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17 January 2013

This week in "Brussels"
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Articles from 10 January 2013 - 17 January 2013

Banking

ESMA and EBA take action to strengthen Euribor and benchmark rate-setting processes
ESMA and EBA have today published the results of their joint work on Euribor and are proposing principles for benchmark rate-setting processes. Deadline for comments on their consultation paper is 15 February, 2013.  View Article
Euribor-EBF supports EBA/ESMA Recommendations on future of Euribor
Euribor-EBF supports the conclusions of the joint EBA & ESMA Report on the future of Euribor, which fairly reflect the discussions held between EBA, ESMA and Euribor-EBF during the Review process.   View Article
EBF response to EBA consultation on prudent valuation
EBF commented on EBA's discussion paper relating to draft regulatory technical standards (RTS) on prudent valuation under article 100 of the draft capital requirement regulation (CRR).  View Article
Industry response to EBA's discussion paper on Draft RTS on prudent valuation under Article 100 of the draft CRR
This letter contains the response of ISDA, AFME and BBA to the EBA's Discussion Paper on "Draft Regulatory Technical Standards on prudent valuation under Article 100 of the draft Capital Requirements Regulation (CRR)" of November 2012.  View Article
BoE: The Financial Policy Committee's powers to supplement capital requirements - A Draft Policy Statement
The interim Financial Policy Committee (FPC) published a draft Policy Statement explaining the planned powers for the FPC to give directions setting extra capital requirements for the purposes of financial stability.   View Article
David Miles: Bank capital requirements - Are they costly?
There is a view that banks are using more equity capital – and relatively less debt – to finance the assets they hold, creating substantial costs so great as to make more capital unfeasible. This column argues that these costs are exaggerated, but that the benefits of having banks that are far more robust are likely to be large.  View Article
EBIC's views on the Liikanen report's recommendations
The European Banking Industry Committee draws attention to selected issues, including the LTV (Loan to Value) and LTI (Loan to Income) ratios, and the treatment of the Assets for Sale put forward by the Report.   View Article
BBA publishes options paper on banking standards
BBA published its submission to the PCBS which sets out a range of possible options to improve standards of banking practice. The submission also includes industry proposals to rejuvenate the oversight and enforcement mechanisms to clamp down on rogue bankers and bad practice.  View Article
Reuters: German push for Liikanen consensus could help Deutsche Bank
Germany said it is seeking a common position with the French government over how to apply new EU bank safety rules, a move that could allow Deutsche Bank to sidestep a division of its business.  View Article
Report of TheCityUK seminar on European banking union
The overarching conclusion from the seminar is that the steps taken so far towards banking union did not pose unmanageable threats or tensions for the UK financial sector's position.  View Article
Christian Thimann: Banking union should ease Target fears
A single European supervisory system will fill the information gap, writes Thimann, advisor to the ECB president, in this FT article.  View Article
Verhofstadt strongly criticises first Commission draft on banking resolution
Verhofstadt said that in the long run such a system must not be funded by the tax payers, but by the creditors and the financial institutions in relation to the risk they represent.  View Article
BBA: Regulators' decisions can help or hinder the economy
One of the main challenges in the wake of the financial crisis is that if the reforms are introduced too soon they may make the economic downturn even worse than it need be.  View Article
Andrew G Haldane: Have we solved 'too big to fail'?
Too-big-to-fail is far from gone. It is even more important it is not forgotten. Further analytical work, weighing the costs and benefits of different structural reform proposals, would help keep memories fresh and policies on the right track.  View Article

