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16 September 2010

This week in "Brussels"
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Financial Services Policy Banking Securities
Asset Management Corporate Governance/Accounting Edited Minutes of key legislative Bodies
Brief Opinions/Commentaries Financial stability - policy analysis About this email

Articles from 09 September 2010 - 16 September 2010

Financial Services Policy

Barnier: The Commission will “enlighten” the OTC derivatives markets
As regards short selling, Barnier emphasized the need for a common EU approach, to avoid individual measures by member states such as Germany’s go it alone regulation.   View Article
Economic governance: MEPs asked to fast-track legislative package
The aim of the economic governance package is to have the legislation, which should reinforce fiscal surveillance and management of macro-economic imbalances across the EU, adopted before the next summer break.  View Article
Trichet called for ‘a quantum leap’ in the reinforcement of fiscal surveillance
In an interview published in the Financial Times, Trichet stated that Europe should have undertaken stress tests earlier. As regards Basel III, he stressed that global rules on that issue are needed.   View Article
AMF Chairman meets with SEC and CFTC Chairmen in Washington DC
During the meeting AMF Chairmen Jouyet and CFTC Gensler discussed the regulation of derivatives markets, in the context of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the forthcoming European Market Infrastructure Regulation.  View Article

Banking

BCBS announces a substantial strengthening of existing capital requirements
The Basel Committee on Banking Supervision announced substantially increased capital requirements as well as the corresponding transition arrangements for national implementation by member countries beginning on 1 January 2013.  View Article
BCBS issues Consultative document on proposal for countercyclical capital buffer
The Macro Variables Task force (MVTF) formed by the Basel Committee to develop a proposal to address work on procyclicality has released a document that takes into consideration the formal feedback on the broad concept of countercyclical buffer from previous consultations  View Article
ECON committee: much work still to be done on new Basel standards
The EP own-initiative resolution approved by ECON on Monday gives a taste of the position that Parliament could take later this year on the European Commission proposals to update the Capital Requirements Directive (CRD IV), which is to transpose the Basel III standards into EU law.   View Article
ECON Chairwoman: Basel III faces repeated old problems
Liberal MEP Sharon Bowles argues that the four layers of capital proposed in Basel III- a base layer of some 5%, another which is a "warning-level" layer, then a buffer layer, and finally a systemic layer – will not be enough because the third and fourth layer are not clear at all.  View Article
Trade federations call for greater recognition of covered bonds in Basel III
The CEA, together with five other trade federations, calls for covered bonds to be given greater recognition in the Basel Committee’s proposed capital and liquidity regimes to avoid a negative impact on the European economy compared to other major economic zones.   View Article
EBF says Basel III will have cost consequences on the economy
The European Banking Federation considers the new capital requirements of Basel III very demanding, even though they believe European Banks will meet the new thresholds for capital. They believe it will negatively impact the volume and cost of Bank lending  View Article
AGB warns of target overshooting when introducing new capital and liquidity rules
The Association of German Banks have called for a phased and globally consistent introduction of Basel requirements. They agree that more capital is needed, but that a sense of proportion is also important, especially as the combined effect of the rules pose a threat to bank core funding activities  View Article
ESBG and WSBI warn of danger to retail banks of one-size-fits-all regulation
International representatives of savings and retail banks have warned of the potential harm that Basel III may do to non-quoted retail banks. Retail banks are some of the most resilient banking structures and they may be punished by the disproportionate increase in capital standards.  View Article
BBA declares "the era of cheap money" to be over
The Chief Executive of the British Banking Association comments on the advantages to financial stability and disadvantage to bank costs of the new capital rules as confirmed by the BCBS.  View Article
U.S. banking agencies express support for Basel agreement
The U.S. federal banking agencies actively supported the efforts of BCBS to increase the quality, quantity, and international consistency of capital, to strengthen liquidity standards, to discourage excessive leverage and risk taking, and to reduce procyclicality in regulatory requirements.   View Article
BBA publishes a new Code for financial disclosures
In complying with the Code, the banks will provide high quality disclosures in their annual and interim reports, and they will also re-evaluate the disclosures given to ensure that they continue to be relevant and of high quality.  View Article
WSBG: Basel III framework has to avoid harm to non-quoted retail banks
The trade associations that promote the interests of retail and savings banks at global and European level are highly concerned about the effects of Basel III on alternative banking structures.  View Article
ECB publishes the 2009 statistics on payments
The 2009 statistics on payments comprises indicators on access to and use of payment instruments and terminals by the public, as well as volumes and values of transactions processed through payment systems.  View Article
CPSS publishes paper on strengthening clearing and settlement arrangements for repo markets
The recent financial crisis exposed some repo markets to be less reliable sources of liquidity and funding. The CPSS investigates the contribution of clearing and settlement infrastructure to the instability in repo markets and tries to identify potential ways in which it can be improved.  View Article

