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06 September 2012

This week in "Brussels"
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Articles from 26 July 2012 - 06 September 2012

Banking

Banking union - Commission to propose a single banking supervision mechanism
On 12th September the Commission will present proposals to design a single banking supervision mechanism in the euro area, further strengthening its response to the current crisis while fully preserving the integrity of the single market.   View Article
Wolfgang Schäuble: How to protect EU taxpayers against bank failures
Europe's efforts to draw the right lessons from the crisis will have amounted to little if we do not get the next step right – the creation of a truly effective European banking supervisor to enforce a robust single rule book for the sector, writes Schäuble in an opinion piece for the FT.  View Article
WSJ: Rajoy - Banking union needs resolution tools
Mariano Rajoy urged his European Union counterparts to makes sure that tools to handle failed lenders are included in a planned region-wide banking union, just two days after his government unveiled new financial sector measures aimed at securing European Union aid funds.  View Article
EurActiv: Brussels, Berlin bicker over scope of banking union
The extent to which European banking union will cover all banks in the eurozone came under fire as MEPs and the German finance minister raised doubts that the Commission's blueprint will be feasible.  View Article
Bundesbank/Dombret: ECB should not be sole euro bank regulator
In his speech, entitled 'Foreign banks between financial crisis and financial stability', Dr Dombret talked about different aspects of a European banking supervision.  View Article
Association of German Banks against two-class system of European banking supervision
A proposal put forward by the Association of German Banks suggests that the ECB assume sole responsibility for banking supervision in the euro area.  View Article
Weidmann, Schlesinger review 55 years of the Deutsche Bundesbank and its current role within the Eurosystem
In an interview, Jens Weidmann, President of the Deutsche Bundesbank, and Helmut Schlesinger, former Bundesbank President, discuss i.a. European banking supervision and the biggest challenges facing the Bundesbank.  View Article
DW: ECB banking supervision remains controversial
The ECB is in charge of the eurozone's financial policy. In future, the ECB is also to provide banking supervision. But is it necessary and realistic to supervise and regulate all of the EU's banks?  View Article
Reuters: Big German banks tout ECB watchdog power grab
Germany's private sector lenders want to give broad watchdog powers over all eurozone banks to the European Central Bank to eliminate interference by politicians in banking supervision.  View Article
BaFin/Elke König: 'It's time to search for alternatives'
In a SPIEGEL interview, the head of the German financial regulator discusses the scandals rocking the banking world. She advocates a single, comprehensive system of supervision, "otherwise, our oversight of the financial system as a whole gets short shrift".  View Article
EurActiv: Italian bank chief warns of 'colossal' trouble without deeper EU
Failure to create a deeper eurozone union would represent an enormous problem for banks, the head of Italian bank Monte dei Paschi di Siena (MPS) said yesterday.  View Article
CER/Whyte: A banking union – it is necessary, but is it likely?
Such a union is key to the eurozone's survival. But the obstacles to its adoption are still huge, comments Whyte.  View Article
Bruegel/Bijlsma: Eurocrisis lessons from banking regulation - Create collateral in return for support
It is natural to compare bank regulation with the governance of countries in a monetary union, writes Bijlsma. Bank regulation has basically three elements: insurance against liquidity problems, regulation of risk-taking incentives, and a framework to address solvency problems.  View Article
Paul N Goldschmidt: State and bank relations - An explosive cocktail!
The time for half-baked compromises is over. One must either move forward with determination to build a "Federal European Union" or, failing agreement, initiate an orderly retreat to the pre-existing status of independent Nation States.   View Article
Huertas/Nieto: Banking union and bank resolution - How should the two meet?
This column argues that the proposed Crisis Management Directive is a step in the right direction for resolution but that banking union needs a single resolution authority and single resolution fund along with a single supervisor.  View Article
Xavier Vives: Banking union and the financial architecture of the eurozone - A retrospective
Does Europe need a banking union? This column argues that banking union is necessary but not sufficient for monetary union to survive. To cope with sovereign risk more political and fiscal integration is needed.  View Article
Commission launches consultation on benchmarks and market indices following Libor manipulation
Following the recent manipulation of Libor, the Commission has today launched a consultation inviting stakeholders to comment on possible new rules for the production and use of indices serving as benchmarks in financial and other contracts. The consultation will run until 15 November.  View Article
ECON Committee: Public consultation into Libor/Euribor
Arlene McCarthy, VP of the EP's economic and monetary affairs committee and rapporteur on market abuse, is holding a public consultation into Libor/Euribor. Submissions are requested by 17 September, 2012.  View Article
UK Treasury Committee publishes Libor report
The Treasury Select Committee today published its report, 'Fixing Libor: some preliminary findings', following its inquiry into the Final Notice issued by the Financial Services Authority with respect to Barclays on 27 June, 2012.  View Article
Bank of England response to TSC Libor report
In a statement, the Bank welcomed the Treasury Select Committee's conclusion that the Bank of England did not have any regulatory responsibilities for Libor during the relevant period.  View Article
FSA/Wheatley Review – the future of Libor
