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08 March 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
European Council/Parliament Financial Services Month in Brussels - Report Graham Bishop’s Articles
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Articles from 01 March 2012 - 08 March 2012

Banking

EU Summit: Leaders called for a rapid completion of the regulatory reform of the financial sector
Furthermore, the proposals relating to bank capital requirements and to markets in financial instruments should be agreed, respectively by June and December 2012, bearing in mind the objective of having a single rule book, and ensuring timely and consistent implementation of Basel III.  View Article
Danish Presidency published latest compromise text on CRD IV/CRR
The compromise text introduces a review by the Commission, after consulting with the EBA and the ESRB, by mid 2014 to assess whether the macro-prudential regulation contained in CRD/CRR is sufficient (Article 483a CRR).  View Article
EBA: Discussion Paper on Draft Regulatory Technical Standards on the capital requirements for CCPs foreseen by EMIR
The EBA invites market participants and all interested stakeholders to provide their feedback on planned regulatory technical standards on the capital requirements for CCPs under the draft European Market Infrastructure Regulation (EMIR) on OTC derivatives, CCPs and Trade Repositories.   View Article
AFME position on FSA Guidance on collateral upgrade transactions
Sidika Ulker said that the Guidance also identifies the potential risks associated with collateral upgrade transactions, such as asset encumbrance, and recognises that these should be dealt with in a broader risk management framework applicable to all forms of collateralised borrowing transactions.  View Article
B Mahapatra: Implications of Basel III for capital, liquidity and profitability of banks
Mr B Mahapatra, Executive Director of the Reserve Bank of India, gave an address at the National Conference on Emerging Macro Environment, Regulatory Changes and Bank Competitiveness, organised by the National Institute of Bank Management.  View Article
FT: More bank equity serves us all better
The warning that more equity will harm growth is self-serving and empty. In fact, banks' high leverage has a polluting and distorting effect on the economy, by increasing the risk and fragility of the financial system and its reliance on public support.   View Article
WSJ: EU banks put onus on units
Some large European banks are using cheap loans from the European Central Bank to insulate themselves from new problems that could flare up in their businesses in financially ailing European countries.  View Article
European Banking Industry Committee's observations on the Recommendation on access to a basic payment account and the IMCO Working Document
EBIC welcomes the adoption of a non-legislative measure granting right to a basic payment account (BPA) to unbanked consumers. EBIC appreciates soft law initiatives, as they are flexible enough to take into account local situations.  View Article
FT: Three fights UK mobile payments plan
An ambitious plan by the UK's three largest mobile phone operators to create a mobile payments system has come a step closer to reality, with plans finally submitted to the EC for approval after months of discussion. However, the plan faces fierce opposition from fourth market competitor, Three.  View Article
BBA issues fact sheet on factors underlying mortgage interest rates
The factors influencing the cost of mortgages include customers' deposits, wholesale money markets, the Bank of England base rate and regulatory reform, a new British Bankers' Association fact sheet explains.  View Article
Customers can expect clear communication on PPI, say BBA and AFB
The British Bankers' Association says that the financial services industry is working to resolve customer complaints about Payment Protection Insurance (PPI).  View Article
BIS: International Journal of Central Banking (IJCB)
The Bank for International Settlements published its quarterly journal, featuring articles on central bank theory and practice, with a special emphasis on research relating to monetary and financial stability.   View Article
BBA: SME Finance Monitor
The Business Finance Taskforce has brought together leading banks and business groups in a Business Finance Round Table and has selected BDRC Continental to conduct, and report on, an independent and authoritative study of SME finance and banking relationships.   View Article
BIS: Paul Tucker appointed CPSS Chairman
The central bank Governors of the Global Economy Meeting (GEM) appointed Paul Tucker as Chairman of the Committee on Payment and Settlement Systems (CPSS). Mr Tucker is Deputy Governor, Financial Stability, at the Bank of England.  View Article