Securities

Plenary Session: Tougher credit rating rules confirmed by Parliament's vote
New rules will allow agencies to issue unsolicited sovereign debt ratings only on set dates, and enable private investors to sue them for negligence. (Includes link to ECON infographic.)  View Article
Statement by Commissioner Barnier following the EP vote on new European rules to regulate CRAs
Barnier reiterated that the vote was another important step in the demanding agenda to strengthen financial regulation, and in response to the financial crisis.  View Article
EPP/Gauzès: Credit rating agencies - Stricter rules for sovereign debt rating
Gauzès welcomed the adoption by the European Parliament of stricter rules concerning sovereign debt ratings by credit rating agencies at its plenary session in Strasbourg.  View Article
S&D/Domenici: 'Stricter rules for credit rating agencies go in the right direction'
"These new rules go in the right direction. They will make credit rating agencies more responsible, more transparent and more democratic. But we will need to make sure that the goals we have set are achieved."  View Article
ALDE: EU further improves regulation on credit rating agencies and aims at reducing overreliance
"Too many companies and investors have lost money for having blindly and solely relied on the mistakenly considered infallibility of CRA's assessments. Evidence has shown that they can be extremely wrong", stressed Wolf Klinz.  View Article
Greens/Giegold: Downgraded deal on new EU CRA rules approved, as opportunity missed for more ambitious regulation
Giegold said he regretted that the new rules were not more ambitious in terms of addressing the market power of the 'big three' agencies and potential conflicts of interest.  View Article
ESMA publishes its advice on delegated acts for the Prospectus Directive
ESMA proposes clarifications of, and amendments to, the Prospectus Regulation in order to increase legal clarity and propose application of the proportionate disclosure regime for convertible/exchangeable debt securities.   View Article
AMF applies the ESMA guidelines on the compliance function requirements
The Autorité des Marchés Financiers incorporated the ESMA guidelines on certain aspects of the MiFID compliance function requirements (2012/388) in its position 2012-17, which will apply as of 28 January, 2013.  View Article
EFAMA response to FSB consultation on strengthening oversight and regulation of shadow banking
EFAMA is supportive of the objectives pursued by the FSB to identify and close any regulatory gaps as well as inefficiencies in the supervision of the financial sector in general, with a view to mitigating systemic risks and reducing the possibilities of regulatory arbitrage.  View Article
ABBL response to FSB Consultation on strengthening oversight and regulation of shadow banking
ABBL takes due note of the three consultation papers on shadow banking, but warns that the concept of "shadow" does not necessarily mean that the activities are not regulated or supervised, as many parts of these three dense areas are - or will soon be - regulated at EU level.  View Article
Eurofinas/Leaseurope response to "A Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities"
Responding to the consultation, Eurofinas and Leaseurope consider it essential that the FSB bears in mind the fundamental differences in economic, market and regulatory structures that exist within its wide range of jurisdictions.  View Article
VoxEU: Shadow banking - Economics and policy priorities
The risks associated with shadow banking are at the forefront of the regulatory debate. However, this column argues that there is as yet no established analytical approach to shadow banking which means that policy priorities are not clearly motivated.  View Article
IOSCO consults on financial benchmarks
The Consultation Report on Financial Benchmarks seeks comments from the public on policy issues arising from the work of its Board Level Task Force on Financial Market Benchmarks. Comments on the Consultation Paper are sought by 11 February, 2013.  View Article

Insurance

EIOPA: Joint Committee 2013 Work Programme
The Joint Committee of the European Supervisory Authorities has published its Work Programme 2013. The Joint Committee will give high priority to the areas of consumer protection and risk analysis.  View Article
Insurance Europe: New data protection rules must accommodate insurance
The data processing requirements that are fundamental to sound insurance practices must be taken into account in the proposed new EU Regulation on data protection.  View Article
IPE: EIOPA shoots down possibility of watered-down Solvency II
The Basel Committee's "softer" approach on liquidity requirements for banks will not necessarily anticipate or accelerate a similar change in the Solvency II framework, EIOPA has confirmed.  View Article
The impact of LCR easing on Solvency II
Although the underlying reasons cited by regulators for amending the LCR rules could be instructive for the Solvency II capital requirements, they also reveal worrying signs that the interaction between banking and insurance regulation is not being properly examined.  View Article
Risk.net: The question is not when Solvency II will come into effect, but in what form
The long-awaited impact assessment on Omnibus II's long-term guarantees package has finally been given the green light after months of political wrangling over the terms of reference.  View Article
Risk.net: Long-term guarantees test specifications to be published on test launch day
The technical specifications for the long-term guarantees impact assessment (LTGA) will be published on the same day the exercise itself is due to start, leading to concerns that many firms will struggle to participate.  View Article
Risk.net: Lawyers question EIOPA's powers to soft-launch Solvency II
Legal experts are divided over whether the European Insurance and Occupational Pensions Authority (EIOPA) is overstepping its powers in trying to compel national supervisors to adopt early elements of Solvency II prior to the entire package coming into force.  View Article
FT: Critics push for broker fee transparency
In spite of growing concerns among some underwriters, brokers and corporate insurance buyers, there is little sign that regulators are planning to launch another probe into the practice at any time in the near future.  View Article