In a speech, FSA Managing Director Wheatley gave an update on the UK's response to the Libor scandal, and introduced his review – the Wheatley Review.  View Article
ICFR Analysis - Interbank Rates
This short note provides a comparison on Libor, Euribor and other interbank rates. It also outlines the steps being taken by regulators to amend the process of calculating interbank rates.  View Article
EBIC: Key positions in first half of 2012
In the first half of 2012, under the Chairmanship of Mr Joseph Delhaye, the European Banking Industry Committee (EBIC) has been focusing on strategic areas of prudential supervision, retail banking and anti-money laundering.  View Article
EPP/Karas: Banking Regulation - No agreement without limitation of bankers' bonuses
Parliament's negotiator on the new EU banking regulation wants to finalise agreement on bonuses in the next few days.  View Article
Bloomberg: Banker bonuses at risk as EU lawmakers fight Barnier plans
European Union lawmakers said they will fight proposals from EU Financial Services Commissioner Michel Barnier that would water down legislation capping banker bonuses.  View Article
EBF: Banking industry raises concerns over delay in legislative process towards implementation of CRD IV
The European banking industry has voiced its concerns after learning that the European Council has suspended its work on the new Capital Requirements Regulation and Directive until September, and that the European Parliament will not be voting on the legislative package until the end of October.  View Article
BIS: Regulatory treatment of valuation adjustments to derivative liabilities - Final rule issued by Basel Committee
The Basel Committee on Banking Supervision has revised paragraph 75 of Basel III as regards its application to derivatives.  View Article
BIS: FSI Survey - Basel II, 2.5 and III Implementation
The Financial Stability Institute (FSI) has conducted surveys in the past on subjects of supervisory interest and shared the findings with the supervisory community. The FSI conducted a survey on Basel II implementation in 2004, which was followed by updates in 2006, 2008 and 2010.   View Article
BIS: Basel III FAQs on counterparty credit risk rules
The Basel Committee on Banking Supervision has issued frequently asked questions (FAQs) on Basel III's counterparty credit risk rules, in order to promote consistent global implementation of Basel III.  View Article
Germany puts pressure on talks in Brussels: Cabinet approves legislation on Basel III banking rules
To ensure that the internationally agreed stricter rules for banks can take effect as planned on 1 January 2013, the Federal Government today approved legislation drafted by the Federal Ministry of Finance to transpose the Basel III rules into national law, in advance of final agreement in Brussels.  View Article
Reuters: Europe's big bang for bank rules set to sputter
A hoped-for "big bang" start next year for new rules to make banks safer is set to sputter in Europe, creating more uncertainty in a sector struggling to win back investor confidence lost in the financial crisis.  View Article
FSA statement regarding CRD IV implementation
The FSA will continue to undertake all preparatory work that is possible in the absence of finalised legislative text, in full expectation that the EU legislation will follow the Basel III implementation timetable. FSA expects all firms in scope of CRD to do likewise.  View Article
EBA: Update on the finalisation and implementation of the standards on supervisory reporting
The finalisation and publication of the EBA draft Implementing Technical Standards (ITS) on supervisory reporting requirements for institutions has been pushed back pending the adoption by the EU legislators of the Capital Requirements Regulation (CRR).  View Article
EBF response to the BCBS consultation on a framework for dealing with domestic systemically important banks (D-SIBs)
The EBF welcomes the opportunity to share with the Basel Committee (BCBS) the views of the European banking sector on the proposal for a framework for dealing with domestic systemically important banks (D-SIBs).  View Article
EBF Response to EBA consultation Paper Draft ITS on supervisory reporting requirements for liquidity coverage and stable funding
The European Banking Federation summarises key messages with regard to the consultation, which is followed by some overarching comments in relation to the supervisory reporting framework and some further general remarks with regard to this consultation.   View Article
EBF response to EBA CP on draft implementing technical standards on supervisory reporting requirements for the leverage ratio
The European Banking Federation (EBF) welcomes the opportunity to respond to the EBA consultation paper on Implementing Technical standards (ITS) regarding supervisory reporting requirements for the leverage ratio.  View Article
BIS: Supervisory guidance for managing risks associated with the settlement of foreign exchange transactions - consultative document
The document aims to update the last supervisory guidance in order to ensure that such risks are properly managed: it will provide a more comprehensive and detailed view on governance arrangements and the management of principal risk, replacement cost risk and all other FX settlement-related risks.  View Article
EBA: ESAs strengthen supervisory cooperation for anti-money laundering supervision of payment institutions
The Joint Committee of the three European Supervisory Authorities (EBA, ESMA and EIOPA) published a Protocol for Supervisory Cooperation in the field of anti-money laundering (AML).   View Article
EBA publishes Guidelines to streamline data collection on remuneration practices
The EBA published Guidelines on the data collection exercise regarding high earners and on the remuneration benchmarking exercise. The objective is to streamline the data collection and increase the consistency and comparability of the information collected by national competent authorities.   View Article
First ECB report on card fraud shows chips have increased the security of physical transactions
