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10 January 2013

This week in "Brussels"
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Articles from 20 December 2012 - 10 January 2013

Banking

BIS: Group of Governors and Heads of Supervision endorse revised liquidity standard for banks
The Group of Governors and Heads of Supervision (GHOS), the BCBS oversight body, met today to consider the Basel Committee's amendments to the Liquidity Coverage Ratio (LCR) as a minimum standard. It unanimously endorsed them. (Includes link to Mervyn King remarks.)  View Article
Commissioner Barnier on the impact of the latest Basel Committee liquidity developments for Capital Requirements (CRD IV) in the EU
Barnier welcomed the unanimous agreement reached by the Basel Committee on the revised liquidity coverage ratio and the gradual approach for its phasing-in by clearly defined dates, calling it significant progress.  View Article
EBF: Basel Committee's liquidity standards in keeping with difficult economic times
EBF welcomes the revisions to the Liquidity Coverage Ratio (LCR) just endorsed by the Group of Governors and Heads of Supervision (GHOS), the BCBS oversight body, and agrees with the GHOS that the LCR is an essential component of the Basel III reforms.  View Article
BBA: Changes to liquidity rules are good news for the economy
BBA welcomed the revision of the Liquidity Coverage Ratio (LCR) and said it was delighted that a decision was finally able to be reached. It will reduce the uncertainty that banks and their investors face.  View Article
EACT/Raeburn: Relaxation of Basel III - How excited should we be?
While Raeburn finds Basel's announcement of a relaxation of the original proposals for the Liquidity Coverage Ratio (LCR) interesting for the non-financial sector on at least two counts, he also says it is challenging to write about the topic.  View Article
Reuters: Banks' victory on liquidity will still cost them dear
What first appears as a victory for banks in their battle to dilute draconian rules on liquidity will still mean they have to find trillions of dollars to protect themselves against their funds running out. (Includes quote from Graham Bishop.)  View Article
BIS: Fourth FAQs on Basel III's counterparty credit risk and exposures to central counterparties
The Basel Committee on Banking Supervision today issued frequently asked questions (FAQs) on Basel III's counterparty credit risk rules and the interim framework for bank exposures to central counterparties (CCPs).   View Article
EBA: Update on supervisory reporting requirements for liquidity and leverage ratio
The European Banking Authority published feedback documents and amended templates following the consultations on Draft ITS on supervisory requirements for: liquidity coverage and stable funding; and leverage ratio.   View Article
DG MARKT: Summary of replies to consultation on recommendations of the HLEG on reforming structure of EU banking sector
This note is structured to cover each of the five main areas of recommendations made by the Group. The proposal for the mandatory separation of bank trading activities was subject to most comment and controversy, especially from responding banks, and hence is summarised in more detail.  View Article
EIB capital increase approved by all 27 EU Member States
The capital increase of €10 billion will allow Europe's long-term lending institution to provide up to €60 billion, over a three-year period, in additional lending for economically viable projects across the European Union.  View Article
Basel Committee issues "Principles for effective risk data aggregation and risk reporting - final document"
The Basel Committee on Banking Supervision issued its Principles for effective risk data aggregation and risk reporting. The implementation of these Principles will strengthen risk management at banks, in particular G-SIBs, thereby enhancing their ability to cope with stress and crisis situations.  View Article
Basel Committee on Banking Supervision (BCBS) Charter
The new Charter sets out the Committee's objectives and key operating modalities, and is designed to improve understanding of the Committee's activities and decision-making processes.  View Article
BIS appoints Peter Zöllner to head its Banking Department and Christian Noyer to continue as Chairman of BIS Board
The Board of Directors of the BIS announced the appointment of Peter Zöllner as Head of its Banking Department and announced the re-election of Christian Noyer, Governor of the Bank of France, for a second three-year term as Chairman of the BIS Board.   View Article
UK Parliament: Ring-fence needs electrification, says Banking Commission report
The Parliamentary Commission on Banking Standards has published its first report. The report contains the Commission's consideration of the Government's draft Financial Services Bill and associated proposals which give effect to the recommendations of the Independent Commission on Banking.  View Article
FT: UK urges EU to adopt banking reforms
The British government on Tuesday urged Germany and other European nations to implement an EU-commissioned report on banking that recommended erecting ringfences to separate banks' high street operations from riskier investment banking.  View Article
Bundesbank/Weidmann: "There is light at the end of the tunnel"
In an interview with WirtschaftsWoche, Deutsche Bundesbank President Weidmann discussed the euro crisis and the ECB's new supervisory role.  View Article
Bruegel/De Sousa & Wolff: Banking union for non-EA countries
In a recent article, the authors estimated the total assets and number of banks in the euro area under direct ECB supervision, according to the agreed criteria of the SSM. They now extend the research to all EU countries.   View Article
Bank of Finland: Rules for counterparties and customers
The ECB's Guideline ECB/2011/14 on monetary policy instruments and procedures of the Eurosystem was amended by Guideline ECB/2012/25. The Bank of Finland's rules for counterparties and customers are amended in accordance with the Guideline and will become effective on 3 January, 2013.  View Article
EPC: The 2013 euro payments outlook
In this EPC Newsletter article, the authors argue that when taking a close look at the broader picture, it becomes clear that the European Commission is determined to drive forward its vision of an integrated, efficient and stable euro payments market through regulatory action.   View Article
State aid: Commission approves resolution plan for the Dexia group
The European Commission has authorised aid granted by Belgium, France and Luxembourg for the orderly resolution of the Dexia group, the sale of its subsidiary DMA (Dexia Municipal Agency) and the restructuring of Belfius (formerly Dexia Banque Belgique).  View Article

