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24 May 2012

This week in "Brussels"
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Articles from 17 May 2012 - 24 May 2012

Banking

Bundesfinanzministerium response to ECOFIN meeting on CRD IV
The Federal Ministry of Finance reports that the German government is 'most satisfied' that an agreement has been reached, and hopes that the principled and transparent implementation of Basel III in Europe will proceed as agreed from 1 January, 2013.   View Article
FN: Fund chiefs say bank rules will cause economic winter
Europe's most senior asset managers have warned of massive unintended consequences of new banking regulations, with fears that they could wipe half a percentage point off global economic growth annually for decades, change market structure "profoundly", and see "society bear the cost".  View Article
Peterson Institute/Goldstein: Implementing Basel III in the European Union - A deeply flawed compromise
Goldstein writes that the decision announced on May 15 reflected a compromise that set back the cause of reform, risking further instability for the banking system in Europe and the global economy generally. Parliament should demand significant changes before approving this very flawed measure.  View Article
Nicolas Véron: The European debate on bank capital is not just about Europe
This column argues that many officials, within Europe and beyond, severely underestimate the importance of this debate for reaching a global standard for financial regulation.  View Article
FT: EU to push for binding investor pay votes
Shareholders in Europe's listed companies will be given a binding vote on pay, while those who invest in banks will gain powers to set a cap on bonus levels, under plans being drawn up by senior EU officials.  View Article
FT: EU keeps tight rein on bank penalties
Lloyds Banking Group and Royal Bank of Scotland should not count on securing softer bailout penalties, the EU's top competition enforcer has warned, as he expressed confidence the banks would meet Brussels deadlines for forced sell-offs.  View Article
EPC launches annual three-month public consultation on possible modifications to the SEPA Credit Transfer and SEPA Direct Debit Rulebooks
On 16 May 2012, the European Payments Council launched the annual public consultation on possible modifications to the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Scheme Rulebooks. The EPC encourages all Single Euro Payments Area stakeholders to provide feedback by 13 August, 2012.  View Article
WSJ: New rules for prepaid card companies
Financial companies in the $150 billion prepaid card market could face higher regulatory costs, while consumers could find it easier to recover stolen funds and sort out fees under new federal rules in the works.  View Article
EBA: Guidelines on Stressed Value-At-Risk (Stressed VaR) and on the Incremental Default and Migration Risk Charge (IRC)
The European Banking Authority published two sets of Guidelines, one on Stressed Value-At-Risk (Stressed VaR), and one on the Incremental Default and Migration Risk Charge (IRC) modelling approaches employed by credit institutions using the Internal Model Approach (IMA).  View Article
BBA: Banks call for international cooperation
A coordinated approach to the requirements banks have to meet in the UK, EU and USA was called for today by the British Bankers' Association's Chief Executive, Angela Knight.  View Article
FT: Spanish banks eye four-way merger
Four Spanish savings banks are working on a merger supervised by the ministry of economy that could create the country's fifth-largest lender with assets of €270 billion, people close to the talks said.  View Article
Nicolas Véron: Is Europe ready for banking union?
Véron briefly assesses the current policy debate on the possibility of a European "banking union", current parlance for a European federal banking policy framework, and makes a few short-term recommendations.  View Article
SUERF Study 2012/2: New Paradigms in Banking, Financial Markets and Regulation?
The contributors to this SUERF study look with critical eyes on financial theories, supervisory structures, (mis)pricing of risk and distorted incentives, risk management models and procedures, conflicts of interest and bank strategies.   View Article

Securities

Danish Presidency: Agreement on new rules for credit rating agencies
Today the Danish Presidency gained support from Member States for an agreement that will strengthen the regulation of credit rating agencies.  View Article
Credit rating agencies: General approach agreed ahead of talks with EP
The Permanent Representatives Committee agreed the Council's position on two proposals amending the EU's rules on credit rating agencies ("CRA 3"), with a view to negotiations with the European Parliament.  View Article
AMF: Extension of transaction reporting requirements to OTC derivatives
The Autorité des Marchés Financiers has decided to take part in the CESR project to collect OTC derivatives transactions without waiting for MiFID II and EMIR to come into force.  View Article
Moving forward with the ECBC Covered Bond Label
The European Covered Bond Council (ECBC) is moving forward with the implementation of the Covered Bond Label infrastructure, and is on target to go live in Q4 2012.   View Article
Treasury Committee publishes correspondence with FSA and FOS on mis-selling
The Treasury Select Committee published several pieces of correspondence on mis-selling between the Chairman of the Committee, Andrew Tyrie MP, the Chair of the Financial Services Authority, Lord Turner, and the Chairman of the Board of the Financial Ombudsman Service, Sir Nicholas Montagu.  View Article