The report was compiled by the Eurosystem, i.e. the European Central Bank and the 17 national central banks of the euro area. Its main findings are that card fraud has been on a declining trend since 2007, and that technological advances have been key to increasing the security of transactions.  View Article
ESBG Working Paper on EC’s Consultation on Green Paper, 'Towards an integrated European market for card, internet and mobile payments'
With this Working Paper, a deliberate choice has been made to focus on analysing the replies contributed to the Commission's Green Paper by the demand side (and also by telecommunication companies, payment institutions, and their respective associations).   View Article
EPC: EU law mandates migration to SEPA by February 2014 in euro area - Recommendation is to rely on EU legislator when planning migration
The European Union (EU) Regulation No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation EC No 924/2009 stipulates the mandatory deadlines for compliance with its rules for credit transfer and direct debit transactions.   View Article
ESBG: 2 clicks to understanding© the SEPA migration Regulation
In order to assist the market in accessing the SEPA migration Regulation easily, ESBG has transcribed this very important piece of legislation into a single chart, highlighting by date and item the key steps for compliance over the next five years.   View Article
European Payments Council Newsletter July 2012
The July 2012 edition of the EPC Newsletter focuses on the most appropriate approach to fostering further integration of, and innovation within, the Single Euro Payments Area (SEPA).  View Article
EMF: Quarterly review of European Mortgage Markets - Q1 2012
The European Mortgage Federation published its regular quarterly report for the 1st quarter of 2012.  View Article
EMF: Mortgage Info, July/August 2012
The July/August 2012 edition of the European Mortgage Federation's monthly newsletter includes articles such as: CRR/CRD IV: Hoping for More Certainty and the Correct Technical Solutions; and Covered Bonds: A Reliable Funding Mechanism for the Recovery.  View Article
ECBC Publishes 2012 Edition of the European Covered Bond Fact Book
This seventh edition of the ECBC European Covered Bond Fact Book builds on the success of previous editions and cements its place as the benchmark and most comprehensive source of information and data on the asset class.  View Article
AGB: No rash decisions when regulating shadow banks
The Association of German Banks has said that shadow banking sector needs effective regulation which it says has come a long way in recent years. The aim must be to minimise and, if possible, eliminate the systemic risk of a bank run in the shadow banking sector.  View Article
Risk.net: Central banks working on liquidity support for CCPs, says BoE's Tucker
Leading central banks, including the Bank of England, are working together to make sure they are able to prop up clearing houses in a crisis, says Paul Tucker, as part of a broader effort by the Financial Stability Board (FSB) to enable central counterparties (CCPs) to operate on a global basis.  View Article
HM Treasury: Steering group publishes recommendations for 'simple' financial products
An independent steering group set up by the Government has published initial recommendations on the development of 'simple' financial products that will better enable consumers to navigate the financial services market, the Financial Secretary to the Treasury, Mark Hoban, announced.  View Article
FSA publishes new rules on packaged accounts, consults on further issues
The Financial Services Authority (FSA) has published new rules requiring banks and building societies to check whether customers are eligible to claim on insurance cover before selling them a packaged bank account.   View Article
IJCB publishes quarterly journal - September 2012
The International Journal of Central Banking (IJCB) is an initiative of the central banking community. Published quarterly, the journal features articles on central bank theory and practice, with a special emphasis on research relating to monetary and financial stability.   View Article
BaFin: The success story of the Minimum Requirements for Risk Management
One of the success stories in banking supervision is the development of the Minimum Requirements for Risk Management. They form a comprehensive framework for banks' own internal risk management that extends across different types of risk and attaches importance to the quality of risk management.  View Article
Bruegel/Bijlsma: Should we worry about Target2 imbalances? Why Central Bank negative equity does and doesn’t matter
In the end, whether or not Target 2 imbalances lead to losses if a currency union breaks down is largely the German Central bank's own business.  View Article
Douglas J Elliott: Let's relax, and not break up the big banks
Writing for Brookings, Elliott says that anger and frustration have been very poor policy guides for dealing with the financial system. He firmly believes that many of the proposals to restructure banking would damage all of us.  View Article
Peterson Institute/Gagnon: Combating widespread currency manipulation
In order to get manipulators to agree to a change in international rules, the main targets of currency manipulation, the United States and the euro area, may have to play tough.   View Article
Peterson Institute/Truman: The IMF embraces FEERs and acts to broaden surveillance
The International Monetary Fund (IMF) has released a Pilot External Sector Report in which the organisation for the first time has embraced the concept of fundamental equilibrium exchange rates (FEERs) for use in its surveillance activities.   View Article
SunGard: Large Chinese financial institutions need to improve risk management
Competition from within the industry and a more complex financial environment now outweigh regulatory factors as key considerations for risk management at large financial institutions in China, according to a survey by analyst firm, Celent, sponsored by SunGard.   View Article
José Manuel Barroso: Banking union is the next key step for eurozone integration
The Commission's proposals for a Single Banking Supervisory Mechanism are based on three key principles: single supervision, credibility, and broad coverage, writes Barroso in an article for the Guardian.  View Article

