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11 October 2012

This week in "Brussels"
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Banking Securities Insurance
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Articles from 04 October 2012 - 11 October 2012

Banking

ECON Committee: Bank supervision and bond buying top the agenda with Draghi
Banking union and the ECB's bond buying plans were the focus of Tuesday's ECON Committee hearings with ECB President Mario Draghi. MEPs also quizzed Mr Draghi on Greece, Ireland and Portugal, with most MEPS stressing that more solidarity was needed at EU level.  View Article
EBA: Initial statement by Andrea Enria before the ECON Committee of the European Parliament
Enria delivered his statement during the public hearing on "Banking Supervision and Resolution: Next Steps?".  View Article
Bruegel/Véron: Europe's single supervisory mechanism and the long journey towards banking union
Véron suggests improvements, particularly to make the framework more inclusive to non-eurozone Member States, and to enhance effectiveness, accountability and acknowledgement of differences between monetary and bank supervisory policies.  View Article
Simon Nixon: Vicious spiral threatens Europe's banks
A vicious spiral now threatens large swathes of the European banking system, comments Nixon in his WSJ column.  View Article
European Banking Authority: Work Programme 2013
The annual work programme describes and summarises the main objectives and deliverables of the EBA in the forthcoming year. It is based on the tasks specified in the Regulation and in the relevant EU banking sector legislation.  View Article
Basel III implementation progress report published by the Basel Committee
The BCBS has published its third progress report on Basel III implementation. It is the Committee's last report ahead of the globally-agreed start date of 1 January 2013 for implementing Basel III, although the Committee will continue to provide updates throughout next year and beyond.  View Article
EBF: Europe's banks on steady path towards robust capital levels
On publication of the results of the EBA's Basel III monitoring exercise, the EBF highlights that EU banks are progressing steadily towards robust capital levels despite the ongoing debt crisis, and that they are showing their willingness to comply with the Basel III requirements.  View Article
Liikanen bank reform proposals: Reaction from Sharon Bowles MEP
ECON chair Bowles hoped that the Commission would take on board some of the recommendations, some of which had previously been pushed for by the EP, but also warned of certain pitfalls.   View Article
Fitch: Liikanen bail-in proposal would clarify bondholder status
An EU expert group's proposal to introduce a designated category of debt subject to "bail-in" would give bondholders more certainty about their position when a bank fails, Fitch Ratings says. It should also make other counterparties more comfortable with remaining exposed to troubled banks.  View Article
UN independent experts call for EU banking sector reform in line with human rights obligations
Responding to the Liikanen report, the human rights experts urged EU authorities to ensure that vital public funds are not used on collapsing financial firms in the future.  View Article
Bruegel/Bijlsma: The Liikanen report - Is size the elephant in the room?
There are factors complicating the type of structural regulation proposed, some of which are practical while others are more fundamental.  View Article
Martin Wolf: Liikanen is at least a step forward for EU banks
The review of the structure of EU banking carried out by an expert committee could, with important modifications, be a big step forward, comments Wolf in his FT column.  View Article
BBA: The next Bank of England governor
Applications have now closed for the post of governor of the Bank of England, perhaps the most significant non-elected position in the UK. The new governor of the Bank of England will have much greater responsibility than any predecessor, or any other central banker in the world.   View Article
FT: Financial stalwarts line up to lead BoE
The candidates confirmed by the FT are BoE's deputy governor for financial stability Paul Tucker, FSA chairman Lord Turner, ICB chairman Sir John Vickers, and ECON chair Sharon Bowles.  View Article
EBF preliminary comments on the draft RTS on the uniform application of the calculation methods of the Financial Conglomerates Directive
The European Banking Federation provides its preliminary comments on the draft RTS on the uniform application of the calculation methods under article 6.2 of the Financial Conglomerates Directive (JC/CP/2012/02).  View Article
EPC: What drives innovation in payments? Conclusions of the report 'Innovations in Retail Payments' published by CPSS
The CPSS report contains a number of elements geared to assessing what an innovation-friendly environment should look like. It focuses on fact-finding in order to define the most relevant developments and to identify the major factors driving and hampering innovation.  View Article
BBA: Here's a radical idea: Let's take stock before introducing more regulation
In his BBA blog, Anthony Browne proposes a 'radical' suggestion: How about finding out whether all the reforms that have already been introduced, or are being introduced, actually do what they are intended to do?   View Article
Reuters: Europe edges towards banking union
European Union ministers examined a proposal to limit planned new powers for the European Central Bank to supervise lenders, in a bid to allay the concerns of countries outside the eurozone over a new banking union.  View Article

