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02 May 2013

This week in "Brussels"
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Asset Management Corporate Governance/Accounting Financial Services Policy
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Articles from 25 April 2013 - 02 May 2013

Banking

BIS: Structural bank regulation initiatives - Approaches and implications
This paper examines the basic rationale and features of the proposals adopted to separate specific investment and commercial banking activities (Volcker rule, Vickers and Liikanen proposals).   View Article
Adrian Blundell-Wignall for OECD: The Liikanen Report on Banking Reform - A good try, but two major flaws
The Special Advisor to the OECD Secretary-General on Financial Markets was invited by the German Parliament's Finance Committee to comment on a draft bank separation law. The draft is strongly influenced by the final Liikanen Report of 2012.  View Article
Finance Watch: Position paper on German bank reform
Finance Watch published its position paper on the German bill proposal to separate risks and to plan the recovery and resolution of credit institutions and financial groups.  View Article
EBA/Enria: Progress in banking sector and institutional repair in the EU
In a speech, Enria focused on the progress achieved, and the steps yet to be taken, in regulatory, banking sector and institutional repair.  View Article
Bundesbank/Weidmann: Challenges for banking regulation and supervision in the monetary union
Weidmann said that given the current degree of integration among Member States and financial systems, a single Europe-wide DGS would not be practical, and that it was much more important to set up the SSM/SRM and put them on a 'firm footing'.  View Article
Reuters: The maze behind EU "treaty change"
In Schäuble's view, banking union - originally a three-step plan to create a single eurozone banking supervisor, a unified system for resolving problem banks and a single deposit-guarantee scheme - only makes sense if there are strict rules for restructuring and winding up bad lenders.  View Article
FT: EU split over plans for bank resolution
European banking union increasingly appears to be Germany's problem, a project to which it acts as reluctant midwife, checking the more radical ambitions of Brussels, Paris and even the European Central Bank.  View Article
Czech National Bank Governor Hampl: Should non-euro area countries welcome the banking union?
Hampl focused in his remarks on non-euro area countries' attitude to the SSM, as the SSM is the key part of banking union and is "almost" finalised.  View Article
Reuters: Decision on eurozone banks review within two months - Buba
European regulators will decide within two months how to conduct an extensive review of the eurozone's lenders, Bundesbank Vice-President Sabine Lautenschläger said.  View Article
FT: UK Treasury fears £9 billion bank crisis fund
George Osborne faces being forced to set aside up to £9 billion for a stand-alone bank crisis fund, as the UK chancellor is once again cornered in Brussels over a flagship EU financial reform.  View Article
Reuters: UK regulator defends tough bank capital rules
Britain's top banking regulator defended his tough rules, saying strong capital buffers were a pre-condition for keeping the economy supplied with credit.  View Article
BIS: Central bank finances
This paper looks at the relevance of a central bank's own finances for its policy work. It analyses the determinants of a central bank's financial position and the possible implications of insufficient financial resources for policymaking.   View Article
EPC: There is only Plan A: Get ready for SEPA by 1 February 2014 in the euro area!
The EPC's April 2013 newsletter again offers information to support market participants in the euro area in getting ready for SEPA by February 2014, as mandated by EU law.  View Article
ESBG response to Eurosystem's Consultation on Recommendations for "Payment Account Access" Services
This response to the draft Recommendations for Payment Account Access Services is divided into a set of general comments, followed when relevant by a comment of each Recommendation, and the related Key Considerations and Best Practices.  View Article
HM Treasury: Government provides FPC with first remit
The Chancellor of the Exchequer has written to the Governor of the Bank of England to provide the new Financial Policy Committee with its first remit. The FPC is charged with identifying, monitoring and addressing risks to the financial system as a whole.  View Article

Securities

New ECB survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets
This ECB survey is part of an international initiative to enhance the monitoring of credit terms and conditions in these wholesale financial markets.   View Article
Risk.net: Banks fear loss of hedge accounting for CCP novations
Derivatives users may lose hedge accounting privileges on trades that have been amended to face a new counterparty - known as a novation - under the terms of an exposure draft issued by the IASB in February.   View Article
SIFMA statement on SEC cross-border proposal
SIFMA released a statement from acting president and CEO Kenneth E Bentsen Jr, following the SEC's release of its proposal on cross-border regulatory application of derivatives regulations under their purview.   View Article
Risk.net: Clearing chaos - US OTC industry braces for June deadline
With March 11 receding from view, all eyes have turned to the second stage of the US clearing roll-out. No-one knows precisely how many derivatives users will be caught this time, but estimates go as high as 2,000, and dealers, clearing houses and middleware firms are already nervous.  View Article
Bundesbank: Restructuring counterparty credit risk
This paper reviews 10 different structuring styles for counterparty credit risk-sensitive transactions.  View Article
ESMA Opinion on the emergency measure by the Greek HCMC under the Short Selling Regulation
The European Securities and Markets Authority has published its Opinion on the emergency measure by the Greek Hellenic Capital Markets Commission under the Short Selling Regulation.  View Article