Insurance

Risk.net: ORSA risk quantification will not require internal model, says EIOPA
The requirement to conduct an Own Risk and Solvency Assessment (ORSA) will not push insurers into effectively developing an internal model to quantify their business risks, according to a risk governance expert at the European Insurance and Occupational Pensions Authority (EIOPA).  View Article
Insurance Europe Position Paper on the Solvency II Reporting Package
The European (re)insurance industry will require approximately 18 months, following finalisation of the reporting templates, to implement the necessary systems and procedures to support Solvency II reporting.  View Article
Insurance Insight: Solvency II setbacks taking toll on insurer budgets
Rising numbers of insurers believe the industry will miss the January 2012 compliance deadline for Solvency II, according to a survey conducted by the Economist Intelligence Unit on behalf of Deloitte.  View Article
Risk.net: Smoothing the flow - Integrating workflow in Solvency II
Insurers need to overhaul their approach to dealing with the flow of data within their organisations, if they are to comply with all of the requirements of Solvency II, not just Pillar I.   View Article
FSA/Adams: Solvency II and the London market
Julian Adams sets out the journey towards model approval from now until the implementation of Solvency II, and gives specific feedback on some of the issues seen in the course of the FSA's work to date, in order to help firms prepare for their interaction with the FSA in these areas.  View Article

Asset Management

IPE: EIOPA to postpone paper on QIS for holistic balance sheet plan
EIOPA is planning to publish a consultation paper on a quantitative impact study (QIS) of the 'holistic balance sheet' proposal by mid-June. The news means EIOPA will be likely to postpone releasing the results of the study on the proposal for the IORP Directive.  View Article
ALFI comments on the IOSCO Consultation Principles for the Valuation of Collective Investment Schemes
The consultation report sets out principles which can be utilised in order to assess the quality of regulation and industry practices regarding the valuation of CIS, with a view to ensuring the fair treatment of investors.  View Article
AIMA: Institutional investors spur hedge funds to grow operational infrastructure and increase transparency
The post-2008 influx of institutional money into hedge funds has resulted in a marked increase in the global industry's operational sophistication and transparency to investors, according to a new report by KPMG and AIMA.  View Article
NAPF: Pension funds respond to IMF call for more QE
Joanne Segars, Chief Executive of NAPF, said: "QE has driven pension funds further into the red, and leaves those trying to buy an annuity with a worse deal, which they are then locked into for life".  View Article
IPE: UK parliamentarians step up pressure on defined contribution pension fees
Clarity and accuracy in disclosing the management fees of defined contribution plans must be improved, according to the National Association of Pension Funds, which gained backing for the launch of an industry-wide code of conduct from both union and fund management representatives.  View Article
IPE: Austrian parliament finally approves reform of second-pillar pension system
Austria's parliament has approved reforms to the second-pillar system, and has declared that amendments to the country's pensions law will not be the last. Major amendments to the law include the creation of a 'safety pension', with a lower discount rate but certain guarantees for a minimum pension.  View Article
IPE: New Swiss supervisor weighs in on underfunding at public pension funds
Switzerland's new top supervisory body, OAK, has issued its first major regulatory edicts, tackling the long-debated issues of the interest paid by pension funds and funding levels at public schemes.  View Article
EDHEC-Risk research shows that dynamic portfolio strategies can provide solutions to corporate pension fund challenges
A new publication, entitled "Dynamic Investment Strategies for Corporate Pension Funds in the Presence of Sponsor Risk", shows that sophisticated dynamic allocation strategies can usefully be implemented by pension funds.  View Article

