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03 March 2011

This week in "Brussels"
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Asset Management Corporate Governance/Accounting Financial Services Policy
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Articles from 24 February 2011 - 03 March 2011

Banking

EBA completes its top management structure and reaches agreement on the next steps of its EU-wide stress test exercise
The stress test, which will be conducted on a large number of European banks, involves a series of detailed technical steps and, as a consequence, will take several months to run.  View Article
CEPS commentary: The forest of Basel III has too many trees
Senior Research Fellow, Karel Lannoo, surveys the radical shift in bank capital requirements confirmed by the new Basel III Accord, with its focus on more and better quality capital, especially for the large banks.   View Article

Securities

ECON committee: Second debate on Langen's report
Langen stressed that the exemptions from the scope are one of the most difficult issues, and announced that a hearing took place organised by US stakeholders on whether small banks and building societies should be exempted.   View Article
AFME: Losing EMIR’s interoperability clause will affect freedom of choice for trading firms in Europe
Taking out the interoperability clause from the European Commission’s proposed European Market Infrastructure Regulations (EMIR) will reduce competition and freedom of choice for trading firms when transacting securities in Europe, according to the Association for Financial Markets in Europe.  View Article
FN: Financial Stability Board warns on clearing access
The Financial Stability Board has warned that global regulators must ensure there is fair and consistent access to derivatives clearing houses, amid growing tension regarding competition in the European clearing space.  View Article
Electronic trading could solve OTC derivative regulatory headaches
US and European regulators would like to reduce counterparty credit risk of OTC derivatives. Regulations could encourage trading on multilateral platforms, improving transparency and liquidity.  View Article
FT: EC official urges OTC derivatives reform
Patrick Pearson, head of the Commission’s unit spearheading reform of the OTC derivatives markets, told the Economic and Monetary Affairs Committee of the EP on Monday that the European Market Infrastructure Regulation (Emir) should be extended to so-called listed, or on-exchange, derivatives.  View Article
IOSCO publishes a report on mitigating systemic risk
The Technical Committee of the International Organisation of Securities Commissions has published 'Mitigating Systemic Risk – A Role for Securities Regulators', which focuses on the role securities regulators play in addressing systemic risk.  View Article
IPE: Pension funds should not be exempt from derivatives regulation
The presentation of Langen's draft report to the Economic Affairs Committee earlier today officially kicked off the process of overhauling derivatives regulation in the EU.  View Article
EFAMA reply to the European Commission Public Consultation on the Review of the Markets in Financial Instruments Directive
EFAMA comments on the following topics: developments in market structures, pre- and post-trade transparency, data consolidation, transaction reporting and on reinforcement of supervisory powers in key areas.  View Article
EFAMA replies to IOSCO Consultation Report regarding ‘Issues Raised by Dark Liquidity’
The comments were focused on the principles that IOSCO had proposed, as well as on the transparency issues.  View Article
FN: Deutsche Börse tries to allay monopoly fears
Deutsche Börse has moved to calm fears that its proposed merger with NYSE Euronext will seriously reduce competition in European trading, by saying that it supports rivalries among clearing houses in the region.  View Article
EFAMA reply to European Commission consultation paper on Central Securities Depositories/Harmonisation of Certain Aspects of Securities
The comment letter essentially focuses on the questions related to the scope and definitions, as well as on the access and interoperability of CSDs.  View Article
FN: Exchange-traded market set for bigger future
It is estimated that the new group formed by the merger of NYSE Euronext and Deutsche Börse – yet to be christened – will derive 37% of its net revenues from derivatives trading and derivatives clearing. In comparison, equity trading will supply less than 30%.  View Article
FT: Brussels warned on financial plan
Stephen Burton, head of the Association of Financial Markets in Europe (AFME), said the proposals, set to be debated in the economic and monetary affairs committee of the European Parliament, could have “a serious negative impact on competition and choice.”  View Article
FT: LCH.Clearnet in interest rate swaps drive
LCH.Clearnet, Europe’s largest independent clearing house, said it would launch clearing for non-bank users of interest rate swaps next month, setting the stage for a showdown with CME Group of the US.  View Article
WSJ: CME and Deutsche Börse discussed deal
Exchange giant, CME Group, discussed a merger with Deutsche Börse in late 2007, but the two companies couldn't agree on a price, according to people familiar with the matter.  View Article
FT: Fears over CFTC derivatives rule
The issue revolves around a rule proposed by the Commodity Futures Trading Commission that 85 per cent of annual trading in a futures contract or swap must occur on an exchange, or what is called a Designated Contract Market.  View Article

Insurance

FN: Insurers move back into equity markets
Insurance companies are preparing to pour hundreds of billions of dollars into the world’s equity markets in one of the biggest switches out of bonds since the start of the financial crisis. It is a dramatic change of strategy for insurers, who traditionally invest most of their assets in bonds.  View Article
CEA responds to US FSOC systemic risk consultation
The CEA argues that FSOC’s proposed methodology for identifying systemic risk is not suitable for the insurance sector and instead puts forward a three-step approach to identifying the systemic risks presented to the IAIS by the insurance industry.  View Article
FT: Allianz critical of new EU capital rules
Europe’s new capital rules for insurers are unworkable and dangerous for consumers, the chief executive of Allianz has said in some of the harshest criticism yet of the disputed “Solvency II” regime, due to come into force in 2013.  View Article

