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22 March 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
European Council/Parliament Rolling ReviEUs About this email

Articles from 15 March 2012 - 22 March 2012

Banking

Commission published green paper on shadow banking
Shadow banking activities are those that could act as important sources of funding for non-bank entities. These activities include securitisation, securities lending and repurchase transactions.  View Article
The Commission launched a consultation on bank accounts
The purpose of this consultation is to gather stakeholders' views on the need for action and on the possible measures to be taken in relation to the issues of transparency and comparability of bank account fees, bank account switching, and access to a basic payment account.  View Article
ECON Committee: Commissioner Barnier counts on Parliament to back financial sector regulation
"No player will escape" financial services regulation, Commissioner Michel Barnier promised MEPs. However, he could not give a definite timetable for legislative proposals to resolve the banking crisis, saying that more consultations were needed.   View Article
ICMA European Repo Council paper explores official concerns about ‘shadow banking’ and repo
The paper explores concerns raised by regulators about 'shadow banking', particularly in the context of the European repo market. The paper is intended to inform the 'securities lending and repo' workstream set up by the FSB within its shadow banking project and the EC's own deliberations discussed in yesterday's green paper.  View Article
Reuters: EU considers new controls for shadow banking
The European Commission is widening its regulatory sweep to include "shadow" banking, heralding new controls over the sprawling and largely unchartered £38.16 trillion (€46 trillion) sector that has been blamed for helping trigger the financial crisis. (Includes quote from Graham Bishop.)  View Article
FSA Lord Turner: Shadow banking and financial instability
In his speech, the Chairman of the Financial Services Authority (FSA), Lord Turner, set out how the 'shadow banking' sector contributed to the financial crisis, the risks it still poses to financial stability, and the importance of a sufficiently comprehensive and radical policy response.  View Article
HM Treasury: Chancellor launches scheme to boost small business lending
The Chancellor has launched the National Loan Guarantee Scheme (NLGS), helping smaller businesses across the UK (with an annual group turnover of up to £50 million) access cheaper finance.  View Article
ECBC response to Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories
The ECBC supports the special treatment of hedging derivatives within covered bond cover pools with regard to the clearing obligation. When establishing exchanges of collateral, the ECBC calls on the ESMA to take into account the legal and technical obstacles faced by covered bonds issuers.  View Article
Ian Wishart: Shining light into the shadows
Writing for European Voice, Wishart explores the challenges that the European Commission faces as it seeks to regulate non-traditional financial services.  View Article
CEPS: Time to set banking regulation right
This study argues that the new Basel III Accord and the ensuing EU Capital Requirements Directive IV fail to correct the two main shortcomings of international prudential rules: 1) reliance on banks' risk management models for the calculation of capital requirements; and 2) the lack of accountability by supervisors.  View Article
EPC: Get ready for SEPA by February 2014 – Early movers on the customer side share lessons learnt
This European Payments Council Blog highlights best practice identified by bank customers who have successfully completed migration to the Single Euro Payments Area (SEPA). Part II focuses on the transition to the International Bank Account Number (IBAN) and the Business Identifier Code (BIC).   View Article
EBA commented on the IASB's ED/2011/6 'Revenue from Contracts with Customers'
The EBA is aware of the differences in revenue recognition requirements between US Generally Accepted Accounting Principles (US GAAP) and in International Financial Reporting Standards (IFRS), and therefore welcomes the efforts to achieve consistency of the accounting for revenue recognition.  View Article
Risk.net: Loan and bond markets will suffer under Basel III
Basel III rules, particularly ratios for net stable funding and liquidity coverage, could hit bank lending and the bond market, panellists said at the recent Risk Annual Summit. Patricia Jackson, former BCBS member, said the main concern is how the rules will affect lending.   View Article