Securities

ESAs consult on the application of the capital calculation methods for financial conglomerates
The Joint Committee of the European Supervisory Authorities launched a public consultation on Draft Regulatory Technical Standards for the calculation methods of the Financial Conglomerates Directive.   View Article
ESMA publishes responses to consultation on the Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories
ESMA published the responses it received to its consultation on the Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories which ended on August 5.  View Article
ALFI comments on ESMA's consultation on its technical standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories
ALFI suggests that ESMA should analyse the possibility to request more synthetic information and think about the frequency at which the trade information should be refreshed, especially on collateral and valuation elements.  View Article
EFAMA response to ESMA's consultation paper on draft technical standards for the Regulation on OTC derivatives, CCPs and trade repositories
EFAMA appreciates the wide and profound scope of the proposed draft technical standards. In addition, it welcomes the flexible and more pragmatic overall approach in the draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS).  View Article
Final ISDA-AFME-BBA-Assosim submission to ESMA re EMIR draft RTS on OTC, CCP, TR
The signatory associations would like to underline that they support the key aims underpinning EMIR, in particular reduction of counterparty credit risk through clearing and compression, increasing regulatory transparency through trade repositories, and enhanced credit risk mitigation.  View Article
FESE response to ESMA consultation paper on EMIR technical standards
FESE members believe that ESMA is interpreting its mandate too widely by proposing not only a definition but also the remedies to the potential issues posed by liquidity fragmentation. In addition, FESE members believe that the definition of liquidity fragmentation proposed is too narrow.  View Article
The AMF draws attention to publication of European "EMIR" Regulation
EMIR is yet to be completed by technical standards which were the subject of a public consultation. Their publication will set the conditions of the entry into force of the great majority of the provisions in the Regulation.  View Article
EACT comments in response to ESMA consultation paper: Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and TRs
The comments reflect the perspective of the classic role of the corporate treasurer, which is to use financial instruments such as derivatives to mitigate rather than to take on risk.  View Article
EACT/Raeburn: ESMA's proposed technical standards for OTC derivatives et al
Raeburn summarises the key issues of EACT's response to the ESMA consultation on draft technical standards on the regulation of OTC derivatives, CCPs and trade repositories.   View Article
IMA proposes new clearing approach to protect investors
The EMIR Regulation is intended to reduce the risk associated with the OTC derivatives market and establish common rules for central counterparties and trade repositories.   View Article
IPE: OTC regulations may depress bond yields further
The upcoming regulations in both Europe and the US for OTC derivatives will create a "significant" increase in demand for liquid, high-quality government securities resulting therefore in lower returns for the funds mandated to invest in these securities.  View Article
IPE: Brussels set to postpone implementation of EMIR to achieve 'global' approach
The European Supervisory Authorities expect Brussels to set a new deadline for the publication of the joint draft regulatory technical standards on risk mitigation techniques for OTC derivatives not cleared by a central counterparty (CCP), after they called on the Commission to review its timetable.  View Article
AMF publishes 2011 report on credit rating agencies
The AMF's annual report on credit rating agencies (CRAs) covers CRA supervision, international regulatory developments, and credit ratings. It also provides an opportunity for the regulator to review Europe's new supervisory framework.   View Article
BCBS: Capitalisation of bank exposures to central counterparties
The Basel Committee issued today interim rules for the capitalisation of bank exposures to central counterparties (CCPs) that are intended to come into effect as of January 2013.  View Article
Publication of the translations of ESMA guidelines on certain aspects of the MiFID suitability requirements
ESMA published the official translations of the "Guidelines on certain aspects of the MiFID suitability requirements".  View Article
ESMA publishes update on MiFID waivers from pre-trade transparency
ESMA published a revision of its waiver document which provides information on the pre-trade transparency of trading systems already set up in the European Union, and informs on the compliance of such systems with MiFID, the Markets in Financial Instruments Directive.  View Article
ESMA calls for candidates to join its consultative working group on investor protection and intermediaries
ESMA has launched a call for expressions of interest for its Consultative Working Group (CWG) for ESMA's Investor Protection and Intermediaries Standing Committee (IPISC). Applications are requested by 31 August, 2012.  View Article
CPSS-IOSCO issue consultative report on the recovery and resolution of financial market infrastructures
Financial market infrastructures play an essential role in the global financial system. The disorderly failure of an FMI can lead to severe systemic disruption if it causes markets to cease to operate effectively. Comments are requested by 28 September, 2012.  View Article
FSA: Short selling regulation – Handbook changes
In this Consultation Paper, FSA invites comments on the proposed amendments to the FSA Handbook relating to the EU Short Selling Regulation (SSR), which applies from 1 November, 2012. Responses are requested by 20 September, 2012.  View Article
FSA: Special short selling edition of Market Watch
The August 2012 edition of Market Watch contains the regulator's approach to transposition of the Short Selling Regulation in the UK and advance notice of expected procedures.  View Article
Gillian Tett: Don’t be fooled by short-selling bans
Last month, the governments of Spain and Italy banned the short selling of shares in banks in a desperate bid to shore up confidence. But is there any evidence that short-selling bans have any long term effect? Or can they potentially make a bad situation worse, asks Tett in her FT column.  View Article
European repo market side-lined by ECB LTROs
Banks have reduced their reliance on funding from the repo market as a result of their access to generous LTRO financing. The size of the market remains well above the level recorded in the December 2008 (€4,633 billion).  View Article
EDHEC-Risk Institute strongly welcomes ESMA's ETF guidelines
EDHEC-Risk Institute has strongly welcomed the ETF guidelines released by ESMA on July 25, 2012, which are consistent with the conclusions of EDHEC-Risk Institute's research on ETF risks and ESMA's consultation paper, both published earlier this year.  View Article
FT: Questions over viability of US ETFs
According to this article, more than a quarter of exchange-traded funds and notes listed in the US have failed to attract enough assets to be economically viable.  View Article
FIA and ISDA publish cleared derivatives addendum
The Futures Industry Association and the International Swaps and Derivatives Association, Inc announced the publication of a template that can be used by US futures commission merchants and their customers to document their relationship with respect to cleared over-the-counter swaps.  View Article
GFMA submits comments to IOSCO on the consultation report, Global Developments in Securitisation Regulation
GFMA provides comments to the International Organisation of Securities Commissions on the consultation report entitled "Global Developments in Securitisation Regulation" (the Consultation Report), and the corresponding proposed policy recommendations.  View Article