Asset Management

European Commission urges extension of working life to stave off crisis
A member of the European Commission has argued that encouraging employees to continue in work until the statutory retirement age is key to tackling Europe's demographic problems.  View Article
IPE: Overview of legislative and regulatory developments for pensions in European countries
Gail Moss highlights key developments for pensions in Denmark, Finland, Germany, the Netherlands and Sweden.  View Article
IPE: EU to target pension schemes with infrastructure bonds
The plan, recently outlined by EU president, José Manuel Barroso, targets pension funds and insurance companies as potential capital contributors for private companies involved in infrastructure projects.  View Article
IAPF: Fine Gael proposals will increase Irish pension deficits
The proposals put forward by Fine Gael in its election manifesto were suggested as accrued payments enjoyed more beneficial tax relief than currently in place and would allow pension savers to contribute towards the recovery.  View Article
NAPF: Early access to pensions would deepen retirement problems
The National Association of Pension Funds said that allowing early access to workplace pension pots would damage overall retirement savings, undermining the UK government’s drive to auto-enrol workers into a pension.  View Article
IPE: Ireland's recovery plan 'seriously jeopardises' pension schemes' future
Proposals to breach Irish collective bargaining agreements risk jeopardising the future of pension schemes, the European Association of Paritarian Institutions (AEIP) has argued.  View Article

Corporate Governance/Accounting

Corporate governance in financial institutions and listed companies
The Commission aims at publishing a legislative proposal on corporate governance in financial institutions in or around June 2011. However, the unit in charge of this issue in DG MARKT is not sure whether it will come as a stand-alone proposal, or be presented in September within a wider framework.  View Article
Nicolas Verón: Governance of international accounting standard-setting
Verón commented on the paper published by the IFRS Foundation Trustees on its strategy. He argues that experience suggests that it is impossible for accounting standard-setters to internalise all potential public policy concerns without lowering the quality of their standards.   View Article
FRC published Guidance on Board Effectiveness
The FRC published new guidance to encourage the boards of listed companies to consider how they can lead their companies most effectively. The new guidance replaces ‘Good Practice Suggestions from the Higgs Report’ (known as the Higgs Guidance), which has been withdrawn.  View Article
IFAC results of the Risk Management and Internal Control Survey
Risk management and internal control frameworks, standards and guidance should be aligned internationally, according to the results of the Risk Management and Internal Control Survey released by the IFAC Professional Accountants in Business (PAIB) Committee.  View Article
SEC adopted 2011 U.S. GAAP Financial Reporting Taxonomy
The Financial Accounting Foundation (FAF) announced that the SEC has adopted the 2011 U.S. GAAP Financial Reporting Taxonomy. This contains updates for accounting standards and other improvements to the official taxonomy previously in use by SEC issuers.  View Article
ASB issued for public comment Amendments to FRS 29 (IFRS 7) Disclosures - Transfers of Financial Assets
The ASB of the FRC published a Financial Reporting Exposure Draft (FRED) for public comment, aimed at improving the disclosures on transfers of financial assets. The comments are expected by 30 April 2011.  View Article
EFRAG commented on the IASB's Supplementary Document Financial Instruments: Impairment
EFRAG published the draft comment letter on the IASB's Supplementary Document Financial Instruments: Impairment. Comments are invited by 28 March 2011.  View Article

Financial Services Policy

European Commission issued consultation on Financial Sector Taxation
The Commission issued a consultation that asks for feedback on two forms of a financial transaction tax: a broad-based FTT on stock and a narrow-based FTT only on stocks and bonds.  View Article
Germany and Austria push financial transaction tax
Angela Merkel said after meeting with her Austrian counterpart on Wednesday that they would like "this financial transaction tax to be accepted by all the Eurogroup's member states".  View Article
ECB opinion on the economic governance package
The ECB calls on the EU legislator and the Member States to take advantage of the ongoing legislative process to strengthen the economic governance package to the maximum allowed under the current Treaties.  View Article

Financial Stability - Policy Analysis

Adair Turner - Reforming finance: are we being radical enough?
Turner said that fixing the ‘too big to fail’ problem by making it possible to resolve banks smoothly is an absolutely essential element of the policies which are currently being discussed to improve financial instability.   View Article
Bank of England Working Paper: Mapping systemic risk in the international banking network
Systemic risk among the network of international banking groups arises when financial stress threatens to criss-cross many national boundaries and expose imperfect international co-ordination.   View Article

Economic Crisis

Verhofstadt, Delors and Prodi: Europe must plan a reform, not a pact
Writing in the FT, the former Belgian Prime Minister and two former Presidents of the Commission argue that Europe needs a common and concerted plan of action for growth based on a high degree of consensus, if it is to surmount the considerable challenges its economies will face in the years ahead.  View Article
Ireland's central bank releases banks' debt liabilities
Ireland's central bank releases banks' debt liabilities of six Irish banks that had $22.58 billion outstanding of senior bonds not guaranteed by the government or secured on mortgages.  View Article
CRIS Committee’s briefing papers: 'Beyond Economic Governance' and 'Financing the Real Economy'
The first briefing paper deals with the different ways of decision-making in the area of European Economic Governance, where six proposals are currently under discussion, while economic governance and relative power in the EU are both in a state of flux.   View Article

Financial Services Month in Brussels - Report

February 2011 - Financial Services Month in Brussels
Webinar: Graham Bishop hosts a discussion of the key events of the month on 4th March 2011, 10.00 GMT. Register your interest: Hannah.Sassone@grahambishop.com.  View Article

Commentaries

Wolfgang Münchau: Say no to Germany’s competitiveness pact
Münchau wrote in his FT column that it is time to stop pretending that we are about to see a “grand bargain” for the eurozone in March, considering that last week the political developments in Germany shifted dramatically in the wrong direction.   View Article




© Graham Bishop

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