Securities

Commission published regulation on Central Securities Depositories (CSDs)
The proposal will bring more safety and efficiency to securities settlement in Europe. It also seeks to shorten the time it takes for securities settlement and to minimise settlement fails.   View Article
European Supervisory Authorities published a joint Discussion Paper on Draft Regulatory Technical Standards foreseen by EMIR
EBA, EIOPA and ESMA (the ESAs) invite market participants and all interested stakeholders to provide their feedback on planned regulatory technical standards covering risk mitigation techniques for OTC derivatives not cleared by central counterparties.  View Article
ESMA advises European Commission on Prospectus Directive's overhaul
In its advice, ESMA proposes how to use a prospectus in a retail cascade, and provides input on how to review the provisions of the Prospectus Regulation concerning tax information, indices, auditor's report on profit forecasts and estimates, and audited historical financial information.  View Article
EACT response to ESMA consultation paper, 'Guidelines on certain aspects of the MiFID suitability requirements'
The European Association of Corporate Treasurers has responded to the ESMA Consultation Paper 'Guidelines on certain aspects of the MiFID suitability requirements (ESMA/2011/445)'.  View Article
BIS published a working paper on collateral requirements for mandatory central clearing of OTC derivatives
In this paper, BIS estimates the amount of collateral that CCPs should demand to clear safely all interest rate swap and credit default swap positions of the major derivatives dealers.  View Article
Reuters: EU blueprint to shake up settlement of trades
The settlement of share and bond trades in the European Union will be thrown open to competition and close scrutiny under a draft EU law published on Wednesday. (Includes quote from Graham Bishop.)  View Article
FN: Deutsche Börse cash market mulls clearing reform
Germany's Deutsche Börse is exploring the possibility of introducing clearing reforms to its cash equities platform, in a sign of the growing pressure on incumbent exchanges to succumb to rising industry clamour for competition in Europe's clearing market.  View Article
FSA: FG12/06 - Collateral upgrade transactions (includes liquidity swaps)
Respondents recognised the potential conflict of interest with intra-group transactions, but argued that it is possible to mitigate these risks rather than having to ban these transactions.  View Article

Insurance

Insurance Europe called for parity between IORPs and Solvency II
Insurance Europe said it supports a package of measures related to long-term guarantee products that is currently being developed under Solvency II. This package would then allow the Solvency II principles to be applied to IORPs and insurance companies without any significant adverse or unintended consequences.  View Article
KPMG published a report: 'Evolving insurance regulation - Time to get ahead'
The focus of the report extends from risk management and prudential change to include the insurance regulatory reform initiatives currently underway in markets around the world, including the increased focus by many jurisdictions on new consumer protection measures.   View Article
Insurers 'campaigning' for Solvency II rules for schemes
Speaking at a European Commission hearing, Sharon Bowles said that plans to revise a Directive for pension schemes to transpose Pillar I of Solvency II rules - applied to insurance firms - was a "political" point which was being lobbied for by some insurance firms.  View Article
ABI: New EU solvency rules must not deter long-term growth and investment in the economy
Speaking at the Economist Insurance Summit, Otto Thoresen, ABI Director General, called for EU policy-makers to ensure that draft EU Solvency II rules do not prohibit insurers from driving growth in the UK, and to make long-term investments which generate growth in the economy.   View Article

Asset Management

ECON Committee published draft report on European Venture Capital Funds
A first set of amendments concern the definition of a 'qualifying venture capital fund'. The Rapporteur, Philippe Lamberts (BE, Greens), considers that VC funds should be closed-ended, in order to ensure that their shares are not redeemable for cash or securities until they liquidate.  View Article
EBF comments on proposal on Venture Capital Funds
The European Banking Federation has identified several issues that it would like to bring to Rapporteur Philippe Lambert's attention, as his work for the ECON Committee progresses on the draft report on the proposed Venture Capital Funds regulation.   View Article
DG MARKT’s Director General, Jonathan Faull: IORP Directive must account for past pensions promises
A clear distinction between past and future accruals should be made before applying solvency measures to cross-border pension funds, as more rigorous rules would be "financially unsustainable", according to Jonathan Faull.  View Article
Credit hedge funds are not 'shadow banks' - AIMA
Credit hedge funds should not be considered part of the 'shadow banking' sector, according to a new paper by the Alternative Investment Management Association (AIMA), the global hedge fund trade association.  View Article
EDHEC-Risk Institute research sees social infrastructure as too small and risky to be attractive to pension funds
In a new study, EDHEC-Risk Institute has identified two fundamental issues that make social infrastructure potentially unattractive to pension funds: in-built political risk and limited asset pool size.  View Article
Employers, worker and industry representatives: “Commission should reconsider plans on occupational pensions”
AEIP, BusinessEurope, CEEP, EFAMA, EFRP, ETUC, EVCA and UEAPME issued a statement concerning the pension regulation.  View Article

