awful job of managing their data on risk. That was the main conclusion of the Basel Committee on Banking Supervision’s latest review of the progress that the 30 most important lenders have made in recent years.   View Article
The Telegraph: Complacent bankers must ditch broken Libor, says top regulator Andrew Bailey
Libor is on the way out and bankers must stop using it or risk destabilising themselves and the financial system, Britain’s top regulator has warned.   View Article
Financial Times: Banks warn about overheating UK asset finance market
Executives and senior bankers at some of the UK’s biggest lenders have warned about overheating in the £32bn asset finance market, as rising competition pushes down profit margins and encourages increasingly risky practices in the loosely regulated sector.  View Article
New Europe: French lenders win a major regulatory case against the ECB
The European Court of Justice (ECJ) ruled that banks may regard capital held against customer deposits as part of their overall reserves. Under EU rules, banks must have capital buffers worth at least 3% of their total assets.  View Article
Financial Times: ECB fires starting gun in hunt for new head of eurozone watchdog
The European Central Bank has started the hunt to fill one of the most important jobs in eurozone finance — bank supervisor-in-chief. Danièle Nouy is about to complete her term at the helm of the Single Supervisory Mechanism, the ECB’s banking watchdog set up in the throes of the financial crisis.   View Article
BIS: Financial Stability Institute: Innovative technology in financial supervision (suptech) – the experience of early users
This paper aims to provide an overview of the experiences of some early suptech users, particularly those with key applications under development or in use, highlighting their benefits and challenges, and the implications for supervisors.  View Article
Financial Times: Banks under watch over exposure to cryptocurrencies
Global banking regulators are assessing the size of banks’ exposure to “crypto-assets” such as bitcoin and looking at introducing capital safeguards, in a move that could deter banks from embracing the nascent market.   View Article
 
  Capital Markets Union
 
 
Financial Times: EU urged to ‘redouble’ capital markets union push as Brexit looms
A group of European countries are urging the EU to “redouble” flagging efforts to build a single market for capital, warning that Brexit and looming EU elections mean that “time is not on our side” to drive forward a project aimed at increasing financing opportunities for companies.  View Article
ESMA reminds UK-based regulated entities about timely submission of authorisation applications
ESMA is issuing this Public Statement in order to raise the awareness of all market participants on the importance to prepare for the possibility of no agreement in the context of the United Kingdom withdrawing from the European Union.   View Article
Financial Times: EU to change share-trading rules in fear of hit from Brexit
European markets regulators plan to rewrite part of their new share trading rules as concerns grow they may lose business to London after the UK leaves the EU next year.  View Article
BIS: Yves Mersch: Euro clearing - the open race
Keynote speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Frankfurt Finance Summit, regarding importance of central counterparties (CCPs), new developments and current challenges and recent regulatory reforms.  View Article
ISDA publishes consultation on benchmark fallbacks
The ISDA has launched a market-wide consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates (IBORs). The consultation sets out options for adjustments that would apply to the fallback rate in the event an IBOR is permanently discontinued.  View Article
ESMA defines standards for the implementation of the Securitisation Regulation
The European Securities and Markets Authority (ESMA) has issued a first set of technical standards under the Securitisation Regulation (SR) containing both draft regulatory and implementing standards (RTS/ITS).  View Article
ESMA consults on risk factors and exemptions for takeovers, mergers and divisions
The first consultation paper contains draft technical advice on the minimum content of a document published in the context of offers/admission to trading of securities related to takeovers, mergers, and divisions while the second one sets out draft guidelines on risk factors featured in a prospectus.  View Article
ESMA sets out plan for systematic internaliser regime calculations and publications
The ESMA has published details of its action plan for systematic internaliser (SI) regime calculations ahead of their publication on 1 August 2018. ESMA’s action plan focuses on equity, equity-like instruments and bonds while postponing the publication for derivatives and other instruments to 1 February 2019.   View Article
FCA proposes actions to improve competition in the investment platform market
Competition is working well for most consumers using investment platforms, according to interim findings of the FCA’s market study into investment platforms, but it also reveals concerns about how platforms compete for particular groups of consumers. Given the rapid growth in this market, the FCA is proposing measures to address these problems before they get bigger.  View Article
ESMA updates Q&A on EMIR data reporting
The purpose of this document is to promote common supervisory approaches and practices in the application of EMIR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of EMIR.  View Article
ESMA updates Q&As on temporary product intervention measures
ESMA has updated its Questions and Answers document on its temporary product intervention measures on the marketing, distribution or sale of CFDs and binary options to retail clients based on the Markets in Financial Instruments Regulation (MiFIR).  View Article
FSB consults on the effects of reforms on infrastructure finance
The Financial Stability Board (FSB) published a consultation report on the Evaluation of the effects of financial regulatory reforms on infrastructure finance, and is seeking public feedback on the results of the evaluation to date.   View Article
FSB invites responses from prospective UPI service providers
The Financial Stability Board has published a Self-assessment questionnaire for prospective UPI Service Providers and is seeking responses from entities that wish to be designated by the FSB as a Service Provider for the Unique Product Identifier (UPI).   View Article
 