Securities

Commission Delegated Regulations on OTC derivatives, CCPs and TRs: Extension of the scrutiny period for the EP/EC
The Chair of the ECON committee has requested the extension of the scrutiny period by one month until 19 February, 2013.  View Article
IMF: Capital requirements for over-the-counter derivatives central counterparties
This paper argues that there are considerable benefits from having prudential authorities adopt a more prescriptive approach to central counterparties' risk buffers, in line with recent enhancements to the capital regime for banks.  View Article
DG MARKT: Summary of responses received to the Commission's Green Paper on shadow banking
There is general support for the European Commission's initiative in this area. Work should continue to improve the regulatory system in the EU and to ensure global consistency.  View Article
EBA opinion on the EC's consultation on a possible framework for the recovery and resolution of financial institutions other than banks
In general, the EBA believes it important that any future regime should strengthen the legal framework and seek to harmonise the regimes for recovery and resolution across the European Union to avoid regulatory arbitrage and thus potential customer or taxpayer detriment.  View Article
ISDA response to Consultation on a possible recovery and resolution framework for financial institutions other than banks
ISDA commended the EC for its consideration of the issues raised by a possible recovery and resolution framework, emphasising a number of overarching points.  View Article
ESMA proposes guidelines on the scope of the CRA Regulation
The European Securities and Markets Authority (ESMA) has launched a Consultation Paper on Guidelines and Recommendations on the scope of the CRA Regulation. Deadline for comments is 20 February, 2013.  View Article
IOSCO publishes two reports advancing its work on Credit Rating Agencies
IOSCO published two reports on CRA: the final report on 'Credit Rating Agencies: Internal Controls Designed to Ensure the Integrity of the Credit Rating Process and Procedures to Manage Conflicts of Interest', and a consultation report on 'Supervisory Colleges for Credit Rating Agencies'.  View Article
SIFMA issues 2013 Municipal Bond Issuance Survey
Compiled from responses provided by large and regional municipal bond underwriters and dealers, the report forecasts what type of activity is expected in the taxable and tax-exempt municipal securities market in 2013.  View Article
FSA: Financial Conglomerates Directive - Technical review amendments
This is a joint consultation with HM Treasury setting out how the UK intends to transpose amendments made to the Financial Conglomerates Directive, following a European Commission-led technical review of the Directive. Deadline for comments is 21 March, 2013.  View Article
FT: LSE in cut-price clearing house deal
The London Stock Exchange has agreed to buy LCH.Clearnet, the European clearing house, in a deal worth about €340 million, shaving more than €100 million off the original offer price.  View Article
Hedgeweek: IntercontinentalExchange and NYSE Euronext enter clearing services agreement
ICE Clear Europe and Liffe Administration and Management have entered into a clearing services agreement, by which ICE Clear Europe will provide clearing services to the London market of NYSE Liffe.  View Article