Securities

ESMA published the responses to EMIR consultation
Among the respondents, there are stock exchanges, asset managers, financial services end-users and banks. It has been identified that common rules are required in the case of CCPs in view of the shift of risk management from a bilateral to a central process for OTC derivatives.  View Article
EACT response to ESMA consultation on the implementation of the new derivatives regulation (EMIR)
The European Association of Corporate Treasurers (EACT) has made a submission to the European Securities and Markets Authority (ESMA) on some fundamental issues in the Level 2 implementation of the new regulation of derivatives (EMIR).  View Article
ISDA, AFME, BBA published response to first ESMA Discussion Paper on EMIR
ISDA, AFME and BBA believe that it should be clarified that Special Purpose Vehicles (SPVs) should benefit from the exemption from clearing, in recognition of the hedging of debt issuance enabled by SPVs' use of OTC derivatives.  View Article
EuropeanIssuers review of Transparency Directive
EuropeanIssuers support the inclusion of "instruments of similar economic effect" in the regime of major holding notifications.  View Article
Reuters: Asset-backed securities seek new look to shed bad image
Asset-backed securities (ABS), blamed for triggering the financial market chaos that has toppled banks and sucked in countries, are undergoing a brand makeover. In future, top-notch ABS may be known as PCS, or Prime Collateralised Securities.  View Article
FT: Clearing houses warn regulator over EMIR
European lawmakers' plans to strengthen the financial system may be undermined by proposals from regulators that "deviate significantly from current practice", the region's clearing houses have warned.  View Article
Hedgeweek: Investors dragging feet over central clearing rules
Investors in Europe and the US are on notice that they will eventually be required to execute OTC derivatives trades through centrally cleared transactions. As of late 2011, however, most investors in these markets had not moved to change trading practices to accommodate the incoming rules.  View Article
Deutsche Börse to appeal EC ruling on NYSE merger block
Deutsche Börse said it considers the decision by the European Commission to block the deal to be "faulty" in several respects and will take its complaint to a European court in Luxembourg. It did not specify to which aspects of the Commission's ruling it is objecting.  View Article
Hedgeweek: FPL releases support to advance fixed income trading following regulatory reform
FIX Protocol Limited (FPL) has issued best practices recommendations to support the trading of Credit Default Swaps (CDS) and Interest Rate Swaps (IRS).  View Article
ESMA allows EU-registered CRAs to endorse credit ratings issued in the US, Canada, Hong Kong and Singapore
ESMA today announced that it considers the regulatory frameworks for credit rating agencies (CRAs) of the United States of America, Canada, Hong Kong and Singapore to be in line with European rules.  View Article
AFME comment on ESMA endorsement of credit ratings issued by ratings agencies in US, Canada, Hong Kong and Singapore
Mark Bearman, a director at AFME, said that ESMA's announcement should allow firms to continue to use ratings from these major jurisdictions, thereby avoiding the potential for multiple increases in regulatory capital requirements.  View Article
FESE position on the Market Abuse Review
The Federation of European Securities Exchanges (FESE) welcomes the Commission's proposals and fully endorses the objectives supporting the revision of the Market Abuse Directive.  View Article

Insurance

ECON Committee adopted the Omnibus II Directive related to Solvency II
"The insurance sector should be able to provide long-term guarantees to the benefit of consumers and remain a long-term investor in the market in times of crises", said the European Parliament Rapporteur Balz on the revision of the Directive on the EIOPA and Solvency II.  View Article
Insurance Insight: Analysts praise ECON vote on Solvency II
Industry experts have praised the European Parliament Economic and Monetary Affairs Committee decision to back a series of Solvency II amendments.  View Article
Insurers seek improvements to Omnibus II
Insurance Europe expressed disappointment over provisions relating to long-term guarantees in the Omnibus II Directive approved by the ECON committee. It nevertheless recognises that they will make it possible for the EP, Council and the EC to engage in trialogue discussions on this crucial issue.  View Article
ABI calls for reforms to free businesses from UK compensation culture
The Association of British Insurers (ABI) called for action to free businesses from the fear of the UK's compensation culture and overzealous interpretations of health and safety rules that could hold back Britain's economic recovery.  View Article
Reuters: Insurers win concessions in EU capital debate
European Union insurers are set to be spared the full impact of tough new capital rules for the industry, potentially saving them billions of euros, thanks to a last-minute agreement on Thursday between senior lawmakers.  View Article
Insurance Europe: Concerns voiced about conglomerate supervision
Insurance Europe (formerly the CEA) has provided comments to the Joint Forum of international financial sector supervisors on its proposed update of the principles for the supervision of financial conglomerates. Insurance Europe also co-signed a response by the INIA voicing similar concerns.  View Article
Airmic: March 2012 News
Airmic, a members' association supporting those responsible for risk management and insurance within their own companies, published its March News.  View Article