  Clients Union
 
 
FCA: The Financial Conduct Authority publishes Approach to consumers paper, alongside discussion paper on Duty of care
The FCA has outlined the measures it will take to protect consumers and sets out when and how the organisation takes action. The Approach to consumers document published sits alongside a new discussion paper on a Duty of care and taken together are intended to ensure there are no gaps in protection for consumers in the financial sector.  View Article
IFAC: International accountancy and law professions further anti-corruption mandate ahead of global economic leaders’ meeting
IFAC and the IBA have announced their shared commitment to continue their work combating corruption in all its forms. The signed IBA and IFAC Anti-Corruption Mandate highlights the role of business and government in safeguarding a fair and transparent future for all.  View Article
 
  Insurance
 
 
EIOPA publishes first set of Questions & Answers on the Application of the Insurance Distribution Directive
The EIOPA published the first set of Questions & Answers providing practical guidance on the application of the Insurance Distribution Directive and its implementing regulations.   View Article
EIOPA examines causes of insurers’ failures and near misses
The EIOPA published a report on "Failures and near misses in insurance: Overview of the causes and early identification" to enhance the understanding of the causes of insurers' failures and near misses. This report is the first of a series aimed at enhancing supervisory knowledge of the prevention and management of insurance failures.   View Article
Commercial Risk Europe: Insurers need to ‘rethink’ sharing economy transfer options, says Lloyd’s
Insurers may need to go back to the drawing board to cover new risks arising from the sharing economy that typically sees peers offering services via online sites, say Lloyd’s and Deloitte in analysis of the booming sector.  View Article
EIOPA launches EU-wide thematic review on consumer protection issues in travel insurance
The EIOPA launched a thematic review on consumer protection issues in travel insurance. The purpose of the review is to identify consumer protection issues in travel insurance and possible actions to ensure better consumer protection.   View Article
EIOPA appoints new members to its Stakeholder Groups
The Board of Supervisors of the EIOPA has appointed new members to the Insurance and Reinsurance Stakeholder Group (IRSG) and Occupational Pensions Stakeholder Group (OPSG). The new members will take up their appointment on 4 September 2018 and will serve a 2½ years term.  View Article
 
  Asset Management
 
 
Investment & Pensions Europe: Advisers, fiduciaries respond to ‘softer stance’ from competition regulator
Investment consultants and fiduciary providers breathed a sigh of relief as the UK’s competition regulator stepped back from some of the more extreme remedies it had proposed for the sectors.  View Article
Financial Times: Regulator urged again to act over commercial property funds
The author of an influential report into the structural weakness of commercial property funds has said the regulator “still needs to act” to make the market work better for investors.   View Article
Investment & Pensions Europe: UK pensions sector rallies behind dashboard as government support stalls
The UK government risks exposing millions to fraud and lost pension pots if it abandons its support of a pension dashboard, according to the Association of British Insurers (ABI).  View Article
 
  Corporate Governance/Accounting
 
 
FRC: A UK Corporate Governance Code that is fit for the future
The FRC has released the 2018 UK Corporate Governance Code which puts the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy.   View Article
ESMA responds to EC consultation on fitness check
ESMA has published its response to the EC Consultation Document seeking feedback to evaluate the Fitness of the EU framework for public reporting by companies (Fitness Check). ESMA’s response focuses on those matters falling under the remit of securities regulators.  View Article
Accountancy Europe response to the Commission’s consultation on Fitness check on the EU framework for public reporting by companies
Accountancy Europe has responded to the EC’s consultation document Fitness check on the EU framework for public reporting by companies. Overall, Accountancy Europe assesses that the EU public reporting framework adds value and is mostly effective and relevant.   View Article
Deloitte issues results of global IFRS insurance survey
Deloitte has issued the results of its 'Global IFRS Insurance Survey 2018: 2021 countdown underway — Insurers prepare for IFRS 17 implementation', which aims to provide a comprehensive view of insurers' reactions to the requirement in IFRS 17.  View Article
IASB: IFRS 17 implementation - new support materials
The IASB has published a pocket guide on reinsurance contracts held and a simple example of a reinsurance contract held as part of its activities to support the implementation of IFRS 17 Insurance Contracts.  View Article
IAASB´s global consultation on identifying and assessing the risks of material misstatement
The IAASB seeks public comment on its Exposure Draft ISA 315 (Revised): Identifying and Assessing the Risks of Material Misstatement.  View Article
IVSC consultation on revisions to IVS 2017
Further to the publication of IVS 2017, the IVSC published targeted revisions to IVS 2017 based on feedback received during the agenda consultation process conducted in 2017 and 2018.  View Article
ASCG: Draft interpretation following an agenda decision on IAS 12
ASCG has published ED of Interpretation (IFRS) No. 1 Accounting for Interest and Penalties Related to Income Taxes under IFRSs. The interpretation was developed following a negative agenda decision by the IFRS Interpretations Committee on a matter where diversity in practice is observed in Germany.  View Article
Accountancy Europe issued its comment letter on the IESBA’s consultation paper on Proposed Strategy and Work Plan 2019 – 2023
Accountancy Europe has responded on the IESBA’s consultation paper on the proposed strategy and work plan, 2019 – 2023.  View Article
IFAC: Updated practical support and guidance for small business audits
SMPs may require practical support when implementing ISAs in audits of SMEs. IFAC has updated the Guide to Using ISAs in the Audits of SMEs, Fourth Edition (the Guide) to help firms efficiently and proportionally apply ISAs on SME audits.  View Article
Accountancy Europe comments on good practices for audit committees in supporting audit quality
Accountancy Europe has responded to the IOSCO’s consultation report on good practices for audit committees in supporting audit quality.   View Article
 