Securities

Market abusers should face jail, say economic affairs MEPs
Financial market fraudsters across the EU could face jail from next year, under tougher EU-wide banking rules approved today, with one abstention, by the ECON committee, in a bid to restore confidence in the Union's financial markets and boost investor protection.  View Article
ECON Committee: Insider trading - "No safe haven for those intent on committing abuse"
The financial crisis has called attention to some unsavoury market abuse practices, such as traders taking advantage of insider knowledge in order to make an extra euro. Arlene McCarthy explains why the ECON Committee has supported the introduction of jail time for the most serious offenders.  View Article
S&D: Manipulating the market should lead to prison
According to the deal struck in the European Parliament's economic and monetary affairs committee, people who manipulate financial benchmarks or indices, as in the Libor case, could face jail.  View Article
ALDE/Klinz: Tougher rules against market manipulation
"We need to keep pace with market and technological developments and ensure that new markets, platforms and instruments are all covered", said Klinz, speaking after the ECON Committee had voted through a revised EU legislation on market abuse.  View Article
FSA: Ex-dividend dates and the Market Abuse Regime
The timing of an issue being marked ex-dividend relative to a derivative's expiry date can be a major determinant of that derivative's value; of particular significance is whether the ex-dividend date falls before or after an expiry.  View Article
Commission launches consultation on a possible framework for the recovery and resolution of non-bank financial institutions
This consultation looks broadly at how different non-bank financial institutions can fail and cause systemic problems, and considers what arrangements could be needed to prevent their failure from compromising financial stability. Deadline for submissions is 28 December, 2012.  View Article
EBF response to CPSS-IOSCO consultative report on recovery and resolution of financial market infrastructures
EBF appreciates IOSCO's attempt to interpret the FSB Key Attributes and convey them onto the resolution of financial market infrastructures. However, this attempt risks not taking into account adequately the individual and particular specifics and variations of financial market infrastructures.  View Article
European Commission: Rules on credit rating agencies (CRAs) in the US, Canada and Australia equivalent to EU rules
The Commission has adopted three implementing decisions which confirm that the rules in place on credit rating agencies in the US, Canada and Australia are equivalent to the EU rules on credit rating agencies.   View Article
ESMA publishes a list of exempted shares according to the short selling regulation
ESMA has published a Questions and Answers (Q&A) document that clarifies the technical aspects of practical implementation of the Regulation.  View Article
BIS: 2013 Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity
By increasing market transparency, the survey aims to help monetary authorities and market participants monitor patterns of activity and exposures in the global financial system better.  View Article
Reuters/Compliance Complete: Credit derivatives market can expect specific rules
Edouard Vieillefond, director in charge of regulation policy and international affairs at French regulator Autorité des marchés financiers (AMF), said that credit derivatives dealers can expect to see specific rules and regulations to address some of the peculiarities of that market.  View Article
Board's decisions further global regulatory reform and strengthen IOSCO
The IOSCO Board meeting highlighted the benefits of early engagement with stakeholders to provide strategic input for IOSCO's key role, and underscored the progress IOSCO is making on enhancing cross-border cooperation.  View Article