Asset Management

"Banks' rip-off investment fees must stop", says Euro MP Sharon Bowles
ECON chair Sharon Bowles MEP has expressed alarm over reports of potential 'rip-off' investment fees by high street banks.  View Article
UK Government White Paper on single-tier pension
The White Paper also includes proposals for a regular and structured mechanism with which to consider changes to the State Pension age in the future.  View Article
ABI: Agreement on the Disclosure of Pension Charges and Costs
Members of the Association of British Insurers have announced an agreement to ensure the consistent and straightforward disclosure of pension charges and costs to employees in workplace pension schemes.   View Article
UK TPR: Consultation on regulating work-based DC pension schemes
The UK Pensions Regulator (TPR) has launched a consultation on the future regulation of defined contribution (DC) funds, suggesting that legislation could be introduced to demand independent assessments of master trusts. Deadline for comments is 28th March, 2013.  View Article
IPE: DC default funds need better risk management
According to a paper by asset manager PIMCO, current defined contribution (DC) default funds need a better risk-management framework.  View Article
IMA stresses need for better pension governance
Jonathan Lipkin, IMA Director of Public Policy, said that it is essential to ensure high standards of governance, particularly with respect to the design, implementation and on-going monitoring of default strategies.  View Article
IPE: Final step in Norwegian pension reform opens up transfer market
Norway's pension reform is now entering its final phases, with a new proposal potentially opening up the paid-up policies market, which has been stagnant for years due to onerous guarantees.  View Article
Mirzha de Manuel Aramendía: Prepare for profound AIFMD changes
In implementing the AIFMD, the Commission has not gone as far as some expected. It has, however, toughened the stance on the methodology of calculating leverage, writes ECMI researcher Aramendía in this FT article.  View Article
FT: 'Dutch RDR' pressuring funds to scrap commissions
Dutch banks are putting pressure on asset managers to review their fund ranges, in light of a self-imposed ban on inducements that will debut in January 2014.  View Article

Corporate Governance/Accounting

EBF publishes joint EBF/ESBG/EACB letter on revision of 4th and 7th Accounting Directives
The joint letter expressed the concerns of European Credit Sector Associations' members on four amendments proposed by the JURI Committee: country by country reporting, materiality principle, substance over form principle, and Public Interest Entities always treated as large undertakings.  View Article
IASB Submission to UK Parliamentary Commission on Banking Standards
The IASB published a memorandum that sets out the IASB's response to a number of questions set out in the call for evidence issued on 4 December 2012 by the Parliamentary Commission on Banking Standards' Panel on tax, audit and accounting.  View Article
FASB proposes improvements to accounting for repurchase agreements
The FASB issued for public comment its proposal to improve financial reporting about repurchase agreements and other transfers with forward agreements to repurchase transferred assets. Comments on the proposal are invited by March 29, 2013.  View Article
IAASB consults on audit quality framework
The IAASB released for public comment a new Consultation Paper addressing audit quality. 'A Framework for Audit Quality' seeks input from stakeholders internationally who have an interest in continually enhancing audit quality. Comments are requested by May 15, 2013.  View Article
FAF Review Team concludes that FASB Statement 131 on segment reporting generally achieves its purpose
The FAF Review Team affirmed that the standard-setting process worked well overall and contributed to a successful standard, and had no significant standard-setting process recommendations.  View Article
Deloitte: Comment letter on EFRAG's disclosure framework discussion paper
Deloitte published a letter of comment responding to the EFRAG, Autorité des Normes Comptables (ANC) and the UK ASB Discussion Paper, 'Towards a Disclosure Framework for the Notes', issued in July 2012.  View Article
CFA Institute: Financial instrument risk disclosures under IFRS 7
CFA Institute has undertaken a study to examine the quality of existing financial instruments risk disclosures. The overall study evaluated credit, liquidity, and market risk disclosures and disclosures for derivatives and hedging activities under IFRS. The study specifically focuses on IFRS 7.  View Article

Financial Services Policy

Acharya/Öncü: A better way to design global financial regulation
This columns argues that at a time of crisis, financial regulators were forced to act on systemically important assets and liabilities, rather than just on the individual financial institutions holding them.  View Article

European Council/Parliament

Plenary Session: Careful pooling of sovereign debt is good for the euro, say MEPs
A resolution to keep up pressure on the Commission and Member States to explore all avenues for pooling sovereign debt was adopted on Wednesday.   View Article

Financial Services Month in Brussels - Report

December 2012 Financial Services Month in Brussels
Graham Bishop's Personal Overview: The European Council of 13/14 December 2012 agreed on a 'roadmap' towards political union within the eurozone, but the first milestone is the enactment of the 'two-pack', and that is currently deadlocked between the co-legislators: Parliament and Council.   View Article





© Graham Bishop

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