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28 June 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
Financial Stability - Policy Analysis European Council/Parliament Graham Bishop’s Articles and Speeches
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Articles from 21 June 2012 - 28 June 2012

Banking

President Barroso proposes banking union
In a debate at the European Policy Centre, President Barroso called for a banking union as the first building block for deepening the Economic and Monetary union. "A big leap forward is now needed", said the President.  View Article
European Commission update on the banking union
The Commission could make proposals as early as autumn 2012. It also wants the Council and Parliament to accelerate the decision-making process on key legislation which is already in the pipeline.  View Article
European Commission: A banking union for Europe
Common supervision of the EU's banks would better protect depositors, restore confidence, and help cushion financial sector from shocks – important steps for pulling Europe out of the crisis.  View Article
Sharon Bowles: Banking union is an idea in search of the good
In an op-ed for Bloomberg, Ms Bowles observes that it wouldn't be Europe if a proposal didn't lead to numerous interpretations, giving the concept of a so-called banking union as a case in point.  View Article
Bruegel: What kind of European banking union?
This paper discusses the creation of a European Banking Union, looking first at questions of design, and then highlighting seven fundamental choices that decision-makers will need to make.  View Article
Nick Clegg: Be alive to the risks and rewards of a banking union
Writing in the FT, Clegg says that the protection of the single currency must not translate into protectionism.  View Article
EBA publishes Annual Report 2011
The 2011 Annual Report of the European Banking Authority (EBA) provides an account of the activities and achievements of the Authority in its first year of existence.   View Article
It's time to break the vicious cycles, says BIS in 82nd Annual Report
Those hoping for quick fixes to the strains in the global economy will continue to be disappointed, writes the Bank for International Settlements (BIS) in its 82nd Annual Report.  View Article
Basel Committee issues final rules on banks' disclosure of the composition of their capital
The Basel Committee on Banking Supervision today issued its final rules on the information banks must disclose when detailing the composition of their capital. These aim to improve the quality of Pillar 3 disclosures in respect of the capital that banks use to meet their regulatory requirements.   View Article
CEPS: Implementing Basel III in Europe - Diagnosis and avenues for improvement
This Policy Brief provides a preliminary diagnosis of the proposed regulatory reforms contained in the CRD IV/CRR, and suggests avenues for improvement.  View Article
Basel Committee issues Principles for effective risk data aggregation and risk reporting - consultative document
The Basel Committee on Banking Supervision today issued for consultation Principles for effective risk data aggregation and risk reporting - consultative document. The proposed principles are intended to strengthen banks' risk data aggregation capabilities and risk reporting practices.  View Article
EBF comments on the EBA Consultation on Data Point Model
The European Banking Federation provided its preliminary comments on the Data Point Model. It includes observations that the European Banking Authority may wish to consider to improve the DPM proposals.  View Article
EPC: Effective date of next versions of SCT and SDD rulebooks will be 1 February, 2014!
SEPA stakeholders are currently working towards achieving compliance with the regulation establishing technical and business requirements for credit transfers and direct debits in euro, which defines 1 February 2014 as the deadline in the euro area for compliance with the regulation's core provision.  View Article
WSBI pleased with important role for financial inclusion after G20 summit
The World Savings Banks Institute is pleased with the key role that leaders at the recent G20 Summit in Los Cabos attributed to financial inclusion in the pursuit of economic growth. WSBI provides statements linked to Basel III and shadow banking.  View Article
Vice President Almunia: Restructuring the banking sector in the EU - A State Aid perspective
Almunia shared his views on Europe's banks, on the basis of the experience gathered by the Commission since the introduction of the special State Aid rules for the financial sector which were adopted at the start of the crisis.  View Article
State aid: Commission approves state support for Spanish Bankia/BFA
The European Commission has temporarily approved, under EU State aid rules, a conversion of existing state-owned preference shares of €4,465 billion into equity and a liquidity guarantee amounting to €19 billion in favour of the Spanish BFA group and its subsidiary, Bankia.   View Article
BIS/Caruana: It's time to address the root causes
Jaime Caruana, General Manager of the Bank for International Settlements, focused in his speech on existing fundamental weaknesses, the limits of central bank policies, the euro area crisis, and the way forward.  View Article
CEPS: Regulation of European Banks and business models - Towards a new paradigm?
This report constitutes the second phase of CEPS's pioneering work in developing a methodology for analysing bank business models and bank risk, performance, governance and transparency on a continuing basis.  View Article