Insurance

EIOPA: Solvency II timetable
In a letter to Commissioner Barnier, EIOPA chairman Gabriel Bernadino stressed the need for a clear and credible timeline for the Solvency II implementation.  View Article
Reuters: European Commission asks for Solvency II capital review
A Director General at the European Commission has asked the chair of EIOPA to review capital charges under Solvency II, particularly for SME financing, infrastructure financing, and socially responsible investment. Securitisations serving these purposes are explicitly included.  View Article
Telegraph: Solvency II delays 'are a major worry'
Gabriel Bernardino, chairman of Europe's insurance watchdog, said "stagnation" in political talks meant there was still no clear timetable for the Solvency II framework, which is supposed to take effect in 2014.  View Article
Investment Europe: Solvency II in focus - Unintended consequences and how regulation encourages short-term thinking in insurance
ICFR CEO Barbara Ridpath argues that the unintended consequences of complying with Solvency II may actually be a less than optimal use of the insurance industry's funds in the interest of longer-term European prosperity.  View Article
Risk.net: Solvency II - Lack of coordination on internal model approval, says Buecheler
European supervisors have different interpretations of the internal model approval process under Solvency II, particularly with regard to the timing and amount and format of the supporting documentation, according to Tobias Buecheler, head of the Solvency II project at Allianz.  View Article
EIOPA: Report on Industry Training Standards emphasises diversity of national knowledge and ability requirements
The European Insurance and Occupational Pensions Authority published a Report on Industry Training Standards. The Report is part of EIOPA's activities in the area of consumer protection, and is related to the task of developing training standards for the industry.  View Article
Insurance Europe: Global insurance federation vows advocacy role
31 insurance associations representing 87 per cent of the worldwide insurance business formally established the Global Federation of Insurance Associations (GFIA) today. Frank Swedlove, president of the Canadian Life and Health Insurance Association, was elected chair.  View Article
Insurance Insight: Legal services insurers in pole position to meet new generation's needs
Insurers are ideally placed to take advantage of the changing market environment, according to the new president of the International Association of Legal Protection Insurance (RIAD).  View Article
Risk.net: Systemic risk methodology continues to worry insurers
The insurance industry is worried that new proposals for identifying global systemically important insurers fail to distinguish them properly from the banking sector. Insurers represent a much lower systemic threat, insurers argue.  View Article
Insurance Insight: Italy's GI sector weathers major changes
Legislative changes, industry consolidation and ongoing economic difficulties are changing the landscape of Italy's general insurance market. Non-life insurers are focusing on achieving technical profitability after some challenging years and an increasingly volatile investment environment.  View Article

Asset Management

IPE: Netherlands becomes first country to implement AIFMD
The Netherlands has become the first country to implement the EU's Alternative Investment Fund Manager Directive (AIFMD), following the approval of the necessary legislation by its parliament.  View Article
FT: Hedge funds tiptoe back into Greece
Although there are still worries over Greece's ability to meet its obligations, the current price is the highest since the restructuring of €200 billion worth of private sector debt in March produced the new ten-year benchmark.   View Article
IPE: Regulators stick with 25 per cent property shock
EIOPA has included a 25 per cent capital charge for property in its latest recommendation for new pension fund regulations.  View Article
IPE: PE fund managers express concerns over institutional withdrawal
Private equity fund managers have become increasingly concerned about the shift from defined benefit (DB) pension funds to defined contribution (DC), and are worried that regulatory changes in Europe will prevent institutional investors from allocating to the asset class.  View Article
IPE: UK Pensions Regulator unlikely to be given power to force mergers
Bill Galvin, chief executive of the UK's Pensions Regulator, has said he doubts the organisation will be granted powers to merge under-performing or costly defined contribution (DC) schemes with larger funds to achieve better economies of scale.  View Article
IPE: Pensions worried by auto-enrolment opt-out provisions
Lars Rohde, chief executive at the Danish pensions provider ATP, has expressed concerns over the long-term impact of opt-out provisions in the UK auto-enrolment law.  View Article
EDHEC-Risk Institute considers that the European Commission White Paper on Pensions could be improved
EDHEC released a study in response to the European Commission White Paper, "An Agenda for Adequate, Safe and Sustainable Pensions", which proposed a series of measures related to information and monitoring, European harmonisation and portability, and pension design.  View Article
FT: Pension funds assess investments in government debt
Recent monetary policy in developed markets has already pushed down government bond yields, but experts say the situation could get worse. One concern is that over the long term, a period of high inflation or strong currency moves would lead to a great reversal of government bond prices.  View Article
FT: Report from actuarial consultants urges hedging of pension schemes
UK companies that have taken high levels of risk in their pension schemes by investing in assets such as equities would do better to take steps to hedge those risks than to use corporate cash contributions to make new investments, a new report from actuarial consultants Hymans Robertson concludes.  View Article
IPE: Dutch regulator adopts new discount rate for pension funds
The Dutch regulator (DNB) has adopted a new discount rate for pension funds that takes into account a 4.2 per cent 'ultimate forward rate' (UFR), similar to the term structure for insurers.  View Article
IPE: INVERCO dismisses use of Spanish reserve fund for regional debt
The Spanish government will employ the €66 billion Social Security Reserve Fund solely to pay pensions and not to finance regional debt, according to the country's investment and pension fund association, INVERCO.  View Article

