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26 May 2011

This week in "Brussels"
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Banking Securities Asset Management
Corporate Governance/Accounting Financial Services Policy Economic Crisis
European Council/Parliament Graham Bishop’s Articles Commentaries
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Articles from 19 May 2011 - 26 May 2011

Banking

Commission approves restructuring plan of Agricultural Bank of Greece (ATE)
The plan involves a state recapitalisation of the bank of up to €1,144.5 million, as well as liquidity measures. The bank committed to reduce its overall assets by 25 per cent during the restructuring period, and to improve its efficiency.   View Article
ECON committee vote on deposit guarantee schemes: €100,000 for all through different types of systems
ECON committee voted to uphold the increased bank deposit protection limit of €100,000, but chose to allow Member States more leeway over how they design their schemes. The schemes must be fully funded within fifteen years instead of the Commission's proposed ten.   View Article
Basel Committee Chairman Nout Wellink - Basel III: A roadmap to better banking regulation and supervision
Mr Wellink stressed that the Basel Committee is on its way to developing a framework to address the risks arising from G-SIFIs. The Committee is also carefully monitoring a variety of aspects related to the Basel III liquidity framework, and will adjust the standards if necessary.   View Article
FT: EU states urge flexibility in Basel rules
Seven member states – including the UK – have written to EU internal market commissioner, Michel Barnier, warning about the potential downside of using a "regulation" to implement the global rules adopted late last year by the Basel Committee on Banking Supervision.  View Article

Securities

OTC derivatives to be regulated: ECON Committee votes on new EU regulation
Rapporteur, Werner Langen, announced that he will not start to negotiate with the Council on an agreement at this stage, saying that the Council was not ready. The Parliament will now vote in 1st reading in the week of 4-7 July.  View Article
ISDA welcomes European Parliament progress on EMIR
The International Swaps and Derivatives Association, Inc. welcomes the adoption of amendments at committee stage by the Economic and Monetary Committee of the European Parliament on 24 May.  View Article
AIMA warned that new barriers to international clearing could be created by EU OTC derivatives proposals
AIMA called on EU lawmakers to reconsider a key provision of EMIR which could in effect exclude EU-established financial services providers from using central counterparties (CCPs) which are not located in the EU.  View Article
FN: EU compromise fails to remove pensions threat
Guy Verhofstadt writes that the debate over new over-the-counter derivatives rules comes to a head with a crucial vote in the European Parliament. He says that MEPs should bear in mind that the current proposals will still lead to higher costs and lower payouts for pension funds in the years ahead.  View Article
IPE: Pension funds win reprieve from European derivatives regulation
Pension funds have won a reprieve from the derivatives regulation passing through Brussels, at least for a period of three years, with a further extension possible.  View Article
FN: Spencer calls for fairness over derivatives monopolies
Michael Spencer, one of the most prominent figures in the City of London, has called for increased competition in the exchange-traded derivatives sector, and described the regulatory failure to address monopolistic behaviour among derivatives exchanges as "incredible".  View Article
IPE: European short selling regulation hampered by further delays
The principal problematic point in the legislation concerns the granting of various powers to the European Securities and Markets Authority.  View Article
WSJ: Clearing sector draws EU scrutiny
A debate has emerged over whether the clearing market is hobbled by a major flaw: European clearing houses usually face limited competition from other companies, giving them what critics say is monopoly power.  View Article
ISDA publishes "The Economics of Central Clearing: Theory and Practice", a discussion paper on clearing issues
The International Swaps and Derivatives Association, Inc. announced the publication of an in-depth discussion and analysis of the purposes, function and issues associated with central clearing of over-the-counter derivatives.  View Article
AFME published high yield and leveraged loan report – Q1 2011
The report contains European leveraged finance market trends for the first quarter of 2011, which includes issuance and credit performance figures for the high yield and leveraged loan markets.   View Article
IOSCO finalises principles to address dark liquidity
The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published a final report, 'Principles on Dark Liquidity', containing principles to assist securities markets authorities in dealing with issues concerning dark liquidity.  View Article
FN: LSE merger proposal attracts short sellers
The London Stock Exchange has attracted more short sellers looking to profit from a potential fall in its share price than any other exchange, since it announced its proposed tie-up with Canadian rival, TMX Group.  View Article
Bloomberg: LSE’s TMX bid to be reviewed by UK antitrust regulator
The London Stock Exchange Group Plc’s bid to buy Toronto Stock Exchange owner, TMX Group Inc., for $3.2billion will receive a preliminary review by Britain's antitrust regulator.  View Article
FN: LSE's solution may lie south
The plan to merge London Stock Exchange Group with Canada's TMX Group remains on track - but only just.  View Article
NASDAQ OMX Group Inc and IntercontinentalExchange Inc abandon their proposed acquisition of NYSE Euronext
The Justice department said that the acquisition would have substantially eliminated competition for corporate stock listing services, opening and closing stock auction services, off-exchange stock trade reporting services and real-time proprietary equity data products.  View Article
FT: Is this the wrong time for exchanges consolidation?
The withdrawal by Nasdaq OMX of its counter-offer in partnership with Intercontinental Exchange for NYSE Euronext is as stunning for its timing as well as for falling a day after another exchange combination was all but scuppered.  View Article
SEC proposes rules to increase transparency and improve integrity of credit ratings
The Securities and Exchange Commission voted unanimously to propose new rules and amendments intended to increase transparency and improve the integrity of credit ratings.  View Article

