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19 January 2012

This week in "Brussels"
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Articles from 12 January 2012 - 19 January 2012

Banking

Commission creates a High-level Expert Group on structural aspects of the EU banking sector
In agreement with President Barroso, Commissioner Barnier has today appointed Erkki Liikanen as the Chairman of the future group. Mr Liikanen is currently Governor of the Bank of Finland and formerly a Member of the European Commission.   View Article
BIS Working Paper: 'Stress-testing macro stress-testing - does it live up to expectations?'
The Bank for International Settlements published Working Paper no 369, containing a critical review of the state of the art in macro stress-testing.  View Article
Special meeting of the European Bank Coordination “Vienna” Initiative
The purpose of the meeting was to exchange views on how better to coordinate national policies in order to avoid adverse cross-border effects in the context of the ongoing bank deleveraging in advanced Europe, and to support transition towards a more sustainable banking model in emerging Europe.   View Article
ICMA survey on buffer contingent capital securities (BCCS)
EBA published a formal recommendation on the creation of temporary capital buffers which may include very strong newly-issued buffer convertible capital securities ("BCCS"), if consistent with the EBA "Buffer Convertible Capital Securities Common Term Sheet".  View Article
CEPR Discussion Paper: 'The Role of Central Banks in Financial Stability: How has it changed?'
The roles of central banks in the advanced economies have expanded and multiplied since the beginning of the crisis. The conventional monetary policy roles have been transformed.   View Article
EurActiv: EBRD warns of capital outflow from Eastern Europe
There is growing consensus among financial regulators and institutions about the need for a new Vienna Initiative to curb the outflow of capital from emerging Europe, according to Erik Berglöf, chief economist at the European Bank for Reconstruction and Development.  View Article
Project Syndicate: Behind the ECB's 'wall of money'
Benedicta Marzinotto writes that throughout the crisis period, the European Central Bank's behaviour has been conditioned by the tension between what it can do and what it is allowed to do.  View Article
BBA: Five priorities for the EU
The European Union faces some major decisions later this month. The eurozone currency crisis is just one of the problems facing the union as it works to restore financial stability and begin the process of economic recovery.  View Article
EurActiv: E-commerce proposal causes liability jitters
Proposals to double the volume of e-commerce in Europe by 2015 (from its current levels of 3.4 per cent of total retail sales - 3 per cent of the EU GDP - to 7 per cent) are set to cause a tussle over the liability of online traders.  View Article
Commissioner Almunia: State aid regime and bank restructuring
Almunia also described how the EU – and the euro area in particular – is coping with the crisis, and discussed the role of competition policy in the recovery of Europe's economy.  View Article
WSJ: Hungary accedes to IMF concerns on bank laws
Hungary aims to secure an agreement with the European Union and the International Monetary Fund on a loan package by the end of the first quarter.  View Article

