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05 April 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
International/G20 Financial Services Month in Brussels - Report Graham Bishop’s Articles
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Articles from 29 March 2012 - 05 April 2012

Banking

European Commission published discussion paper on the banking resolution regime
As part of the final steps to prepare the forthcoming legislative proposal on the recovery and resolution of banks and investment firms, the Commission is engaging in discussion with key stakeholders on a number of outstanding points, mainly the bail-in tool.  View Article
Informal ECOFIN meeting: EU aims for a common framework for the resolution of unhealthy banks
EU finance and economy ministers and central bank governors gathered in Copenhagen to discuss the EU strategy for solving the economic crisis, the resolution of failing banks, and the EU multiannual budgetary framework.   View Article
Commissioner Michel Barnier welcomed the launch of Big Society Capital
Barnier stressed that Big Society Capital is not only remarkable for its £600 million of available funding, but for the fact that this money comes from original sources – dormant bank accounts – which will now be used to finance projects that have a positive social impact.   View Article
ESRB: Principles for macro-prudential policies in EU legislation on the banking sector
The ESRB supports the establishment of a set of commonly-defined prudential rules on the supervision of banks within the EU, based on the full implementation of the Basel III agreement as endorsed by the leaders of the G20.   View Article
EBA published questionnaire on the identification of users/investors needs on credit institutions Pillar 3 disclosures
The questionnaire invites interested parties to comment on the issues/areas that users of Pillar 3 disclosures consider to be the most important from their perspective, and that accordingly should be the focus of the EBA's 2012 assessment of Pillar 3 disclosures.   View Article
EBA published a report on the Basel III monitoring exercise
The EBA published a report on the results of the Basel III monitoring exercise, as a follow-up to the comprehensive European quantitative impact study conducted to analyse the impact of the new requirements, published in December 2010.   View Article
Barnier: How to achieve global convergence on financial regulation
Barnier stressed that establishing a level playing field also means being attentive to unintended consequences of regulation in other jurisdictions. That is why the Commission is taking a close interest in the Volcker rule.   View Article
FT editorial on Commissioner Michel Barnier's plans for wrapping up insolvent banks
Mr Barnier tackles the elephant that most EU policymakers keep trying to push to the corner of the room: that taxpayers cannot pay for bank losses too huge to be absorbed by banks' equity cushions.  View Article
BIS: Central banking in a balance sheet recession
Panel remarks by Mr Jaime Caruana, General Manager of the BIS, at the Board of Governors of the Federal Reserve System 2012 conference on "Central banking: before, during and after the crisis".  View Article
BBA: Angela Knight to step down
Angela Knight has announced her intention to step down as the chief executive of the British Bankers' Association in the summer. Angela said she will be staying on while the search for her successor is concluded.  View Article
Reuters: European Union told to handle fragile banks with care
European Union finance ministers were warned of the continued fragility of the region's banks on Friday, as the bloc's executive postponed a contested proposal critics warn could make nervous banks even more reluctant to lend. (Includes quote from Graham Bishop.)  View Article
Jens Weidmann: Rebalancing Europe
Dr Jens Weidmann, President of the Deutsche Bundesbank, gave a speech at Chatham House in London on 28 March, 2012.  View Article
Paul Fisher: Liquidity support from the Bank of England – the Discount Window Facility
Paul Fisher, the Bank of England's Executive Director for Markets, gave a speech at the National Asset Liability Management global conference in London on 29 March, 2012.  View Article
EPP/Ivanova: EIB should increase its support for businesses in Europe
The Annual Report on the activities of the European Investment Bank in 2010, now approved in Plenary, focuses on issues related to i.a. financing for SMEs, financial instruments of the bank, external policy programmes, optimisation of systems, audit and control of spending, and improving transparency.  View Article
EPC: SEPA Regulation published in Official Journal of the European Union.
The European Payments Council reports that the Regulation (EU) No 260/2012 effectively mandates migration to SEPA by 1 February 2014 in the euro area.   View Article
EPC: Get ready for SEPA by February 2014 – How to choose the right IT strategy
Part III of the EPC's SEPA series focuses on how to determine the appropriate strategy to ensure the compatibility of IT systems with SEPA payment schemes and technical standards.  View Article
BIS: Progress report on Basel III implementation and procedures for conducting country reviews published by Basel Committee
The Basel Committee on Banking Supervision has published its second progress report on Basel III implementation.  View Article
BIS: Basel III regulatory consistency assessment programme
To aid the implementation process, members of the Basel Committee have agreed on an assessment programme that will review and report on their implementation of Basel III.  View Article
BIS/Jaime Caruana: Shareholder value and stability in banking - is there a conflict?
BIS General Manager, Jaime Caruana, outlined what is meant by safer banking, and took stock of the development and implementation of new standards. He argued that the concerns of investors and bank supervisors are remarkably well-aligned in the long term.  View Article
Commission opens in-depth investigation into sale of Dexia BIL
Given that the proposed sale is the result of exclusive negotiations with a private investor, and that the EC does not have enough information on the valuation of the carved-out businesses, the EC has opened an in-depth investigation to assess whether the price of the transaction is market conform.   View Article
Commission approved amendment to Commerzbank restructuring plan
Under EU state aid rules, the Commission has approved a modification to Germany's and Commerzbank's commitment to divest its largest subsidiary, Eurohypo, by the end of 2014.   View Article