Securities

Commissioner Barnier: The US must not override EU regulators
Writing in the FT, Barnier says that proposed US regulation of derivatives could conflict with EU rules, and warns: "The danger is that many of the requirements would apply to companies in the EU and to trades between the EU and US clients. American rules would take primacy over those in Europe".  View Article
ESMA publishes its first Annual Report
The report provides an overview of the first year of ESMA's operations as an independent European Supervisory Authority, focusing on its tasks and achievements. In addition, it sets out the Work Programme for 2012.  View Article
ESMA proposes rules on derivatives, central counterparties and trade repositories
The European Securities and Markets Authority (ESMA) has launched a consultation on its technical standards under the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR), which is aimed at improving the functioning of OTC derivatives markets in the European Union.  View Article
ECB takes further measures to increase collateral availability for counterparties
The Governing Council of the European Central Bank decided on additional measures to improve the access of the banking sector to Eurosystem operations, in order to support further the provision of credit to households and non-financial corporations.  View Article
Central banks' posting of collateral, Round 2 – comments by Sharon Bowles MEP
Sharon Bowles MEP, ECON Chair, welcomes the announcement by the Bank of England that it will no longer ask for a special exemption when it comes to certain derivative transactions that it enters into on behalf of the UK.   View Article
Canadian securities regulators seek comments on OTC central counterparty derivatives clearing framework
CSA published for comment CSA Consultation Paper 91-406 'Derivatives: OTC Central Counterparty Clearing', which sets out the CSA Derivatives Committee's recommendations for central counterparty clearing of OTC derivatives transactions through regulated central counterparties.  View Article
Hedgeweek: The Great Migration - hedge funds and the move into central clearing
Buy-side interest rate swap clearing volumes have grown rapidly during the first half of 2012, as hedge funds and other asset managers have raced to begin central clearing ahead of the imposition of Dodd-Frank.  View Article
FSMA conducts consultation on financial planning
FSMA is conducting a public consultation on the introduction of a new legal status for financial planners and on the rules of conduct that apply to financial planning. The new status sets out the conditions for being authorised to act as an independent financial planner.  View Article

Insurance

New EIOPA guidelines aim to harmonise supervisory practices
The European Insurance and Occupational Pensions Authority published a set of guidelines today aiming to establish consistent, efficient and effective supervisory practices, and ensure the uniform and consistent application of EU law.  View Article
CEPS: Countercyclical regulation in Solvency II - Merits and flaws
October 2011 saw the latest draft of Solvency II, the EU's code for regulation of the insurance industry. This commentary argues that the latest proposals need to be drafted again, urgently.  View Article
Risk.net: Managing Solvency II's equity capital charge
The capital charge imposed by Solvency II on equities could be costly for many life insurers. The market volatility made many investors reconsider their equity positions. Some life insurers drifted slowly away from the asset class.  View Article
CII launches London Market qualification
A new qualification has been launched exclusively for the London market by The Chartered Insurance Institute (CII).  View Article
Swiss Re: Global non-life premiums expanded 1.9 per cent in 2011
Global reinsurance premiums declined 0.8 per cent in real terms in 2011, according to Swiss Re's latest sigma study.  View Article
Reuters: Bermuda on track to comply with EU insurer rules
Bermuda is on course to bring capital rules for insurers into line with the European Union's tough new Solvency II regime, the island's financial regulator said.  View Article
China Daily: CIRC outlines plan for private investors to own 20 per cent of a single Chinese insurer
The China Insurance Regulatory Commission has revealed that an individual private investor would be able to own a fifth of a single insurance company, as part of new proposals.  View Article
AM Best: Russian insurance market sees 'radical' changes
The Russian insurance sector is still young but is radically changing despite being fraught with challenges. According to a report, 'Insurance Revolution Begins to Gain Pace', penetration is low but total premiums underwritten will continue to grow as compulsory lines are introduced.  View Article