Securities

ESMA publishes annual report on application of regulation on credit rating agencies
This report is the first annual report on the application of Article 21(5) of the Regulation No (EC) 1060/20091 on credit rating agencies, as amended by the Regulation No (EC) 513/20112 (CRA Regulation), which mandates ESMA to publish annually a report on the application of the Regulation.  View Article
ESMA publishes Q&A on MAD regarding definition of inside information on dividends
ESMA published a Q&A on the definition of inside information of the Market Abuse Directive (MAD), with regards to information relating to dividends by an issuer of financial instruments that would be likely to have a significant effect on the prices of related derivative financial instruments.  View Article
CPSS-IOSCO publishes final report on requirements for OTC derivatives data reporting and aggregation requirements
The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) have published their final report on the OTC derivatives data that should be collected, stored and disseminated by trade repositories (TRs).  View Article
ECON Committee: Action, not just commitments, needed to solve eurozone crisis
Mr Draghi said that rather than criticising CRAs, we should make sure the legislation leads to less reliance on them and more competition. On the EFSF downgrade, Mr Draghi hinted that one solution could be for AAA-rated countries to contribute more to the fund.  View Article
CEPR Discussion Paper: 'Securitisation Without Risk Transfer'
This paper analyses asset-backed commercial paper conduits, which experienced a shadow-banking "run" and played a central role in the early phase of the financial crisis of 2007-09.   View Article
ALFI response to the questionnaire on MiFID/MiFIR 2
ALFI does not see the need to extend MiFID to cover the sale of structured deposits by credit institutions. Its understanding is that the PRIP initiative is designed to cover such products.   View Article
CEPR Discussion Paper: 'Internalisation, Clearing and Settlement, and Liquidity'
The study focuses on the relation between liquidity in financial markets and post-trading fees (i.e. clearing and settlement fees).  View Article
Reuters: Clearing houses - the next casualty of the crisis?
Clearing houses could become the next casualty of the crisis as regulators insist that banks run their riskiest and private trades through them.  View Article
FT published interview with Mario Monti
Italy's technocratic prime minister has no criticism of ratings downgrades – just of persistent policy weakness at the European level.   View Article
BoE King: We should pay less attention to ratings agencies
Bank of England governor, Mervyn King, has urged investors and public authorities to pay less attention to ratings agencies, which he said have often "rushed" to downgrade.  View Article
Bloomberg: Draghi questions role of ratings companies
European Central Bank President, Mario Draghi, said investors have largely priced in the euro area sovereign downgrades from Standard & Poor's, and questioned the importance of ratings companies.  View Article
Reuters: Merkel vows faster eurozone reform after S&P downgrades
European leaders promised on Saturday to speed up plans to strengthen spending rules and get a permanent bailout fund up and running as soon as possible, a day after US agency S&P cut the ratings of several eurozone countries' creditworthiness.  View Article
S&P takes various rating actions on 16 eurozone sovereign governments, including downgrading France and Austria to AA+
Standard & Poor's today announced its rating actions on 16 members of the eurozone, following completion of its review. The outlooks on the long-term ratings on just two coutries, Germany and Slovakia, are stable.  View Article
FN: NYSE-Börse - Five possible options
The news that European Union regulators have preliminarily rejected the proposed landmark merger between NYSE Euronext and Deutsche Börse, despite a range of remedy packages, leaves the two exchanges with few options.  View Article

Insurance

Solvency II capital proposals bad for captives, says Fitch
The latest QIS5 Solvency II regulatory capital proposals could significantly increase the capital and compliance burden of the European captive market, according to a report by ratings agency Fitch.   View Article
Geneva Association: Insurance companies' highly controlled use of derivatives has also resulted in protection from “rogue trader” problem
In recent discussions on financial stability in insurance, the issue of insurers' use of derivatives has become the object of some considerable focus. The NAIC examines why "rogue trading" has not been an issue for an insurer to date.   View Article

Asset Management

Hedgeweek: Regulation prompts fund managers to reconsider domiciles and avoid burdening costs
A greater focus from regulators and investors has led to an increased number of hedge fund and private equity managers actively considering strategic moves to more favourable domiciles.  View Article
ALFI: Position Paper on the CSSF Regulation N° 10-4: Treatment of subscription and redemption orders under UCITS IV
The main objective of this ALFI Position Paper is to outline ALFI's recommendations with regard to providing Best Market Practice Guidelines on the treatment of subscription and redemption orders.   View Article
New EDHEC-Risk Institute research assesses the true risks of Exchange-Traded Funds (ETFs)
Any discussion of the risks inherent in ETFs should go beyond merely hypothesising about potential risks, and should also take into account the empirical evidence provided by the existing academic research on ETFs, which has documented various benefits in terms of liquidity and price efficiency.   View Article
Catalogue of French statutory and regulatory measures applicable to the marketing of shares or units of foreign UCITS in France
This document has been prepared pursuant to Article 91(3) of Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 (the "UCITS IV Directive").  View Article
Reuters: Will hedge fund holdouts scuttle Greek swap deal?
Hedge funds holding Greek bonds that mature in March may have the strongest hand in the critical negotiations to restructure the cash-strapped country's debt.  View Article
IPE: Pensions expert calls for alternative to 'inflexible' IORP Directive
The pension industry's views on the promotion of IORP vehicles in Europe seem to be diverging, with some experts concluding that their implementation has become impracticable and that alternatives should be pursued.  View Article
FN: MEPs warn UK veto threatens pension talks
British representatives in Brussels are warning that pension funds may become the first victims of David Cameron's decision to veto a new European treaty aimed at rescuing the euro.  View Article
IPE: IORP lacks 'substantial' guidance on addressing pension deficits – Mercer
Consultancy Mercer has criticised the European Insurance and Occupational Pensions Authority (EIOPA) over what it perceives as its lack of consideration on the issue of deficit funding in the IORP Directive consultation.  View Article
FN: Anger erupts over 'vague' pension reforms
The pensions industry has condemned as vague and unhelpful a consultation exercise from the European Commission designed to introduce rules on solvency.  View Article