Insurance

EIOPA: 2012 Report on Market Developments
This report provides a general overview on the developments in cross-border arrangements of Institutions for Occupational Retirement Provision (IORPs), following the implementation by Member States of Directive 2003/41/EC.  View Article
EIOPA: Annual Report 2011
EIOPA's main priorities in 2011 were in the following areas: Solvency II, Occupational pensions, Consumer protection and financial innovation, Colleges of Supervisors and cross-border crisis management and resolution, Financial stability.  View Article
Insurance Europe key messages on the European Commission's proposed General Data Protection Regulation
Insurance Europe comments that the EC's proposed Regulation on the protection of individuals with regard to the processing of personal data and the free movement of such data may have unintended consequences for insurers and consumers.  View Article
Insurance Europe response to IAIS Consultation on ComFrame
For many years, Insurance Europe has supported the introduction of comprehensive and efficient group supervision and therefore appreciates the International Association of Insurance Supervisors' (IAIS) efforts in launching the ComFrame initiative.   View Article
Insurance Europe critical of IAIS systemic risk methodology
Insurance Europe has responded to the consultation by the International Association of Insurance Supervisors (IAIS) on its proposed methodology for identifying global systemically important insurers.  View Article
Risk.net: Liability insurers need to embrace life ALM techniques
The growth of periodical payment orders in personal injury cases is requiring general insurers to think more like life companies when it comes to asset-liability management.  View Article
Risk.net: Latest delay to key Solvency II vote 'could threaten agreement on Omnibus II'
The EP plenary vote on Omnibus II will now take place on November 20. The latest postponement of the EP's critical vote on Omnibus II could undermine the negotiations to finalise the Omnibus II Directive and ultimately damage the international reputation of Solvency II.  View Article
Risk.net: Keeping above the capital floor
Solvency II brings rise to significant volatility in insurers' capital own funds due to the regime's market-consistent view of the economic balance sheet. Managing this volatility and ensuring that fluctuating capital levels remain above regulatory requirements presents challenges for insurers.   View Article
Investment Europe: Focus on regulation - White paper spells out steps to Solvency II technology readiness
The independent research unit of Simcorp has produced a comprehensive report on what Europe's asset managers, insurers and other financial industry practitioners need to do, primarily in terms of IT systems, to be ready to meet demands put upon them by Solvency II provisions.  View Article
FinCAD: Technological infrastructure of insurers crucial to effective Solvency II implementation
Insurers will need the proper information technology (IT) infrastructure in order to implement the pending Solvency II regulations smoothly.  View Article
Risk.net: Policymakers urged to widen scope of matching adjustment 'for good of society'
European policymakers should adopt a more liberal approach to the application of the matching adjustment for discounting long-term liabilities under Solvency II, according to Towers Watson.  View Article
Risk.net: Standard formula 'an inadequate risk measure' for high-risk bonds
European policy-makers have been urged to adjust Solvency II's treatment of bonds, after a study found that the current calibration of the standard formula does not adequately reflect the risks associated with very high-risk bond types.  View Article
Risk.net: The UFR curve conundrum
With an ultimate forward rate-based extrapolation looking very likely for Solvency II, the Royal Bank of Scotland Insurance ALM Advisory team has carried out extensive research on optimal hedge strategies for hedging the Solvency II risk-free rate  View Article
Risk.net: An alternative model for extrapolation
The proposed method for extrapolating the risk-free yield curve under Solvency II could have serious consequences for insurers, changing their risk profile and distorting the swap market. As a result, risk management will become more complex and potentially less effective.   View Article
Towers Watson: Solvency II - The matching adjustment and implications for long-term savings
Solvency II was initiated by the European Commission in 2000 and represents a fundamental change to European insurance regulations. The project aims to create a more harmonised, risk-orientated solvency regime, resulting in capital requirements that are reflective of the risks being run.  View Article
Towers Watson: Swiss Re Prepares life models for Solvency II
Swiss Re has enhanced its life insurance modelling platform with the addition of Towers Watson's RiskAgility software, as part of its longer-term governance agenda and the Solvency II internal model approval process.  View Article
Risk.net: Council proposal on life morbidity insurance threatens compromise on long-term guarantees
An agreement on Omnibus II was prevented by a proposal from the Council of the European Union to extend the package of measures for life insurance contracts with long-term guarantees to other product lines.  View Article
FSA: Review of the client money rules for insurance intermediaries
This Consultation Paper (CP) contains various proposals for changes to the CASS 5 rules. It is aimed at insurers, as well as all insurance intermediaries to whom CASS 5 applies. Comments are requested by 30 November, 2012.  View Article
CRE: Risk managers call for TCoR to address more than insurance premiums
Risk managers are questioning the suitability of industry metrics used to assess the effectiveness of risk management programmes, suggesting that such metrics need to focus less on insurance-related costs and be more reflective of additional factors (high cost of capital, rising interest rates…).  View Article
CRE: Half of European companies unprepared for emerging risks finds ACE
Around half of European companies say they are unprepared to deal with many of the most prominent emerging risks, citing terrorism and political violence as their biggest concern, according to research by ACE.  View Article
Risk.net: Concerns over reporting burden on groups of proposed framework for international supervision
Proposals for a common framework for the supervision of international insurance groups could increase the reporting burden on groups and risk confidential information being inadvertently released.  View Article
PropertyCasualty360: Building on legacy systems essential for impending Solvency II challenge
While American insurers may take a blasé attitude about the upcoming Solvency II standards, for large multi-national insurers with operations in Europe and North America, the deadline looms and the time for implementation is growing shorter.   View Article
Risk.net: Regulatory change will enable China insurers to reduce their asset-liability mismatch
Chinese insurers will be able to duration-match their assets and liabilities more accurately following a decision by the China Insurance Regulatory Commission (CIRC) to allow insurance companies to outsource their investment mandate and broaden the type of investments allowed, say analysts.  View Article