Securities

ESMA publishes the responses received to the Joint Discussion Paper on EMIR
EBA, EIOPA and ESMA (the ESAs) invited 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
EACT Response to ESMA/EBA/EIOPA discussion paper on risk mitigation techniques for OTC derivatives
The crucial areas covered by the document concern the potential requirements for collateral on OTC derivative transactions by corporates where the corporate concerned is above the 'clearing threshold' and the contracts cannot be cleared through a CCP.  View Article
IMA: ESA proposals for non-cleared OTC derivatives will substantially increase costs for clients
The IMA expresses concern that the ESAs' proposed approach could substantially increase costs for pension and UCITS funds, thus impacting investment returns for unit and policy-holders.  View Article
Credit rating agencies will start paying fees for their supervision
The Commission's Delegated Regulation that entered into force on 1 April enables the European Securities and Markets Authority (ESMA) – the European supervisor for credit rating agencies – to charge fees to CRAs in order to finance their supervision.  View Article
ECB published its opinion on the Credit Rating Agencies Regulation
The ECB shares the general objective pursued under the proposed Regulation and the proposed Directive, which is to contribute to reducing financial stability risks and restoring the confidence of investors and market participants in financial markets and ratings quality.  View Article
ICMA ERC submits comments on draft regulatory technical standards on risk mitigation techniques for OTC derivatives not cleared by a CCP
The ICMA European Repo Council's discussion paper seeks stakeholders' views on the regulatory technical standards which the European Supervisory Authorities are required to develop jointly, specifying the requirements on risk mitigation techniques for OTC derivative contracts not cleared by a CCP.  View Article
EFRP responds to the ESAs' consultation on technical standards for derivatives clearing
The European Federation for Retirement Provision opposes the introduction of Initial Margin requirements for bilateral clearing of derivatives managed by IORPs, as this would be against the rationale for the exemption from central clearing of derivative contracts managed by IORPs, as recently established under EMIR.  View Article
IMA: ESMA's discussion paper on the OTC derivative clearing regulation fails to address the position of clients
Jane Lowe, Director of Markets, said that proposals do not fully take account of the operational readiness of clients to clear and report transactions, the cost of systems upgrades required to ensure compliance, or the dependency of clients on agents such as fund managers to perform key functions.  View Article
ESMA publishes the draft technical standards on short selling
The Commission has three months to decide whether to endorse ESMA's draft technical standards. A further regulatory technical standard, on the method of calculation of the fall in value of a financial instrument, will be submitted together with the technical advice in the course of April 2012.  View Article
ESMA publishes the responses received to the Consultation on ESMA guidelines for the regulatory framework for ETFs and other UCITS issues
The proposals cover both synthetic and physical UCITS ETFs, and detail the obligations to come for UCITS ETFs, index-tracking UCITS, efficient portfolio management techniques, total return swaps and strategy indices for UCITS.  View Article
ALFI comments on the Discussion Paper on Draft Regulatory Technical Standards on risk mitigation techniques for OTC derivatives
ALFI claims the specific nature of UCITS is not really taken into account in the various questions and technical standards, and there is no recognition of mutual funds in the current legislation. ALFI recommends that rules on margining and capital requirements are adapted to the funds' specifics.  View Article
ISDA: Response to EBA, ESMA, EIOPA Joint Discussion Paper on risk mitigation techniques for trades not cleared by a central counterparty
The Industry is supportive of the Paper's aims and objectives, and understands the desire expressed by the G20 nations to require over-the-counter derivatives to be cleared where appropriate, and for uncleared trades to be subject to robust operational processes and capital requirements.  View Article
EDHEC-Risk’s annual European ETF Survey reveals investor attitudes to risk, replication and asset allocation
EDHEC-Risk Institute has announced the results of the EDHEC European ETF Survey 2011, which represents a comprehensive survey of 174 European ETF investors.  View Article