Asset Management

EFAMA: UCITS framework provides high levels of risk mitigation and investor protection for ETFs
EFAMA's reply to the FSB Note on potential financial stability issues arising from recent trends in ETFs stresses that the large majority of European ETFs are UCITS, and the UCITS Directive provides a robust regulatory framework for investment funds, with strong risk mitigation provisions.  View Article
FN: Swelling ETFs draw fresh fire
The rapid growth of the Exchange-Traded Funds movement is leading to an increase in the number of attacks being made on its credibility, as investors and regulators fret over the way an ETF snafu could disrupt the capital markets.  View Article
IPE: Hedge funds improve risk/return ratios for pension insurance firms
A new research by the University of Oulu has found that including hedge funds in investment portfolios can improve risk/return ratio at work pension insurance firms.  View Article

Corporate Governance/Accounting

Summary of EFRAG meetings held from April to May 2011
EFRAG published the May 2011 edition of Update that summarises the discussions held at the recent EFRAG TEG meeting.   View Article
IASB: Strategy Review comment letters analysis
The paper analyses the feedback received in response to the Foundation’s public consultation paper "Status of Trustees’ Strategy Review", which was issued on 5 November 2010. The paper contains comments on the Trustees’ questions and recommendations for improvements.  View Article
FEE commented on the IAASB ED proposed ISRE 2400 (revised), 'Engagements to Review Historical Financial Statements'
FEE encourages the IAASB to ensure that the new standard is of the highest quality possible, and to remain committed to finalising it. This is a matter of priority for the benefits of the practitioners performing numerous such engagements in practice, as well as for users of review reports.  View Article
APB: Revised guidance on the audit of credit unions in the UK
The APB of the FRC published a revision of Practice Note 27 “The audit of credit unions in the United Kingdom”. This Practice Note replaces the previous Practice Note 27 (Revised) which was issued in January 2009.  View Article
ACCA posted 'Audit under fire: a review of the post-financial crisis inquiries'
ACCA published a paper that outlines ACCA's position on the key issues that have been raised in a number of high-level inquiries about the role of audit in several jurisdictions during 2010 and 2011.   View Article

Financial Services Policy

ECON committee: Exchange of views with Commissioner Barnier
Barnier stressed that the EC wants to make sure that there is more pluralism with all financial services stakeholders. He also stressed that certain groups should be better heard, particularly SMEs and trade unions.   View Article
Interview with ECON Chairwoman on the Economic Governance package
Sharon Bowles stressed that the package, which is expected to be adopted in plenary in June, is essential in order better to monitor member state budgets and deficits, as well as measures to determine and repair imbalances between EU economies.   View Article
Committee on the Global Financial System: Interactions of sovereign debt management with monetary conditions and financial stability
The CGFS report discusses the interactions of sovereign debt management with monetary conditions and financial stability in these historically unusual circumstances. The report concludes that in certain circumstances, there is benefit in debt managers taking a broad view of cost and risk.   View Article

Economic Crisis

IMF: Economic policy cooperation vital to global recovery
Lipsky, who became acting managing director of the IMF after the resignation of Dominique Strauss-Kahn, described the next G-20 leaders’ summit, which will take place in France in November 2011, as “a key stage in the upcoming acid test for policy cooperation under the mutual assessment process”.   View Article
IMF: Wider plan needed to address Ireland's problems
The Irish government has been making good progress in addressing the country's deep-seated economic problems since it took office on March 9. But without comprehensive action from the EU, Ireland and other euro area countries with programmes will struggle to restore their access to the markets.  View Article

Graham Bishop’s Articles

Graham Bishop's Blog to 19th May 2011
City of London competitiveness: is it really in decline? Three discussions/speeches on this topic this week! Is this possible loss of self-confidence just a malaise that stems naturally from the sustained banker–bashing or is there something more to it?  View Article

Commentaries

Paul N Goldschmidt: The Belgian political crisis - a mirror of the crisis of the European Union
Goldschmidt concludes by saying that: "It is not too late but it is high time that Belgium and the EU take the full measure of their respective crisis and take the unavoidable – even if painful – measures that are required".  View Article




© Graham Bishop

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