Corporate Governance/Accounting

FEE commented on IESBA Exposure Draft on Proposed Change to the Definition of "Those Charged with Governance"
FEE provided its comments on the IESBA Exposure Draft on the Proposed Change to the Definition of "Those Charged with Governance" ("the ED") in the IESBA Code of Ethics for Professional Accountants ("the Code").  View Article
IOSCO Board highlights the implementation of IFRS
The Board of the IOSCO met in Madrid to progress its current work agenda and set a path for future work. The Board was asked by the IFRS Foundation to play a larger role in global efforts to further the international adoption and implementation of IFRS.  View Article
FEE commented on the CPAB Discussion Paper, "Enhancing Audit Quality: Canadian Perspectives— The Auditor Reporting Model"
FEE published its comment letter to CPAB where it shared views on auditor commentary, going concern, and reporting internally to management and to those charged with governance.  View Article
FEE commented on the IVSC Exposure Draft, "The Role of the Professional Valuer in the Audit Process"
FEE published its comment letter to the International Valuation Standards Council (IVSC), sharing its views on key areas, and including a copy of the FEE Responses to the IAASB's ED on related ISAs published in relation to the role of experts appointed in the course of the audit.  View Article
FRC's consultation on updated guidance for the audit of financial instruments
The FRC published a consultation on the proposed update of the guidance to auditors on the audit of financial instruments; an update to Practice Note 23 (Revised). The consultation period closes on 4 January, 2013.  View Article
IFAC: Forum of Firms focuses on auditor reporting
The Forum of Firms organised a symposium that assembled a group of experts to discuss the proposals outlined in the IAASB's public consultation, 'Invitation to Comment: Improving the Auditor's Report (ITC)'.  View Article
IAIS to IAASB on improving of the auditor's reporting
The IAIS responds to the IAASB's Invitation to Comment, Improving the Auditor's Report (the ITC). The IAIS believes that the ITC goes a long way to addressing the issue that there were few early warning indicators that preceded failures during the financial crisis.  View Article

Financial Services Policy

FSA/Bailey: Prudential regulation - Challenges for the future
Bailey emphasised that the current package of reforms was not about "dragging the rest of the financial services industry into reform to solve a problem that is in essence only about the banks". A system must be designed that works effectively for all sectors of the industry.  View Article

European Council/Parliament

ECOFIN: Main results of the Council
The Council reported i.a. on the FTT, bank capital requirements (CRD IV package), the European Semester, the financial support and excessive deficit procedure for Portugal, and current legislative proposals.  View Article

Financial Services Month in Brussels - Report

September 2012 Financial Services Month in Brussels
Graham Bishop's personal overview of events throughout the summer break and during the month of September. "Banking Union" is likely to throw into sharp relief many of the issues that lie ahead for the progress of the two-stage van Rompuy Report on moving to a genuine EMU.  View Article





© Graham Bishop

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