Corporate Governance/Accounting

IASB's future agenda and strategy discussed by Chairman Hans Hoogervorst
IASB Chairman, Hans Hoogervorst, addressed the Consejo Mexicano de Normas de Información Financiera (CINIF) in Mexico City, Mexico, on 7 March 2012. Mr Hoogervorst focused on the IASB's agenda consultation and the IFRS Foundation Trustees' strategy review.  View Article
FASB: Statement submitted by FAF President & CEO, Teresa S Polley
The FASB published a statement submitted by FAF President & CEO, Teresa S Polley, requesting that it be included in the record for the hearing on "Spurring Job Growth Through Capital Formation While Protecting Investors, Part II" before the US Senate Committee on Banking, Housing and Urban Affairs.  View Article
IFAC revised Policy Position Paper 2, promoting a single set of auditing standards for all
The IFAC released a revised version of Policy Position Paper 2, 'A Single Set of Auditing Standards: Audits Of Small- And Medium-Sized Entities'.  View Article
FRC's draft priorities and funding for 2012/13
The FRC published its draft priorities and funding proposals for 2012/13 in advance of its Annual Open Meeting which will be held on Tuesday, 20 March 2012. The FRC will finalise its 2012/13 Plan and Levy Proposals at the end of April 2012, taking account of the responses to its consultation paper.   View Article
FRC's consultation document: Monitoring the work of third country auditors
The Professional Oversight Board (POB) published for consultation proposals on the external monitoring of auditors of companies from outside the EU that have issued securities on the London Stock Exchange.  View Article
ICGN commented to the PCAOB on the Re-proposed Auditing Standard related to communications with audit committees
The ICGN published its comment letter on the Re-proposed Auditing Standard, Communications with Audit Committees, issued by the PCAOB. The ICGN provided general comments as well as comments on some of the specific issues raised in the document.  View Article
UK Audit Commission: Audit fees reduction by 40 per cent
The Audit Commission announced the proposed award of five-year audit contracts to four private firms starting from 2012/13 - contracts that will contribute to an up to 40 per cent cut in the audit fees paid by local public bodies.  View Article

Financial Services Policy

Commissioner Šemeta sent a letter to the Danish Presidency on bilateral tax deals
Member States should "refrain" from bilateral deals on taxing Swiss bank accounts held by their nationals, EU taxation commissioner, Algirdas Šemeta, wrote in a letter to the Danish EU presidency.  View Article
Commissioner Šemeta: Crisis has changed attitudes to how we approach taxation within the EU
Šemeta stressed that a coordinated approach to all areas of fiscal policy is vital for a strong euro and collective growth. "It is now time to reassess the role of tax policy coordination in the context of the monetary union", he said.   View Article
Sharon Bowles: There is a need to tackle double non-taxation
ECON chairwoman Bowles stressed that it is undesirable that in the EU Internal Market some taxpayers are able to avail themselves of double non-taxation on their cross-border activity, as this gives those taxpayers both a competitive advantage and also reduces contribution to tax.  View Article

European Council/Parliament

EU Summit conclusions
The European Council discussed the implementation of the EU's economic strategy. This strategy pursues both continued fiscal consolidation and determined action to boost growth and jobs - sustainable growth and jobs cannot be built on deficits and excessive debt levels.   View Article

Financial Services Month in Brussels - Report

February 2012 Financial Services Month in Brussels - Report
Graham Bishop's personal overview. The signing of the Treaty should mark a step change in economic governance that will restore sound public finances in due course – with first fruits being visible in the next couple of years.   View Article

Graham Bishop’s Articles

Financial World: Putting pedal to the metal (Graham Bishop article)
Graham Bishop reports on how Europe is putting its foot on the financial regulation pedal.  View Article
Graham Bishop's blog on the Treaty/EU financial regulation
"The 25" have just signed a manifestation of the shift to a political union at the most macro level of economic governance. At the micro level of financial regulation, the political union of the euro area is already in full swing.  View Article




© Graham Bishop

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