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12 July 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
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Articles from 05 July 2012 - 12 July 2012

Banking

Bank recovery and resolution: EU-wide rules on the Council's table
In the future, bail in instead of bailing out, says a Commission proposal on the recovery and resolution of credit institutions and investment firms, presented to the finance ministers at the ECOFIN Council on 10 July, 2012.  View Article
ECON Committee: Bank troubles and eurozone's future shape dominate Draghi discussion
A "reasonable concept by the end of the year" for EU bank supervision is the top priority, ECB President Mario Draghi told ECON. The ECB could undertake this task, with the European Parliament having a central role to ensure democratic accountability and legitimacy, he insisted.   View Article
Margin requirements for non-centrally-cleared derivatives - consultative document issued by BCBS and IOSCO
The Basel Committee on Banking Supervision and the International Organisation of Securities Commissions (IOSCO) have published a consultative paper on margin requirements for non-centrally-cleared derivatives. Comments on the proposed rules should be submitted by 28 September, 2012.  View Article
Recapitalisation exercise: EBA publishes overview report
The European Banking Authority published an overview report on the implementation of the capital exercise. In line with the EBA's Recommendation, the vast majority of the banks in the sample meet the required ratio of 9 per cent Core Tier 1 (CT1).   View Article
EBF: Study on Internal Rating Based (IRB) models in Europe - Residential Mortgages
In this study, the European Banking Federation (EBF) examines the risk-modelling practices of a sample of European banks that apply internal rating based (IRB) approaches for the calculation of the regulatory capital requirement for credit risk in residential mortgages.   View Article
Mark Hoban: "I strongly support the euro area's decision to pool sovereignty and express solidarity through a banking union"
Financial Secretary to the Treasury, Mark Hoban MP, welcomed the decisions taken by the Eurogroup and the European council to establish a banking union, and said that the crisis had shown why a banking union is a necessary part of monetary and fiscal union.  View Article
VoxEU: In support of a European banking union, done properly - A manifesto by economists in Germany, Austria and Switzerland
The EU Summit decision on banking union is being questioned by some economists in Germany. This column argues that a banking union is a critical step in ending the eurozone crisis and building a more stable eurozone financial architecture.  View Article
Bruegel/Wolff: Organising bank supervision and resolution in Europe
Two issues on the road to a banking union will prove particularly contentious: the organisation of common financial supervision, which is an explicit part of the summit agreement, and the creation of a resolution authority, which is not really covered in the summit statement.   View Article
Bank oversight plans may threaten ECB independence - Draghi urges pragmatic approach
At the last European Union summit, leaders agreed to establish a banking oversight authority. It remains unclear, however, what such a system might look like. The European Central Bank is to play a role, but can it maintain its independence?  View Article
Stewart Fleming: The ECB's choice - speed or quality?
The creation of a European banking supervisor will be a long, slow process, but the eurozone does not have the luxury of time, observes Fleming in his European Voice column.  View Article
HM Treasury: UK Government publishes vision for building societies
The UK Government has published a discussion document setting out its vision for building societies. The consultation sets out how the recommendations of the Independent Commission on Banking will apply to this sector.  View Article
FT: Brussels to act over Libor scandal
Brussels is wading into the interest rate-rigging scandal rocking the City of London with a proposal to outlaw attempts to manipulate market indices across the EU, and a fundamental of the rules on how Libor is set.  View Article
EurActiv: UK warned - European Parliament to hit back on bankers' bonuses
The European Parliament will stand firm against Britain's attempt to limit proposals designed to curb bankers' bonuses and the powers of the European Banking Authority, an influential MEP told EurActiv.  View Article
CEPS: Central banks in times of crisis - The FED vs the ECB
Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The crisis actions undertaken by the ECB have not always represented the best response, in terms of effectiveness, consistency and transparency.  View Article
EurActiv: Luxembourg scoops ECB job as part of Spain deal
Eurozone ministers agreed that Luxembourg Prime Minister, Jean-Claude Juncker, should continue to chair the group, whilst his compatriot, Yves Mersch, will join the European Central Bank's six-member executive board.  View Article