Asset Management

European Commission consults on UCITS
The European Commission has issued a Consultation Document on Undertakings for Collective Investment in Transferable Securities (UCITS) Product Rules, Liquidity Management, Depositary, Money Market Funds, Long-term Investments. Deadline for submissions is 18 October, 2012.  View Article
Towards UCITS VI...The European Commission reopens UCITS debate
On 26 July 2012, the European Commission published a consultation on UCITS, focusing on product rules, Liquidity management, depositary, money market funds and long-term investments policies. In short, a large scope of UCITS issues.  View Article
Investment Europe: KPMG partner urges managers to heed UCITS V, despite regulatory fatigue
An "avalanche of regulation" threatens to overwhelm asset managers and distract them from attending to their clients, says a Luxembourg-based partner at KPMG, but he is urging managers to heed forthcoming UCITS V rules nevertheless - not least because of sections on fines and remuneration.  View Article
FSA proposes to ban promotion of UCIS and similar products to ordinary retail investors
The Financial Services Authority (FSA) has published proposals to ban the promotion of Unregulated Collective Investment Schemes (UCIS) and similar products to the vast majority of retail investors in the UK.  View Article
IPE: ECB action could lower risk premiums for European equities
According to Invesco Perpetual, the European Central Bank governing council's decision to provide financial support alongside the European Financial Stability Mechanism to countries requesting assistance could help to lower risk premiums for European equities.  View Article
EDHEC-Risk Institute research highlights the risk of new forms of equity indices underperforming cap-weighted indices
In its research paper, EDHEC-Risk Institute warns of the risk of new forms of alternative-weighted equity indices seriously underperforming traditional cap-weighted indices.  View Article
ALFI: AIFMD, a welcome opportunity for Europe to create a brand in the alternative investment market
ALFI strongly believes that the AIFMD presents a welcome opportunity for Europe to create a brand in the alternative investment market, similar to the global brand it has created with UCITS.   View Article
Report of AIFMD Stakeholders' Committee on transposition of AIFMD and development of French innovative asset management
Nearly half of French investment funds could qualify as Alternative Investment Funds (AIFs) within the meaning of the Directive, and nearly two-thirds of France's management companies currently manage AIFs. Other investment vehicles that are not yet regulated may also be covered by the Directive.  View Article
Deloitte survey shows fund managers believe AIFMD will lead to less competitive market
Research from Deloitte, the business advisory firm, highlights that fund managers believe the European Commission's Alternative Investment Fund Managers Directive (AIFMD) will lead to fewer non-EU fund managers operating in Europe, resulting in a less competitive market.  View Article
Hedgeweek: Spot the AIFM
The EU's Directive on Alternative Investment Fund Managers (AIFMD) applies to "AIFMs", namely "legal persons" whose regular business is "managing" one or more "AIFs" (essentially, funds that are not UCITS).  View Article
IPE: High volume of responses to EIOPA consultation likely to delay QIS launch
The European Insurance and Occupational Pensions Authority (EIOPA) might delay the launch of the quantitative impact study (QIS) for the revised IORP Directive, due to the particularly high number of responses received to its last consultation paper on the matter.  View Article
IPE: IORP Directive approach to property simple-minded
Proposed revisions to the IORP Directive have been criticised for treating real estate solely as a tradable asset and not as a potentially long-term, income-producing investment.  View Article
IPE: IORP framework could impinge on social partner agreements
According to EFRP secretary general Matti Leppälä, Brussels could be acting outside its remit and intruding on the social contract by weighing in on the issue of pension promises and collective bargaining.  View Article
Professional Pensions: Barnier and Hutton in broadsheet spat over IORP
The author of the [UK] government's public sector pension reforms has engaged in a public row with a senior European official over European regulation.   View Article
NAPF: Damaging pension plans being rushed through by Europe
The European Commission is rushing through harmful plans that could saddle UK pension funds with at least an extra £300 billion in costs, and its impact assessment for these "Solvency II-type rules" proposals is flawed, the NAPF warned.  View Article
EFRP response to EIOPA Consultation on Quantitative Impact Study
The European Federation for Retirement Provision's response discusses the technical specifications of the proposed QIS and shows that a lot of different and subjective assumptions have to be made in order to calculate the Holistic Balance Sheet (HSB).   View Article
IPE: UK industry critical of 'tight' timetable, narrow scope for QIS
A consultation process launched by the European pensions regulator to evaluate the content of the future quantitative impact study (QIS) for a revised IORP Directive asks the wrong questions and is subject to an "inadequate" timeframe, a number of UK pension representatives have claimed.  View Article
IPE: European associations predict HBS will result in pseudo security
The holistic balance sheet (HBS) will fail to assess the solvency of European occupational pension schemes accurately – with IORPs being asked to make risk and impact calculations with too many assumptions rather than accurate figures, increasing the risk of "pseudo" security.  View Article
IMA response to ABI's letter on pension charges
The Investment Management Association's Jonathan Lipkin said that IMA strongly agrees that charge disclosure for savers should be consistent across the pensions landscape.  View Article
IMA's response to Fair Pensions report
Mr Lipkin said that workplace pension schemes have significant responsibilities towards their members and these responsibilities are particularly important given the likely dependence of many members on default investment strategies.  View Article
IMA: IOSCO makes strong progress on fund liquidity management principles
The IMA recommends that IOSCO encourages regulators to review the efficacy of liquidity management tools available to managers for both inflows and outflows.  View Article
AIMA publishes comprehensive rebuttal of 'The Hedge Fund Mirage'
The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has published a comprehensive rebuttal of 'The Hedge Fund Mirage', a polemic critical of the industry.  View Article
FSA: Assessing the possible sources of systemic risk from hedge funds
This paper sets out the results of the FSA's latest Hedge Fund Survey (HFS) conducted in March 2012, and the Hedge Fund As Counterparty Survey (HFACS) conducted in April 2012.   View Article
FT: EU hedge funds face pay threat
There is increasing industry alarm that draft guidance on how to implement the law could see restrictions such as bonus deferrals and clawbacks, which are already enforced in the banking sector, imposed on a wider range of big funds than first thought.  View Article
IPE: AP fund investment regulations should be replaced with prudent person approach
A review of Sweden's AP funds has recommended the abolition of current quantitative investment regulations, replaced with the prudent person principle in order to boost performance, governance and flexibility of the country's buffer system.  View Article