Insurance

CRE: Willis Re reports improved start to 2012 for reinsurers
Reinsurers have had a better start to 2012 than of late, with fewer losses and a gradual improvement in the rating environment reported in the first quarter, according to Willis Re.  View Article
Risk Net: Banks' long-term funding needs will drive demand for liquidity swaps with insurers
The liquidity swap market is expected to grow, but the European Central Bank's long-term refinancing operation has reduced demand for liquidity trades in the short term, say bankers  View Article
CII report paints possible futures for global society, economy and insurance sector
The world's future socio-economic issues – and their impact on the insurance and financial services sectors - are laid bare in the Chartered Insurance Institute's (CII) latest "Future Risk" report, published as part of the professional body's Centenary activities.  View Article
AMICE Newsletter – March 2012
The Association of Mutual Insurers and Insurance Cooperatives in Europe's regular newsletter aims to keep members informed of the association's activities. It is also available for non-members.  View Article
CRE: Spain's Insurance Compensation Consortium cracks down on claims conditions
In worrying news for insurance buyers with operations in Spain, the country's Insurance Compensation Consortium, Consorcio de Compensación de Seguros, or Consorcio, is stamping down on the conditions under which it will pay claims.  View Article
Risk Net: UK insurers set to lobby for easing of constraints on matching adjustment
UK insurers are concerned that the European Parliament is bringing debate on a new version of matching premium into the level 1 negotiations.  View Article
Risk Net: Matching premium back in the spotlight
The European Parliament's Economic and Monetary Affairs Committee (ECON) has voted, and Solvency II's protracted legislative process can move into its next phase with the trialogue negotiations.  View Article
Insurers secure rethink on matching premium
Insurers have secured a last-ditch amendment to Solvency II rules which could prevent a 20 per cent drop in annuity rates, although concerns remain about its implementation.  View Article
WSJ: QBE buys renewal rights of Brit Insurance’s regional operations
QBE Insurance Group has bought the renewal rights of Brit Insurance's £350 million (US$556 million) of regional premium income, which could give Australia's largest insurer an estimated 5 per cent of the UK market share from next year.  View Article

Asset Management

AIMA expresses concern about new European Commission AIFMD implementation text
The Alternative Investment Management Association, the global hedge fund trade association, has expressed concern about the European Commission's new draft text for the implementation of the Alternative Investment Fund Managers Directive.  View Article
FT: Barnier hits out at lobbying rearguard (AIFMD)
The fightback from Michel Barnier comes after the industry publicly raised the alarm over technical standards proposed to implement the Alternative Investment Fund Managers' Directive.  View Article
FT: European rules alarm fund managers
Some fund managers' worst fears over pan-European regulation have re-emerged, prompting the hedge fund and private equity industries to hit back at Brussels' proposed technical standards that they say will damage business and shut out the US and Asia.  View Article
ALFI’s response to ESMA discussion paper 'Key concepts of the Alternative Investment Fund Managers Directive and types of AIFM'
ALFI believes that ESMA goes beyond the purpose of mere technical standards. It identifies policy orientations which in ALFI's opinion go beyond the mandate of issuing technical standards, or suggests interpretations which go beyond the terms of the AIFM Directive.  View Article
EBF comments on ESMA future guidelines on UCITS Exchange-Traded Funds and other UCITS-related issues
EBF suggests that the term "exchange-traded" makes it clear that units can only be bought and sold on an exchange. Therefore, secondary market investors should not have a right to direct redemption of ETF units by the issuer.  View Article
ICMA AMIC ETF Working Group submits response to ESMA consultation paper
The paper includes the recommendations for requirements for index-tracking UCITS and index-tracking leveraged UCITS.  View Article
ALFI's response to the consultation concerning ESMA guidelines on ETFs and other UCITS issues
ALFI supports ESMA's move towards greater transparency, as it will further enhance investors' understanding and confidence in UCITS products. The proposed guidelines reflect industry best practice in terms of transparency and disclosure.  View Article
ABBL: Tax remains a major obstacle to implementation of UCITS IV in European Union
While the overall number of countries with tax issues as a result of the Undertakings for Collective Investment in Transferable Securities Directive has decreased since 2010, there still remains a significant portion of EU Member States that have not addressed the challenges.  View Article
IPE: Institutional investors warming to private equity co-investments
Limited partners such as pension funds and sovereign wealth funds are looking to increase allocations to private equity by co-investing with fund managers, according to a survey by Preqin.  View Article
New EDHEC-Risk survey reveals the investment management opinions of sovereign wealth funds
In a new survey entitled "What Asset-Liability Strategy for Sovereign Wealth Funds?", SWF respondents have underlined the need for a change in investment practices to take into account both short-term constraints and liabilities.  View Article