Asset Management

Solvency II: Data Impacts on Asset Management - an EFAMA-KPMG Report
EFAMA published a new report prepared by KPMG, entitled 'Solvency II: Data Impacts on Asset Management'. The report highlights the need for the asset management industry to work proactively with European insurance companies to respond to the strategic changes caused by the Solvency II Directive.  View Article
AMF launches a consultation on the transposition of the AIFM Directive
An AIFMD Stakeholders' Committee chaired by Monique Cohen and Jean-Luc Enguéhard, both members of the AMF Board, has come up with 25 recommendations for transposing the Directive.  View Article
IPE: EIOPA failed to plan for negative holistic balance sheet result
The European Insurance and Occupational Pensions Authority (EIOPA) has neglected to plan for a "negative" result for the quantitative impact study (QIS) on the proposed 'holistic balance sheet' (HBS) approach, according to PGGM.  View Article
IPE: Dutch regulator casts doubt on added value of alternative assets
Dutch pension funds lack sufficiently detailed guidelines governing their alternative asset portfolios and should examine the cost/return ratio of investments, regulator De Nederlandsche Bank (DNB) has said.  View Article
IPE: Germany, France irresponsible to fight pension liability disclosure
According to Sharon Bowles, proposals for European Union countries to disclose off-balance sheet public pension liabilities have been met with resistance by a "highly irresponsible" group of countries, including Germany and France.  View Article

Corporate Governance/Accounting

Council of the European Union: Review of accounting requirements for companies
The Council agreed on a general approach for the review of the accounting rules applicable to EU companies. The agreement paves the way for the start of negotiations with the European Parliament with a view to its swift adoption.   View Article
IFRS Foundation Trustees' Chairman, Michel Prada, on development and future of international standard-setting
Speaking at the IFRS Foundation conference in Frankfurt, Prada covered two main topics: the path towards global standards, and becoming the global accounting standard-setter.  View Article
Reform of the FRC approved by parliament
The reform of the FRC was given parliamentary approval by the House of Commons and House of Lords on 25 June, 2012. The reforms will enable the FRC to operate as a unified regulatory body, with enhanced independence from those it regulates, and more proportionate range of sanctions.   View Article
FRC: Key facts and trends in the accountancy profession
The Professional Oversight Board (POB), part of the FRC, published the tenth edition of 'Key Facts and Trends in the Accountancy Profession'. The information illustrates the size and shape of the accountancy profession, and shows how it has evolved over recent years.  View Article
FEE commented on Monitoring Group Public Consultation on governance of Monitoring Group, PIOB, and standard-setting boards
FEE addressed its comments to the Monitoring Group on the governance with special focus on organisational aspects, funding, composition and the roles of the Monitoring Group, the PIOB and the standard-setting boards and Compliance Advisory Panel operating under the auspices of IFAC.   View Article
EFRAG's invitation to comment on its draft endorsement advice on the Annual Improvements to IFRSs 2009-2011 Cycle
EFRAG has published an Invitation to Comment relating to the endorsement for use in the EU of the Annual Improvements to IFRSs 2009-2011 Cycle. Comments are requested by 25 July, 2012.  View Article
IFAC: IPSASB's public sector combinations consultation paper
The IPSASB released the Consultation Paper, 'Public Sector Combinations'. The objective of this Consultation Paper is to initiate discussion on the possible accounting treatment for public sector combinations in the general purpose financial statements of an entity that uses accrual-based IPSASs.   View Article
FASB: Proposal for disclosing liquidity and interest rate risk
The FASB published for public comment a proposed Accounting Standards Update (ASU), intended to improve financial reporting on certain risks inherent in financial instruments and how they contribute to the reporting organisation's broader risks. Comments are requested by September 25, 2012.  View Article
IFAC: IAASB indicates future direction of improved auditor reporting
The IAASB's 'Invitation to Comment: Improving the Auditor's Report' sets out the indicative direction of the board's future standard-setting proposals to improve how and what auditors report in accordance with ISAs.  View Article
The future direction of improved auditor reporting – investors' voices need to be heard, says ACCA
A new consultation launched by the International Auditing and Assurance Standards Board (IAASB) about improvements to the auditor's report is welcomed by ACCA (the Association of Chartered Certified Accountants).   View Article
FT: Accounting change bloats US pension gap
The new accounting standards of the Governmental Accounting Standards Board (GASB) could add up to $600 billion to official estimates of the holes in US states' pension funds.  View Article