Insurance

EIOPA: US insurance dialogue outlines the way forward
After a year of intense discussions examining how to facilitate the business environment, increase consumer protection and contribute to more efficient supervision, seven common objectives were agreed, which will be further specified in a detailed project plan of activities to be developed in 2013.  View Article
Insurance Europe welcomes EU-US Dialogue publication of "Way Forward" document
Insurance Europe supports the dialogues on insurance regulatory issues between EU and US policymakers, and welcomes the transparency and long-term commitment shown by policymakers on both sides through the recent publication of their "Way Forward" document.  View Article
EIOPA: Risk Dashboard
The European Insurance and Occupational Pensions Authority published its risk dashboard (December 2012), assessing the main systemic risks and vulnerabilities faced by the European insurance industry.  View Article
EIOPA: Revised Technical Specifications for the Solvency II valuation and Solvency Capital Requirements calculations
This technical specification is a working document proposed by EIOPA to be used by insurance and reinsurance undertakings participating in any quantitative assessment to be undertaken until a new update is available.   View Article
Letter from DG MARKT/Faull to EIOPA/Bernardino on long-term guarantees package
Faull informed Bernardino that both co-legislators had finally achieved an agreement on the Terms of Reference for the technical assessment of the long-term guarantees package.  View Article
Insurance Europe: Concerns over timing of EIOPA long-term guarantee impact assessment
Insurance Europe welcomes the impact assessment by the European Insurance and Occupational Pensions Authority (EIOPA) on measures to deal with long-term guarantee issues in Solvency II. However, a number of concerns remain, including the deadline for the submission of results.  View Article
Risk.net: Lack of clarity on calculation parameters jeopardises long-term guarantees test
Insurers will struggle to participate in the exercise to assess the impact of Solvency II on products with long-term guarantees if the full technical specifications for the exercise are not published imminently, experts warn.  View Article
Insurance Europe: Piecemeal implementation of Solvency II must be avoided
Insurance Europe welcomes EIOPA's endeavours to avoid piecemeal implementation of Solvency II by national regulators. A consistent approach to EU regulation is essential, particularly for insurance groups that operate cross border.  View Article
Risk.net: Insurers grapple with Solvency II economic capital projections
Solvency II's requirement for insurers to project capital calculations forward over a number of years is a significant challenge for insurers that are still grappling with modelling their year-one requirements.   View Article
FTAdviser: Solvency II may 'never manifest in the form envisaged'
Ongoing delays to the European legislative programme bringing in tough new capital adequacy rules could mean the proposals "never manifest in the form originally envisaged" and leave firms that invested in systems in preparation at a disadvantage, according to Cirencester Friendly.  View Article
Risk.net: Insurers look to negotiate CSAs ahead of new clearing rules
Insurers are seeking greater protection for their derivatives trades, but efforts to renegotiate credit support annexes (CSAs) with counterparties are proving to be protracted and insurers are looking at ways to sidestep new regulatory burdens.   View Article
Insurance Journal: Any prospects for insurance regulatory changes in 2013?
Charles E Boyle reports that progress in making insurance regulatory changes has been slow, with really nothing to indicate that the situation will change in the near future. However, the US has managed to make some relevant changes, despite the fact that it has 50 different regulatory bodies.  View Article

Asset Management

IPE: Don't let Basel III get your hopes up about Solvency II
The Basel Committee's recent decision to soften capital requirement rules for banking institutions is unlikely to soften the hearts of European regulators on other issues, a number of pension experts have warned.  View Article
IPE: IORP - Is there light at the end of the tunnel?
Several pensions experts said that the European Commission may be thinking of "watering down" the first pillar and focusing instead on the second and third pillars.  View Article
IPE: Regulator blocked UK Coal from transferring pension assets to PPF
The UK's Pensions Regulator (TPR) stopped UK Coal from transferring all or part of its two pension schemes to the Pension Protection Fund (PPF).  View Article
IPE: Dutch pension funds increase eurozone exposure by 5 per cent in Q3
The combined investments of Dutch pension funds in the eurozone have increased by €12 billion to €232 billion during the third quarter of 2012, according to figures from supervisor De Nederlandsche Bank (DNB).  View Article
SEC staff preview top hedge fund enforcement trends for 2013
Bruce Karpati, chief of the Securities and Exchange Commission's enforcement division's asset management unit, suggested where the SEC may be heading regarding hedge fund oversight in the months to come.  View Article
Hedgeweek: Jersey cites business as usual following publication of AIFMD rules
Jersey is ideally placed to embrace the requirements of the Alternative Investment Fund Managers Directive (AIFMD), according to Jersey Finance and the Jersey Funds Association, following the publication of the European Commission's Level II implementation rules.  View Article