Securities

Commission proposal on OTC Derivatives and Market infrastructures
In its draft regulation, the Commission proposes that information on OTC derivative contracts should be reported to trade repositories and be accessible to supervisory authorities. More information will also be made available to all market participants.   View Article
Commission presents proposal on short selling and Credit Default Swaps
Its main objectives are to create a harmonised framework for coordinated action at European level, increase transparency and reduce risks. The new framework will mean regulators have clear powers to act when necessary, whilst preventing market fragmentation.   View Article
EuropeanIssuers: Market standards on general meetings endorsed
The standards pave the way for a timely and efficient exchange of information related to general meetings. They offer a practical toolbox to implement some of the key aspects of the Shareholder Rights Directive of July 2007.  View Article
IMF: Debt managers navigate post-crisis risks
The IMF brought together debt managers from 33 countries as well as central bankers, representatives from the private sector, and other international financial organizations and agreed a set of principles for an effective and transparent debt management.  View Article
Covered bonds under the spotlight – ECBC publishes a Fact Book 2010
Luca Bertalot, Head of European Covered Bond Council, claims that “the fifth edition of the European Covered Bond Fact Book 2010 builds on the success of the previous four editions, with expert insight into current issues and a complete, in depth market analysis.”  View Article
ECON committee: first exchange of view on “dark pools”
Rapporteur Kay Swinburne (UK/ECR) stressed that MiFID was very successful in its objectives but pre- and post-trade transparency issues should now be tackled. Her draft report concludes that quality of market data is not as good as it should be, in particular in the OTC derivatives transactions.  View Article
ISLA: European Commission short selling disclosure threshold too low
ISLA is concerned that a number of Commission proposals go beyond the framework of the original consultation and are excessive - including for naked short selling, flagging of short sales and for automated settlement buy-ins.  View Article
CESR publishes a Feedback statement on CESR consultation on common standards for assessment of compliance of credit rating methodologies
The statement regards the Consultation on Guidance on Common Standards for Assessment of Compliance of Credit Rating Methodologies with the Requirements set out in Article 8.3.  View Article
CESR publishes a Feedback statement on CESR consultation on enforcement practices
The statement concerns the Guidance on the enforcement practices and activities to be conducted under Article 21.3(a) of the Regulation.  View Article

Asset Management

ECON committee: two main issues are still unresolved on AIFMD
During the exchange of views in the ECON committee with Belgian Finance Minister Reynders, Jean-Paul Gauzès highlighted that there are still two main issues to be solved on AIFMD: the third country passport and private equity.   View Article

Corporate Governance/Accounting

IASB and ASBJ meet to discuss convergence with an intended adoption of IFRSs in Japan
The IASB and the ASBJ have accelerated their work towards the convergence of IFRSs currently in effect and Japanese generally accepted accounting principles (GAAP) by June 2011, as described in their Memorandum of Understanding, known as the Tokyo Agreement.  View Article
IASB proposes to amend one aspect of accounting for deferred tax
The proposal would amend one aspect of IAS 12 Income Taxes. Under IAS 12, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using the asset or by selling the asset.  View Article
FRC published audit inspection reports for four largest firms
The FRC looked at 15 audits and found that in three cases report was signed off too soon, but points out that the problem is 'profession-wide to some degree'.  View Article

Brief Opinions/Commentaries

Wolfgang Münchau: A eurozone banking crisis left unresolved
Münchau argues that the eurozone’s financial sector is still fragile. Moreover, there has been lots of activity – bail-outs, bad banks – but no resolution; it was always clear that this wait-and-see approach would eventually backfire.  View Article

Financial stability - policy analysis

EDHEC-Risk finds no new evidence that Socially Responsible Investment Funds create financial value
EDHEC recommends that SRI be integrated in a more global process whereby the results of 50 years of quantitative research in finance are not abandoned in favour of a solely qualitative approach.  View Article
CEPS paper on fiscal policy coordination and competitiveness surveillance - what solutions to what problems?
This note argues that surveillance of competitiveness risks concentrates on symptoms (rising wages in the non-tradable sector), rather than the underlying causes (credit-financed booms).  View Article




© Graham Bishop

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