Financial Services Policy

European Council debates financial transaction tax
The European Council held a policy debate on a proposed directive aimed at introducing an EU-wide financial transaction tax (FTT) on the basis of a presidency paper suggesting the way forward on the dossier. (Includes statement on the FTT from President Barroso after the Rio+20 conference.)  View Article
EUobserver: Ministers bury Robin Hood tax, splinter version possible
Finance ministers on Friday (22 June) officially declared dead a proposal for an EU-wide financial transactions tax (FTT), opening the way for at least nine countries to press ahead with the levy.  View Article
Proposed FTT is inefficient and EC is seriously underestimating the economic impact, says new report
According to a new report from the independent economic consultants, Oxera, the proposed financial transaction tax (FTT) would not only reduce economic activity but would also be a highly inefficient way to raise public funds.  View Article
Vice-President Almunia: Competition Policy in times of restructuring
In his speech at Chatham House, Almunia said that competition policy was an essential tool to integrate European markets into a single economic area, and that this would contribute in more ways than one to a deeper and more ambitious integration of Europe.  View Article
IIF: Financial services firms boost risk management expenditures
Leading financial services firms have made major changes in the organisation and approach to risk management following the global financial crisis, but there is still much to be done to change and embed new methodologies and approaches, according to a new report by Ernst & Young, in conjunction with the IIF.  View Article
ICFR: “We must improve the integrity of the regulatory process in finance”
In this new ICFR book, entitled 'The Making of Good Financial Regulation: Towards a Policy Response to Regulatory Capture', regulators, bankers and academics propose a series of reforms to address the issue of regulatory capture.  View Article
TheCityUK: Key Facts about EU Financial and Professional Services (June 2012) report
This report outlines the important contribution that the financial and professional services sectors make to the EU economy.  View Article
FSA Consultation Paper: 'Payments to platform service providers and cash rebates from providers to consumers' [RDR]
In its paper, the FSA says that in line with the changes introduced on adviser charging in the Retail Distribution Review, it does not feel product providers should be able to "buy" distribution. The ban would affect both the advised platforms market and non-advised (direct to consumer) platforms.  View Article
FTAdviser: IMA calls for FSA to remove RDR/MiFID conflicts
The IMA is the latest party to warn of conflicts between the RDR and MiFID, in spite of the FSA's belief that it will not be overruled by Europe.  View Article

Financial Stability - Policy Analysis

ESFRC: Escalating crisis in the eurozone - Time for urgent action
The European Shadow Financial Regulatory Committee recommends that recapitalisation of problem banks should be allowed to be done directly by the ESM, and that countries facing punitive interest rates, such as Spain and Italy, should be allowed to issue and sell new debt directly to the ESM.  View Article
ICFR-SUERF Publication - 'Future Risks and Fragilities for Financial Stability'
In March 2012, a joint ICFR/SUERF conference on "Future Risks and Fragilities for Financial Stability" explored what the next pressure points for financial stability might be, how these may arise from the response to the last financial crisis, and how the industry/regulators can prepare for them.  View Article

European Council/Parliament

Towards a genuine Economic and Monetary Union - Report by President of the European Council, Herman Van Rompuy
This report, prepared by the President of the European Council in collaboration with the Presidents of the Commission, the Eurogroup and the European Central Bank, aims at developing a vision for the EMU to ensure stability and sustained prosperity.  View Article
ECOFIN: Main results
The Council approved draft recommendations to all Member States on the economic policies set out in their national reform programmes, and opinions on the fiscal policies presented in the stability and convergence programmes. It also approved a specific draft recommendation for the eurozone as a whole.  View Article
ECOFIN: EU’s finance and economy ministers adopt recommendations for all 27 EU Member States
The ministers decided on recommendations for all 27 EU countries regarding sound economic policy and economic reforms that will help bring Europe out of the crisis and boost growth and job creation.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: The detailed roadmap to a financial and banking union
Many key steps to a political union of the euro area states are already in place - and even a substantive 'fiscal union' seems to be on offer from Germany.  View Article




© Graham Bishop

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