Insurance

Risk.net: Standard formula's treatment of long-term investments 'flawed'
Standard formula data sets and methodologies are 'inappropriate' for securitised products and secured investments, experts have warned. EIOPA is facing calls to adjust the capital charges imposed on certain long-term investments under Solvency II.  View Article
Insurance Insight: Insurance premium tax ruling bad for business and EU policy
A European court ruling on the way insurance premiums are taxed will burden insurers with increased costs and undermine the EU's attempts to create a single market for insurance, according to law firm Pinsent Masons.   View Article
UK Parliament: Solvency II is 'an object lesson in how not to make law', says Tyrie
The Treasury Committee published a series of letters between its Chairman, Andrew Tyrie MP, and the Executive Director of the PRA, Andrew Bailey, discussing Solvency II. Bailey described the history of the EU decision-making process on Solvency II as 'shocking'.   View Article
MoneyMarketing: Insurance experts back PRA attack on Solvency II
Insurance experts have backed PRA executive director Andrew Bailey's attack on the "staggering" costs of Solvency II and the "shocking" EU regulatory process.  View Article
Risk.net: Better risk data vital for insurers to boost disaster coverage
The EU must make it easier for insurers to access and compare data on natural disasters if the bloc is to increase the transfer of natural catastrophe risk to the insurance sector, market participants say.  View Article
Insurance Insight: BVI see captive flight
The British Virgin Islands have seen popularity as a captive destination decline over the last few years, according to a report by research firm Timetric.   View Article

Asset Management

ECB: Signs of improved financial market integration in second half of 2012
An improvement in financial market integration was observed in the second half of 2012, after a further deterioration in the first half of the year caused by adverse market sentiment, worsened fiscal conditions and bank fragility in some euro area countries.  View Article
FT: Brussels plan will 'kill off' money funds
Europe's €490 billion fixed value money market fund industry will be "killed off" by tough reform proposals drafted by the European Commission, industry figures have said. The clampdown could also undermine the larger variable NAV money fund sector, potentially increasing risks for investors.  View Article
Hedgeweek: Regulatory costs might inhibit non-European fund houses from starting UCITS funds
The SSgA ETF platform announced this week that it had launched the SPDR Barclays EM Inflation-Linked Local Bond UCITS ETF on the Deutsche Borse; the world's first ETF to offer pure exposure to EM inflation-linked debt.   View Article
UK MPs call for single regulator for workplace pensions
The Work and Pensions Committee argued that the introduction of auto-enrolment makes rigorous pension scheme governance essential.  View Article
UK FCA sets out new rules for the platforms industry
The FCA has published rules to make the way that investors pay for platforms more transparent. In future, platforms, in both the advised and non-advised market, will not be allowed to be funded by payments (commonly described as 'rebates') from product providers. (Includes Deloitte response.)  View Article
SIFMA statement on Brown-Vitter legislation
After US Senators Brown and Vitter introduced legislation to address 'too-big-to-fail', SIFMA stated: "We should focus on completing the remaining rulemakings mandated by Dodd-Frank instead of enacting new legislation that would undermine the US's standing in the global financial system".  View Article

Corporate Governance/Accounting

Parliament proposes end to oligopoly of big four audit firms – comments by Sharon Bowles MEP
Sharon Bowles MEP played a key role in ensuring the mandatory rotation of audit firms, and supported a new requirement that auditors can only audit large public interest companies for a maximum of 25 years.  View Article
FT: Big Four accountants wield "undue influence" over UK tax system
MPs have accused the Big Four accountants of wielding "undue influence" on the tax system, in a report calling for a code of conduct on acceptable tax planning that would decide their eligibility for public sector work.   View Article
FRC/Haddrill highlights quality of corporate governance and financial reporting
FRC CEO Stephen Haddrill spoke at the FRC's event, "Enhancing trust in European companies, improving investor confidence and facilitating long-term shareholder engagement – the role of high quality corporate governance and financial reporting", which took place in Brussels on 22 April, 2013.  View Article
EFRAG: Draft comment letter on employee contributions
EFRAG published its draft comment letter on the IASB's ED/2013/4 'Defined Benefit Plans: Employee Contributions'. Comments on the letter are invited by 5 July, 2013.  View Article
IASB: Proposals on rate regulation
The IASB published for public comment the ED 'Regulatory Deferral Accounts', as part of its reactivated Rate-regulated Activities research project. The proposals are open for comment until 4 September, 2013.  View Article

Financial Services Policy

Commission consults on the European System of Financial Supervision
The results will provide important information on the effectiveness and efficiency of the ESAs and the ESRB within the ESFS and on the ESFS as a whole, and will help the Commission to prepare the relevant reports. The consultation will run until 19th July, 2013.  View Article
FN: Podimata vows to fight as FTT row turns toxic
A key architect of the European tax on financial transactions has vowed to defend the proposal, in the face of a barrage of opposition.  View Article
Telegraph: Financial Transaction Tax 'may add to eurozone's debt woes'
The world's largest banks have warned European finance ministers that plans to impose a Financial Transactions Tax could deepen the Continent's sovereign debt crisis.  View Article

International/G20

IMF says decisive action in Europe can strengthen growth and avoid economic stagnation
IMF First Deputy Managing Director David Lipton called on European policy-makers to take decisive and sustained actions to strengthen the continent's prospects for growth and avoid the risk of stagnation.  View Article

Graham Bishop’s Articles and Speeches

European Movement UK: Observations on "Scotland analysis: Currency and monetary policy" – HMG, April 2013 (Graham Bishop article)
"The only real game in town for an independent Scotland is the euro", writes Graham Bishop in EM's latest euroblog.  View Article
Financial World: Oh, island under the gun (Graham Bishop article)
As a consequence of the Cyprus crisis, another step has been taken towards the political union of the euro area, says Graham Bishop.  View Article
Graham Bishop: Did the final bits of the 'save the euro' jigsaw fall into place last week?
The SSM and EBA measures were enacted – at least in principle, as final ratifications by Parliament and Council are needed before they come into force. Only then can the ECB Supervisory Board be created and the technical details of managing the new supervisory system filled in.  View Article
Graham Bishop's Blog: Saccomanni as Italy economics minister - Excellent news for Europe (and Italy)
The appointment of Fabrizio Saccomanni as the new economics minister is a shrewd move that should reassure both financial markets and Europe.  View Article





© Graham Bishop

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