Corporate Governance/Accounting

IFAC: PAIB Committee commented to the IESBA on proposed changes to the code of ethics for professional accountants
The PAIB Committee submitted a comment letter on the IESBA's ED on Proposed Changes to the Code of Ethics for Professional Accountants Addressing Conflicts of Interest. Recommendations include expansion of some of the definitions and parameters to cover the work of professional accountants better.  View Article
FRC: Withdrawal of various documents
The Auditing Practices Board of the Financial Reporting Council announced the withdrawal of particular documents that belong to either practice notes, statements of standards for reporting accountants, or bulletins.  View Article
ACCA: The economic governance challenge in the EU
Politicians, accountants and finance experts from both the public and private sectors gathered recently at a high level event organised by ACCA to discuss how to strike the right balance between discipline, accountability, growth and solidarity to meet the economic governance challenges ahead.  View Article
ICGN: Principles for the supervision of financial conglomerates
The ICGN published its comment letter to the Joint Forum (including BIS, IOSCO and IAIS) on the Joint Forum consultative paper dealing with the supervision of financial conglomerates. The ICGN contributed to the Joint Forum's debates on corporate governance and risk management.  View Article
EPP/Bodu: Corporate Governance - Flexibility is the essence
The Report adopted today on a corporate governance framework for European companies contains crucial issues about how the future of listed corporations will look.   View Article
S&D: Progressive Euro MPs reject ultra-light Corporate Governance proposal
S&D members voted against the initiative report drafted by an EPP Member on a Corporate Governance Framework for European companies, as it leaves companies free to concentrate on short-term profit, and does not take into account the worker's perspective or stakeholder approach.  View Article
IASB's future agenda as a highlight of Hans Hoogervorst's speech in Korea
IASB Chairman, Hans Hoogervorst, focused on the IASB's agenda consultation in his speech at the KASB/Korea Accounting Institute Seminar in Seoul, Korea.  View Article
FEE: Improving the quality of audit
FEE's background paper, 'Improving the quality of audit: building on 10 years of lessons learnt', outlines the actions taken by the accountancy profession to innovate auditing practices and to improve the quality of audits e.g. ISAs, quality assurance reviews, ethical standards, etc.  View Article
FEE/Johnson: How best to improve the quality of audit
FEE President, Philip Johnson, gave a speech on some of the key drivers relating to the improvement of the quality of audit at the Legal Affairs Committee of the European Parliament on 27 March, 2012.   View Article
IFAC: ED 47- Financial Statement Discussion and Analysis published by IPSASB
IPSASB published Exposure Draft 47, 'Financial Statement Discussion and Analysis'. The ED proposes minimum required content, while still providing sufficient flexibility for entities to prepare and publish financial statement discussion and analysis that best portrays their specific circumstances.  View Article

Financial Services Policy

Lords Committee publishes report on proposals for a financial transaction tax
The House of Lords' EU Sub-Committee on Financial and Economic Affairs says in its report that the FTT proposed by the European Commission is flawed and will fail to fulfil the Commission's own objectives.  View Article
European Voice: Robin Hood tax was always doomed to fail
This EV editorial suggests that José Manuel Barroso's decision to push ahead for a tax on financial transactions has damaged the credibility of the European Commission.  View Article
S&D: FTT important to help the way out of crisis
In light of recent debates about the future of the Financial Transaction Tax (FTT) in Europe, Socialists and Democrats believe a clear stance in favour of the FTT is required.  View Article
TheCityUK: Lords Committee recognises danger of FTT
TheCityUK welcomed today's report from the House of Lords EU Sub-Committee on Financial and Economic Affairs on the European Commission's proposals for a Financial Transaction Tax (FTT).  View Article
FSA must do more to help IFAs clear the final RDR hurdles
With fewer than 10 months to go before the introduction of the Retail Distribution Review (RDR), the regulator still has several areas to clarify before IFAs can have a clear run at the 31 December finishing line.  View Article

International/G20

EU Code of Conduct Group to ponder Guernsey zero-10 further
Under zero-10 regimes, most businesses pay no corporation tax, while some industries, such as banks, pay 10 per cent and a few pay 20 per cent. It is thought that the island could have its scheme approved by the end of June, when the current presidency of the European Council ends.  View Article

Financial Services Month in Brussels - Report

March 2012 - Financial Services Month in Brussels
Graham Bishop's personal overview for March, "a very busy month for the EU's legislative system".  View Article




© Graham Bishop

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