Asset Management

IPE: EU not the 'bad cop' of pensions reform
According to László Andor, EU commissioner for Employment, Social Affairs and Inclusion, the European Union should not be seen as the "bad cop" of pensions, bullying Member States into reforming their systems. Andor emphasised the working relationship between Brussels and EU Member States.  View Article
UK HMT: Policy options for implementing the Alternative Investment Fund Managers Directive
The Directive establishes an EU-wide harmonised framework for monitoring and supervising risks posed by Alternative Investment Fund Managers and the funds they manage; and for strengthening the internal market in alternative investment funds. The Directive requires the authorisation of AIFMs.   View Article
IPE: There will be no escape (AIFMD)
Iain Morse finds that custodians will face greater levels of liability for the assets they safeguard for clients under AIFMD rules.  View Article
Hedgeweek: Luxembourg adopts 'AIFMD-ready' amended SIF legislation
Luxembourg's Parliament has adopted on 6 March legislation amending the February 2007 law on Specialised Investment Funds, adapting the highly successful SIF regime to European and international developments regarding regulation and transparency of alternative investments.  View Article
IPE: BlueCrest says regulation will deepen impact of inflation on pension funds
BlueCrest Capital Management has warned that new regulation, such as the introduction of Solvency II, will leave pension funds unable to cope with the eventual return of high inflation.  View Article
NAPF comments on new 100-year bonds
NAPF chief executive, Joanne Segars, said that a 100-year bond would be too long for most pension funds, and it is not probable that many would buy them.  View Article

Corporate Governance/Accounting

BSI seeks support for new corporate governance standard planned for 2013
BSI, the global standards organisation, announced this week that it will launch a new governance standard by early 2013.  View Article
FRC: The scope of the Audit Inspection Unit's work for 2012/13
The Professional Oversight Board of the FRC published a description of those entities whose audits will be deemed to be major audits for the purposes of audit inspections in the year from 1 April 2012 to 31 March 2013. Such audits will fall within the scope of the work of its Audit Inspection Unit.  View Article
FSB: Enhancing the contribution of external audit to financial stability
The FSB underscored the importance of work to improve the role that external audits play in providing information to prudential supervisors and regulators of financial institutions, and to reinforce the effectiveness of the regulation of external audits.  View Article
FEE commented on the Consultation by the Irish Department of Jobs, Enterprise and Innovation on EU Audit Proposals
FEE comments on consultation by the Irish Department of Jobs, Enterprise and Innovation on EU Audit Proposals – Proposal for a Directive of the European Parliament and of the Council amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts – COM (2011)778 final.  View Article
FASB: Learning Guide for the Codification Research System
The Financial Accounting Foundation (FAF) published the Learning Guide for the Codification Research System, a new resource for subscribers who want to use the FASB's online Accounting Standards Codification's features more effectively and efficiently.  View Article
FASB responded to FAF’s Post-Implementation Review Report on FIN 48
The FASB issued its response to the Financial Accounting Foundation's Post-Implementation Review (PIR) Report on FASB Interpretation No 48, 'Accounting for Uncertainty in Income Taxes (FIN 48)'. In its response, the FASB noted that the PIR Report findings affirm the overall effectiveness of FIN 48.  View Article
FEE commented on EFRAG’s assessments for endorsement of IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28
FEE published its comment letter on EFRAG's assessments for endorsement of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements, and IAS 28 Investments in Associates and Joint Ventures.  View Article

Financial Services Policy

ECON Committee: Financial transaction tax and Switzerland dominate discussion with Šemeta
Any taxation of the financial sector must be based on the FTT model proposed by the Commission, and Member States should not attempt to use "B or C plans", Commissioner Šemeta told the ECON Committee.   View Article
ABBL: Building the house of EU legislation 2011-2012 - Looking back, looking ahead
The EU's internal market for financial services can be likened to a building hit in 2008 by an earthquake. It was damaged but it still stands. It needs fixing, foundations must be reinforced to withstand the next earthquake better, and a plan for dealing with future crisis situations is required.   View Article
FSA Policy Statement 12/5: Distribution of retail investments - RDR Adviser Charging/Solvency II disclosures, feedback to CP11/25
The FSA published Policy Statement 12/5: Distribution of retail investments - RDR Adviser Charging and Solvency II disclosures, feedback to CP11/25 and final Adviser Charging rules. In this paper, the FSA summarises the responses to CP11/25 and gives its response to the issues raised.  View Article

Rolling ReviEUs

Rolling ReviEU of March 2012
This month Graham is in discussion with Paulina Dejmek, member of Commissioner Barnier's Cabinet; Richard Raeburn, Chairman of EACT; Gerard Hartsink, Chairman of EPC; and James Burnham of EVCA.  View Article




© Graham Bishop

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