Corporate Governance/Accounting

ESMA: Considerations of materiality in financial reporting
The ESMA published a summary of the responses received on its consultation paper on materiality in financial reporting. The comment period closed on 31 March, 2012 with 50 responses received from a broad range of stakeholders.   View Article
ESMA commented on IFRS Interpretations Committee's agenda decision on GGBs
The ESMA published a comment letter to the IFRS Interpretations Committee regarding its tentative agenda decision on IAS 39 'Financial Instruments: Recognition and Measurement' and the accounting for different aspects of restructuring Greek government bonds (GGBs).  View Article
EFRAG's report on Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
EFRAG has completed its due process regarding Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12), and has submitted its Endorsement Advice Letter and Effects Study Report to the EC.  View Article
EFRAG's report on Annual Improvements to IFRSs 2009–2011 Cycle
EFRAG has completed its due process regarding Annual Improvements to IFRSs 2009–2011 Cycle, and has submitted its Endorsement Advice Letter and Effects Study Report to the EC.  View Article
BIS: Speech by Vítor Constâncio on accounting, financial reporting and corporate governance for central banks
BIS published the opening remarks by Vítor Constâncio, Vice-President of the ECB, at the third conference on accounting, financial reporting and corporate governance for central banks held in Frankfurt on 4 June, 2012.  View Article
FRC: How credit analysts view and use the financial statements
The focus of the FRC's paper, "How credit analysts view and use the financial statements", is on credit analysts' requirements and what the new information content of the financial statements should be in their opinion, rather than on equity analysts.   View Article
ACCA: Accountancy profession will continue to lose credibility if it fails to demonstrate value to public
The accountancy profession will continue to lose credibility if it fails to educate the public and its stakeholders of its value and take steps to rebuild trust in the industry, finds new research launched by ACCA called 'Closing the Value Gap'.  View Article
FRC: Response to EFRAG draft IFRIC Interpretation, “Levies Charged by Public Authorities on Entities that Operate in a Specific Market”
The FRC published its comment letter to the EFRAG regarding the draft IFRIC Interpretation, 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'.  View Article
FRC response to IASB draft IFRIC Interpretation “Levies Charged by Public Authorities on Entities that Operate in a Specific Market”
The FRC published its comment letter to the IASB regarding the draft IFRIC Interpretation, 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'.  View Article
IFAC: IESBA proposes changes to Code of Ethics to address illegal acts
The IESBA released for public exposure new requirements that address a professional accountant's responsibilities regarding the disclosure of suspected illegal acts committed by a client or employer. Comments on the Exposure Draft are requested by December 15, 2012.  View Article
IESBA proposes requiring accountants to disclose certain illegal acts by clients, employers
Stuart Gittleman of Thomson Reuters reports on the release of the IESBA's Exposure Draft, 'Responding to a Suspected Illegal Act'. Under requirements proposed by the IESBA, accountants would face new standards for disclosing suspected illegal activity by a client or employer.  View Article
IFAC: IAESB proposes revised standard on professional values, ethics and attitudes
The IAESB released for public exposure a proposed revision of International Education Standard (IES) 4, Initial Professional Development-Professional Values, Ethics and Attitudes. Comments are requested by October 11, 2012.  View Article
IFAC: IAESB proposes revised standards on the development of technical competence and professional skills
The IAESB released for public exposure proposed revisions of International Education Standard (IES) 2, Initial Professional Development—Technical Competence, and IES 3, Initial Professional Development—Professional Skills. Comments are requested by November 1, 2012.  View Article
FASB: Proposal for presenting items reclassified out of accumulated other comprehensive income
The FASB issued for public comment a proposed Accounting Standards Update that is intended to improve the presentation for reclassifications out of accumulated other comprehensive income in a manner that balances the benefits to users of financial statements. Deadline for comments: October 15, 2012.  View Article
EFRAG requests experiences with IFRS 8 Operating Segments
EFRAG is requesting evidence from European Constituents on their experiences with IFRS 8 Operating Segments in relation to IASB's post-implementation review of IFRS 8. EFRAG would prefer to receive responses by 15 October, 2012.  View Article
FASB: Invitation to comment on private company decision-making framework
The FASB issued an Invitation to Comment on a staff paper that outlines an approach for deciding whether and when to modify US GAAP for private companies. Stakeholders are asked to provide input on the document by October 31, 2012.  View Article
EuropeanIssuers' position on Commission's audit regulation proposal
EuropeanIssuers maintains that there is an undue spill-over of regulation aimed at the financial industry and the banking sector to the end users of capital markets, which are listed companies that produce goods and services for the real economy.  View Article
IFAC: IAESB proposes revised standard on professional development of the audit engagement partner
The IAESB released for public exposure a proposed revision of International Education Standard (IES) 8, Professional Development for Engagement Partners Responsible for Audits of Financial Statements. Comments are requested by December 11, 2012.  View Article
AccountancyAge: Audit reporting rules could see 'duel' accounting
Richard Crump observes that with the IAASB adding its voice to calls for fundamental change to auditor reporting, the clamour for auditors to opine on company-specific information has reached a din that the profession can no longer ignore.  View Article