  Financial Services Policy
 
 
VoxEU: The blockchain catalyst for change
This column assesses the available evidence and likely impact for blockchain technology across a wide range of applications and explores the potential use cases for the financial sector, and the ways in which the organisation of these activities may change over time.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
White Paper on new UK “partnership” with EU
The Chequers Cabinet “agreement” appeared to throw the City of London (and its associated services) into the River Thames. The White Paper now confirms that there is no realistic possibility of even half a life-belt for years to come.  View Article
 
  Political
 
 
EU electoral law: new rules adopted by the Council
The Council adopted new rules on elections to the European Parliament.  View Article
 
  Economic
 
 
Financial Times: EU strikes data deal with Japan with UK looking on
The EU and Japan inked a deal to create the world's largest open area for trade.  View Article
Joint statement of the 20th EU-China Summit
On the occasion of the 20th EU-China Summit, the two sides celebrated the 15th anniversary of the EU-China Comprehensive Strategic Partnership.   View Article
VoxEU: Risk sharing and market discipline: Finding the right mix
This column, part of the VoxEU debate on the topic, argues that proposals to enhance market discipline in the euro area are counter-productive, because they increase the vulnerabilities of countries with high legacy debts.   View Article
Main results - Economic and Financial Affairs Council
The Council discussed the Commission proposals on the VAT generalised reverse charge mechanism and on reduced VAT rates for e-publications. The Austrian presidency also presented its priorities on economic and financial issues for the next six months.  View Article
Main results - Eurogroup
The Eurogroup was briefed on the outcome of the June Euro Summit. It discussed the economic situation and the outlook for the euro area as well as the euro area's budgetary situation as a whole.  View Article
European Parliament: ECB non-standard-policies and collateral constraints
Government bonds constitute the most important source of collateral, for use in inter-bank and repo transactions. But, the vast bond buying program of the ECB in the context of the PSPP has not led to any collateral scarcity.   View Article
Project Syndicate: Time to untie the ECB’s hands
The European Central Bank is now signaling its intention to end quantitative easing this year, indicating that it expects eurozone inflation to reach its target of "below, but close to, 2%." But as the ECB prepares for the next crisis, it would be well advised to revisit its longstanding price-stability objective.  View Article
EU economy ministers discuss the future of European industrial policy
Informal meeting of competitiveness ministers takes place in Vienna under the motto “Rethinking European Industry” with focus on innovation, digitalisation, artificial intelligence and professional education.  View Article
Omnibus regulation: simpler rules for use of EU funds adopted
The Council adopted the so-called Omnibus regulation which revises the EU's financial rules to make them simpler and more focused on results.   View Article
Financial Times: European Investment Bank faces call for overhaul after UK exits
Seven EU governments are demanding an overhaul of the European Investment Bank’s operations and governance as tension rises over the bank’s desire to maintain its financial firepower after Brexit.  View Article
Structural reform support programme: Council confirms increased financial envelope
EU ambassadors confirmed the agreement reached between the Austrian presidency and the Parliament on 11 July to increase the budget of the structural reform support programme (SRSP).  View Article
Annual inflation up to 2.0% in the euro area
Euro area annual inflation rate was 2.0% in June 2018, up from 1.9% in May 2018. A year earlier, the rate was 1.3%. European Union annual inflation was 2.0% in June 2018, stable compared with May 2018. A year earlier, the rate was 1.5%.  View Article
Euro area international trade in goods surplus €16.5 bn
Euro area The first estimate for euro area (EA19) exports of goods to the rest of the world in May 2018 was €189.6 billion, a decrease of 0.8%  View Article
EU28 current account surplus €63.9 bn
The EU28 seasonally adjusted current account of the balance of payments recorded a surplus of €63.9 billion (1.6% of GDP) in the first quarter of 2018, down from a surplus of €68.0 billion (1.8% of GDP) in the fourth quarter of 2017.  View Article
 

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