Corporate Governance/Accounting

FASB: 2012 US GAAP Financial Reporting Taxonomy
The FASB announced the availability of the 2012 US GAAP Financial Reporting Taxonomy pending final acceptance by the SEC. The FASB is responsible for the ongoing development and maintenance of the taxonomy applicable to public issuers registered with the SEC.  View Article
IFRS Foundation Trustees and representatives from Singapore Accounting Standards Council discussed financial reporting matters
The Trustees of the IFRS Foundation with representatives of the Singapore Accounting Standards Council (ASC) and the local business community discussed financial reporting matters at their meeting on 12 January, 2012.   View Article
Deloitte: Accounting for eurozone sovereign debt holdings
Deloitte (US) published a Financial Reporting Alert regarding the impairment of Greek government bonds and debt issued by other eurozone states. The alert applies to all entities with holdings of eurozone sovereign debt, and outlines accounting and disclosure considerations for affected entities.  View Article
FRC's Update responding to increased country and currency risk in financial reports
The FRC published an Update for Directors of Listed Companies in the UK to assist them in responding to increased country and currency risk in their annual and half-yearly financial reports. The Update was prompted by the current economic uncertainties facing a number of countries around the world.  View Article

Financial Services Policy

Commissioner Barnier: The solution to the sovereign debt crisis is not less Europe but more integration
Speaking at a conference in Hong Kong, Barnier stressed that the current debt levels must be put into perspective. In 2010, public debt in the eurozone amounted to 85 per cent of GDP. This compares to more than 100 per cent in the US, and nearly 200 per cent in Japan.   View Article
AFME: EU’s FTT could increase FX costs by 9 to 18 times for Europe's businesses and pension funds
The report, 'Proposed EU Commission Financial Transaction Tax; Impact Analysis of Foreign Exchange Markets', evaluates the impact of the European Union's proposed FTT on European FX markets, estimating its impact on FX cash and derivatives users.  View Article
FN: EU considers 'omnibus' reform rules
European policymakers are considering drawing up a new piece of legislation that would rationalise a number of Brussels-born financial services reforms, according to sources familiar with the situation.  View Article

Financial Stability - Policy Analysis

AIMA says financial transaction tax could undermine EU single market
The proposed European Union FTT could lead to a significant decrease in cross-border trading of financial instruments in the EU, undermining the single market, according to the Alternative Investment Management Association.   View Article
The World Economic Forum published its report, 'Global Risks 2012'
The report stresses that economic imbalances and social inequality risk will reverse the gains of globalisation. The report analyses the top 10 risks in five categories - economic, environmental, geopolitical, societal and technological.   View Article

European Council/Parliament

Martin Schulz elected as President of the European Parliament
Today, the European Parliament elected the former Social Democrat Group Leader, Martin Schulz, as the new President of the European Parliament. Schulz succeeds Jerzy Buzek from the European People's Party.  View Article




© Graham Bishop

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