Corporate Governance/Accounting

ECIIA: Action Plan - EU Company Law & Corporate Governance
ECIIA published a summary of the Commission's Action Plan. Of key interest to companies are: new non-financial disclosure requirements and mandatory vote on remuneration policy and report, proposals on shareholder identification, voting policies, and possible recommendation on comply or explain.   View Article
FEE comments on IESBA Exposure Draft "Responding to a Suspected Illegal Act"
FEE published its comment letter to the IESBA on ED "Responding to a Suspected Illegal Act" with proposed changes to the IESBA Code of Ethics for Professional Accountants ("the Code").  View Article
EBF response to the IFRS Foundation proposal to establish an Accounting Standards Advisory Forum
The EBF supports the objective of the IFRS Foundation and the IASB to formalise, rationalise and streamline the relationships with the national standard-setters and other regional bodies.  View Article
EFRAG response to the IFRS Foundation proposal to establish an Accounting Standards Advisory Forum
EFRAG welcomes the proposal of the IFRS Foundation to establish an Accounting Standards Advisory Forum as a multilateral technical discussion forum of an advisory nature.  View Article
IASB: Leading European national standard-setters' joint comment letter on the proposed Accounting Standards Advisory Forum
The IFRS Foundation has posted a joint letter received from the national standard-setters of Germany (DRSC e.V.), France (Autorité des normes comptables), the UK (FRC) and Italy (Organismo Italiano di Contabilitá), commenting on the proposed creation of an Accounting Standards Advisory Forum.  View Article
FASB: Improvements to accounting for credit losses on financial assets
The FASB issued for public comment a proposal to improve financial reporting about expected credit losses on loans and other financial assets held by banks, financial institutions, and other public and private organisations. Comments are invited on the letter by April 30, 2013.  View Article
Telegraph: EC to review 'dangerous' IFRS
A group of leading British investors has secured a pledge from the EC that it will intervene to deal with fears that bank accounting rules are "dangerously flawed". Critics of IFRS have maintained that the way Britain adopted them left its banks uniquely vulnerable.  View Article
Deloitte: Third Global IFRS Banking Survey — Still far from land?
The survey highlights the views of 70 of the world's major banking groups and global systemically important financial institutions (G-SIFIs) on accounting change.  View Article
EFRAG/OIC: Feedback Statement on the Discussion Paper 'Accounting for Business Combinations under Common Control'
EFRAG and the Organismo Italiano di Contabilità published the Feedback Statement, 'Accounting for Business Combinations under Common Control'. The Feedback Statement has been prepared for constituents to consider the analysis of comment letters received, together with EFRAG's and OIC's responses.  View Article
FASB: Proposed clarification to fair value disclosure exemption
The FASB issued for public comment a proposed Accounting Standards Update intended to clarify the scope and applicability of a disclosure exemption that is specific to private companies and non-public not-for-profit organisations. Comments on the proposal are invited by January 22, 2013.  View Article
IASB/IFRS Foundation issued fair value measurement educational material
The IFRS Foundation issued the first chapter of educational material to accompany IFRS 13 Fair Value Measurement. This chapter covers the application of the principles in IFRS 13 when measuring the fair value of unquoted equity instruments within the scope of IFRS 9 Financial Instruments.   View Article
EFRAG: Draft comment letter on the equity method - share of net asset changes
EFRAG has issued its draft comment letter on the IASB's Exposure Draft ED/2012/3, 'Equity Method: Share of Net Asset Changes'. Comments on the letter are invited by 28 January, 2013.  View Article
EFRAG: Invitation to comment on draft endorsement advice and draft effects study report on Investment Entities
EFRAG has issued an Invitation to Comment relating to the endorsement for use in the EU of Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). Comments are requested by 28 January, 2013.  View Article
FRC: Consultation proposals on the draft Auditor Regulatory Schemes
The FRC published consultation proposals on the draft Auditor Regulatory Sanctions Procedure. All responses to the consultation are invited on or before Friday, 1 March 2013.  View Article
FRC invites comments on IAASB's ED of revised ISA 720 on the auditor's responsibilities
FRC would welcome comments on the IAASB's ED of ISA 720 (Revised), "The Auditor's Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor's Report Thereon", by 15 February 2013, before it finalises its response to the IAASB.  View Article
EFRAG: Draft comment letter on the IASB's ED/2012/4 Classification and Measurement: Limited Amendments to IFRS 9
EFRAG published its draft comment letter to the IASB on its ED Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010)), seeking feedback from its constituents. Comments are invited by 18 March, 2013.  View Article
EFRAG: Draft comment letter on the tentative rejection notice from the IFRIC on negative interest rates: implications for presentation
EFRAG published its draft comment letter on the IFRS Interpretations Committee's tentative rejection notice on IAS 39 Financial Instruments: Recognition and Measurement, Negative interest rates: implications for presentation in the statement of comprehensive income. Comments: by 15 January, 2013.  View Article

Financial Services Policy

Irish Times: Quinn hopes to simplify EU-wide recognition of state qualifications
During the Irish presidency of the union, attempts will be made to make "significant progress" on easing the red tape involved in having professional qualifications recognised between EU Member States.  View Article
FSA sets out four RDR thematic reviews for this year
The four reviews will be carried out over three cycles in 2013 and will cover professionalism, charging structures, description of services and market distortions.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop's Blog: The euro crisis: The life-threatening cancer is only in remission! Could the US fiscal cliff be the last straw?
Economic growth is the key to a brighter outlook for 2013. Probably the biggest risk comes not from within Europe itself but across the Atlantic where the struggle to avoid falling over the 'fiscal cliff' is continuing right up to the cliff edge.  View Article





© Graham Bishop

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