Securities

European Parliament: Tough sanctions needed for market abuse
Insider dealing and market manipulation, referred to together as "market abuse", must be clearly defined and punished with the same dissuasive criminal sanctions in all Member States, says the civil liberties committee.   View Article
EurActiv: Brussels acts over market rates abuse
Commissioner for the Single Market, Michel Barnier, is expected to bring forward changes to his Market Abuse Directive and regulation within the coming weeks.  View Article
ESMA publishes MiFID guidelines to enhance investor protection
ESMA has published two final sets of guidelines aimed at enhancing the protection of investors in the EU. The guidelines relate to the provisions under the Markets in Financial Instruments Directive (MiFID) relating to the suitability of investment advice and the compliance function.  View Article
House of Lords report: MiFID II - Getting it right for the City and EU financial services industry
This report concludes that a review of MiFID was necessary, and that some Commission's proposals are based on sound principles. Nevertheless, the proposal contains fundamental flaws which need to be corrected as a matter of urgency if serious damage to EU financial services industry is to be avoided.  View Article
SEC approves rules and interpretations on key terms for regulating derivatives
The Securities and Exchange Commission took another step towards regulating the over-the-counter derivatives market by unanimously approving rules and interpretations for key definitions of certain derivative products.  View Article
ECB announces implementation of loan-level data reporting requirements for asset-backed securities

The Governing Council of the European Central Bank (ECB) decided in December 2010 to implement loan-level data reporting requirements for asset-backed securities (ABSs) as part of the Eurosystem's collateral framework.  View Article
European Issuers' Position on the Regulation on Central Securities Depositories
EuropeanIssuers welcomes the Proposal for a Regulation on improving securities settlement in the European Union and on CSDs, as it is their understanding that the Proposal improves settlement and reduces the risk of reversals, namely by the harmonisation of settlement cycles.  View Article
AMF informs issuers about new measures arising from the Prospectus Directive review, and their entry into force date
The measures resulting from Delegated Regulations, including new formats for the summary and the base prospectus as well as the proportionate schedules for SMEs, companies with reduced market capitalisation and issues with pre-emptive purchase rights, came into force on 1 July, 2012.  View Article
SIFMA statement on final rules on the definitions of swap and security-based swaps
SIFMA released a statement from President and CEO Tim Ryan, after the Commodity Futures Trading Commission, finalising a joint CFTC-SEC rule that would define what would be a swap and security based swap for regulatory purposes.  View Article
SIFMA testifies on impact of Dodd-Frank Act on credit
IFMA's Kenneth E Bentsen, Jr, executive vice president, public policy and advocacy, testified before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises to discuss the impact of certain provisions of Dodd-Frank and their impact on credit availability.   View Article

Insurance

EIOPA publishes the outcome of the public consultation on Solvency II reporting and disclosure requirements for insurers
The European Insurance and Occupational Pensions Authority (EIOPA) published its final report on reporting and disclosure requirements for insurance undertakings and insurance groups.  View Article
Insurance Europe: EC "retail package" must focus on consumer protection
Insurance Europe believes proposed European regulatory changes fail to ensure an equal level of consumer protection for all distribution channels of insurance products.  View Article
Insurance Insight: Commission disclosure overhaul could hit Germany hardest
Commission disclosure requirements in the revised Insurance Mediation Directive (IMD) would have a particular impact on the German market, according to law firm Norton Rose.  View Article
Risk.net: A deal is needed on Omnibus II, even if it is not perfect
It is crunch time for Solvency II. As Insurance Risk went to press, European policy-makers had failed to reach agreement on the critical Omnibus II Directive after three months of heated negotiations.  View Article
Risk.net: Standard Solvency II asset data framework 'at least 12 months' away
Asset managers seek to standardise Solvency II asset data provision, but an industry-wide solution presents challenges. A standard framework for delivering Solvency II asset data from investment firms to insurers is at least a year away, asset managers predict.  View Article
FSA: Transposition of Solvency II - Part 2
The consultation paper (CP) includes how the rules may apply to the Lloyd's insurance market and the regulator's policy for separate disclosure of capital add-ons, together with proposed changes to existing Handbook rules governing with-profits and unit linked business.  View Article
Risk.net: Insurers urged to be cautious of long-term liquidity swaps
Uncertain regulatory and economic environment increases risks associated with liquidity trades, warns Fitch. Insurers should be cautious when considering undertaking long-term liquidity swaps due to current uncertainties in the regulatory and economic environment.  View Article
IUA launches new London market clauses database
A new database of London market insurance and reinsurance clauses has been launched by the International Underwriting Association.  View Article