Financial Services Policy

Commissioner Barnier: Making financial centres contribute to the wider economy
"We should not forget that Europe's financial centres also have key roles to play in the post-crisis recovery", said Barnier, speaking at the European Financial Centre Roundtable.  View Article
Commission consults on tax obstacles to cross-border venture capital investment
The European Commission has launched a public consultation to collect factual examples of direct tax problems that arise when venture capital is invested across borders. Contributions are requested by 5 November, 2012.  View Article
Notre Europe: "Fiscal Compact", sovereignty and austerity
Yves Bertoncini concludes that in adopting and implementing the "Fiscal Compact", Europeans are being urged once again to illustrate the virtues of the old proverb, "prevention is better than cure".   View Article
Bundesbank/Dombret: International coordination to enforce regulatory reform
In his speech at the Salzburg Global Seminar on Financial Regulation - Bridging Global Differences, Dr Dombret said that international collaboration between regulators had never been so challenging – and yet never had collaboration been so important.  View Article
ABBL: PRIPs - With the best of intentions
ABBL's Benoît Sauvage says that overall the ABBL is a true believer and supporter of this project but, as is always the case with drafts, there are some elements to address to make this regulation a success.  View Article
Bloomberg: French Parliament passes transaction tax in Hollande’s budget
France has become the first country in the European Union to bring in a tax on financial transactions.  View Article
FSA publishes RDR Newsletter August 2012
The FSA has published Issue 7 of its Retail Distribution Review newsletter, the penultimate edition before 'RDR-day'.  View Article
FSA considers RDR deadline extension requests
FTAdviser reports that nearly 50 advisory firms have applied for waivers to allow individuals to have an extension to meeting the Retail Distribution Review qualification requirements after 1 January, 2013. Of these, only 13 applications have so far been approved.  View Article
FSA warns IFAs over stress testing post-RDR propositions
The Financial Services Authority (FSA) has voiced concerns that adviser firms are not stress testing the new propositions they will launch in line with the Retail Distribution Review (RDR).  View Article
Deloitte study finds RDR jeopardises financial advice provision
Research from Deloitte, the business advisory firm, highlights how the introduction of the Retail Distribution Review (RDR) is likely to increase the UK's financial advice gap.  View Article

European Council/Parliament

ECON Committee: Focus on bank supervision, wider economic governance and ECB's role in stemming eurozone crisis
Bank supervision, wider economic governance and the European Central Bank's role in stemming the eurozone crisis dominated discussions with ECB President Mario Draghi and Commissioners Michel Barnier and Olli Rehn on Monday in Parliament.  View Article

Financial Services Month in Brussels - Report

July 2012 Financial Services Month in Brussels
Graham Bishop's personal overview of events throughout the month of July. The reverberations from the end-June European Council meetings continued to dominate attention.  View Article

Graham Bishop’s Articles and Speeches

Financial World: Faster, deeper, towards union - Graham Bishop finds an acceleration in common action
The markets will soon have to make up their collective mind about the European Council meeting in June: was it a turning point or just another of these seemingly endless summits that never quite get to grips with the problem?   View Article




© Graham Bishop

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