Corporate Governance/Accounting

FRC's priorities and funding for 2012/13
The Financial Reporting Council published its priorities and funding plans for 2012/13. The FRC's fundamental objective remains to promote high-quality corporate governance and reporting to foster investment.  View Article
FASB: FAF's new council to improve standard-setting for private companies
The Financial Accounting Foundation Board of Trustees has established a new body, the Private Company Council (PCC), to improve the process of setting accounting standards for private companies. The new group will have two principal responsibilities regarding US GAAP.  View Article
FEE's comment letter on the EC proposal for the Accounting Directive dealing with audit related matters
FEE published its comment letter on some of the amendments related to audit currently discussed in JURI regarding the EC proposal for the Accounting Directive (the JURI Draft Reports dated 28 March 2012 and 8 May 2012 on the EC proposal for the Accounting Directive).  View Article
IFAC: 'Eleven Principles for Effective Business Reporting Processes'
The PAIB Committee of the IFAC has issued proposed International Good Practice Guidance, 'Eleven Principles for Effective Business Reporting Processes', for public comment. Comments on the exposure draft are requested by August 23, 2012.  View Article
IASB concludes the 2009-2011 Annual Improvements cycle
The IASB published the Annual Improvements 2009–2011 Cycle, a collection of amendments to IFRSs, in response to six issues addressed during the 2009–2011 cycle.   View Article
IASB: Pan African Federation of Accountants' General Assembly resolution to adopt IFRS
The IASB welcomed the resolution passed by the Pan African Federation of Accountants' (PAFA) General Assembly, to adopt IFRSs and the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs).  View Article
IFAC approves of the Pan African Federation of Accountants' decision to adopt international standards in accounting and auditing
Ian Ball, CEO of IFAC, praised PAFA for its recent decision to adopt international standards in accounting and auditing, calling it "an important benchmark in underscoring the value of accountancy and the accountancy profession to governments and to business on the African continent".  View Article

Financial Services Policy

EP Plenary: Parliament adopts ambitious approach on financial transaction tax
The proposed financial transaction tax should be better designed to capture more traders and make evasion unprofitable, said the European Parliament in its opinion adopted on Wednesday. The opinion also says the tax should go ahead even if only some Member States opt for it.  View Article
Commissioner Šemeta welcomes European Parliament's strong support for the financial transactions tax
Šemeta said that the vote was further recognition of everything that an EU FTT has to offer: a fairer tax system, greater stability of the financial sector, and a new source of revenue that does not ask more of the everyday taxpayer.  View Article
ECON Committee: Financial transaction tax - Getting the financial sector to contribute towards the cost of the crisis
Greek socialist Anni Podimata argues in her report that introducing a financial transaction tax would go a long way towards stamping out banks' risky behaviour, while at the same time replenishing government coffers with much-needed funds.  View Article
EPP/Sirpa Pietikäinen: FTT - Parliament's message is clear, we need a common system for taxing financial transactions
The European Parliament has adopted the Report on a Common System for Taxing Financial Transactions. "Parliament is sending a signal to the Council: the financial transaction tax has broad support", said Pietikäinen, the Finnish Rapporteur.  View Article
S&D: A financial transaction tax for growth and jobs
S&D Euro MPs today won a cross-party majority in the European Parliament to introduce a tax on financial transactions in Europe that can generate additional revenue of close to €100 billion per year.  View Article
Sharon Bowles rejects EU financial transaction tax as a “Sheriff of Nottingham tax”
ECON Chair, Sharon Bowles MEP, has criticised the European financial transaction tax proposals voted through by the EP. "I am all for making banks pay their fair share through bank levies and examination of tax loopholes, but this version of a financial transaction tax is not the way", she said.  View Article
Dombret/Tucker: Blueprint for resolving regulation
Bundesbank's Andreas Dombret and Bank of England's Paul Tucker write that there is a pressing need for countries to have what is known as a macro-prudential policy framework to take on the task of financial stability. They offer six principles to guide the framework's completion.  View Article
ALDE: SMEs need better access to structural funds and to finance in general
During a debate in the Strasbourg Plenary, several ALDE speakers presented proposals on how best to match the practical needs of SMEs with the diligence requirements of those who finance them.  View Article
FN: Level regulatory playing field remains a distant goal
This article says that during a period of economic stress, domestic regulators put their own interests and those of their taxpayers first, as they map out their route to creating a safer local banking system.   View Article
Credit Suisse/Spencer: RDR is blueprint for rest of world
The UK's financial services industry will have an advantage over the rest of the EU following the implementation of the retail distribution review (RDR), says Credit Suisse's Matthew Spencer.  View Article
Consumer Panel reminds MPs to 'mind the gap' [RDR]
The Financial Services Consumer Panel has published its views on the perceived advice gap that is facing millions of consumers as they try to access affordable advice. This may well be exacerbated by the implementation of the Retail Distribution Review (RDR), the Panel says.  View Article




© Graham Bishop

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