Asset Management

ALFI's comments on the IOSCO public consultation on principles for the regulation on ETFs
ALFI welcomes IOSCO's initiative to consult on principles for the regulation of Exchange Traded Funds. ALFI would like to highlight that in the EU, a majority of ETFs are UCITS products that are already subject to high level of rules in terms of investor protection and disclosure.  View Article
NAPF: £50 billion of fresh QE sparks pension fund reaction
The National Association of Pension Funds (NAPF) commented on the announcement of a further £50 billion of quantitative easing (QE). "Pension funds are deeper in the red than ever, and this extra dose of QE is only going to make things tougher."  View Article
IPE: ACA blasts impact study on EIOPA's holistic balance sheet
The detailed methodology for the quantitative impact study (QIS) on the 'holistic balance sheet' proposal for European occupational pension funds has been largely "cut and paste" from Solvency II for insurers, the Association of Consulting Actuaries (ACA) has claimed.  View Article
IPE: Pensions liabilities should be discounted against non-bonds
Pension liabilities should no longer strictly be measured against bond yields, according to the Society of Pension Consultants (SPC), which argued in favour of bond-like assets being taken into consideration when assessing a scheme's health.  View Article
AIMA publishes paper on social and economic value of hedge fund industry - stresses financial stability benefits
The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has published an educational paper about the social and economic value provided by the hedge fund industry.  View Article
FT: EU warned over new fund rules threat
Fund managers have warned that controversial rules proposed by Brussels threaten to increase costs for ordinary investors sharply and undermine the single market in the EU.  View Article

Corporate Governance/Accounting

Council Conclusion on Commission’s success in case of deficiencies identified in the Member States' management and control systems
The Council of the EU published its conclusions on Special Report No 3/2012 by the European Court of Auditors: Did the Commission successfully deal with deficiencies identified in the Member States' management and control systems?  View Article
House of Commons TC: Corporate governance and remuneration in the financial services sector
The UK House of Commons Treasury Committee published its report, "Corporate governance and remuneration in the financial services sector".   View Article
EFRAG draft comment letter on put options written on non-controlling interests
EFRAG published its draft comment letter on the IFRS Interpretations Committee's Draft Interpretation DI/2012/2, 'Put Options Written on Non-controlling Interests'. Comments on the letter are invited by 19 September, 2012.  View Article
EFRAG draft comment letter on levies charged by public authorities on entities that operate in a specific market
EFRAG published its draft comment letter on the IFRS Interpretations Committee's Draft Interpretation DI/2012/1 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'. Comments on the letter are invited by 22 August, 2012.  View Article
EFRAG reports on business combinations under common control
EFRAG published a consolidated feedback statement summarising the input received from the four European events held from March to May 2012. Locations included London, Milan, Vienna and Warsaw.  View Article
Transparency International assesses global corporate reporting
Transparency International (TI) has for the first time released a detailed list looking not at state-level corruption, but rather at irregularities in the corporate reporting of individual companies. Under scrutiny were the world's 105 largest publicly-traded firms.   View Article

Financial Services Policy

European Commission: Investors' interests first under new rules
Investors buying financial products would get better information and more protection under proposed new measures.  View Article
IMA supports EU investor protection package but calls for additional measures
The Investment Management Association (IMA) has welcomed the publication of three proposals by the European Commission to deliver consistent investor protection measures for packaged retail investment products (PRIPs).  View Article
CEPS: Will the KID live up to its promise to protect investors?
While acknowledging that the key information document (KID) is a commendable effort, ECMI/CEPS researcher Mirzha de Manuel Aramendía observes that pre-contractual disclosure is just one of the pieces in the jigsaw puzzle of investor protection, and regrets that the other pieces are not as ambitious.  View Article
House of Lords Committee urges EU to adopt RDR model and widen commission ban
The House of Lords has urged the European Commission to adopt the Financial Services Authority's (FSA) Retail Distribution Review (RDR) as a model for addressing commission being paid to advisers.  View Article

European Council/Parliament

ECOFIN: Further steps taken towards strengthening euro area fiscal surveillance
The EU's Economy and Finance Ministers today exchanged views and adopted a general position on the issue of the "two pack", two draft regulations on strengthened fiscal surveillance of the euro area. The ministers also discussed the appropriate follow-up to the Council meeting of June 28-29.  View Article
European Council issues country-specific recommendations
The Council issued recommendations to all 27 Member States on the economic policies set out in their national reform programmes, and opinions on the fiscal policies presented in their stability and convergence programmes.   View Article

Financial Services Month in Brussels - Report

June 2012 Financial Services Month in Brussels - Graham Bishop's personal overview of events during the month of June
The Council will be seen as a landmark – not because quick fixes were agreed but precisely because it was decided to ask President van Rompuy to produce a report by December for a specific and time-bound roadmap for a genuine EMU.   View Article

Graham Bishop’s Articles and Speeches

Financial World: Trusting one's neighbour (Graham Bishop article)
The building blocks of a euro area political union are dropping into place but first the nations have to rebuild trust in each other, writes Graham Bishop.   View Article

European Finance Forum - Agendas

European Finance Forum 10 July 2012 - Another successful GrahamBishop.com event
Our European Finance Forum, this time discussing cross-border bank resolution and banking union, took place on the 10th July. Our thanks go to all the speakers for making it such a successful day. The next forum is planned for October - more details to follow nearer the time.  View Article




© Graham Bishop

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