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25 July 2013

This week in "Brussels"
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Articles from 18 July 2013 - 25 July 2013

Banking

European Commission: New rules on Payment Services for the benefit of consumers and retailers
In order to adapt the EU payments market to the opportunities of the single market and to support the growth of the EU economy, the Commission adopted a package including: A new payment Services Directive ("PSD2"); and a proposal for regulation on interchange fees for card-based payment transactions.  View Article
VP Almunia: Introductory remarks on proposal for regulation on interchange fees for cards, Internet and mobile payments
In a joint press conference with commissioner Barnier, Almunia explained why the Regulation of Interchange Fees was needed, and then went on to say a few words about the revised Payment Services Directive.  View Article
EBF: A cap on MIFs is likely to impact negatively card payment services
Europe's banks are concerned that putting a ceiling on interchange fees will impact the business models of card issuers and acquirers (i.e. invert the traditional model from a merchant pay model to a consumer pay model) and may jeopardise the sustainability of current card payment services.  View Article
EBF: Payment Services Directive - Innovation and security should go hand in hand
Europe's banks expressed serious concerns, notably over the approach adopted by the new Directive on third-party access to payment accounts.  View Article
Lithuanian Presidency: Banking Union will strengthen EU internal market
President Grybauskaitė met with Commissioner Barnier to discuss the key tasks of the Lithuanian Presidency in strengthening the EU internal market. The focus of the meeting was on further progress in building a Banking Union.  View Article
Bundesbank: European SSM for banks – First step on the road to a Banking Union
Although the Banking Union cannot solve the current crisis, it can play a valuable role in making crises less likely in the future. Ongoing work on the Banking Union should also involve examining the legal basis of the SSM and investigating potential improvements.  View Article
Luigi Zingales: German banks on top
The Banking Union is not a scheme to burden German taxpayers with the losses of failed southern European banks, writes Zingales in this European Voice article. Rather, it is a mechanism to render all banks (including German ones) accountable for their own mistakes.  View Article
Basel Committee issues proposed requirements on banks' disclosure of the Liquidity Coverage Ratio
BCBS has issued a consultative document, 'Liquidity coverage ratio disclosure standards'. Comments should be submitted by 14 October, 2013.  View Article
BIS: FSI Survey - Basel II, 2.5 and III Implementation
The Financial Stability Institute (FSI) published the results of its 2013 survey by disclosing the information received from 74 non-BCBS/non-EU jurisdictions. Survey results are presented in three parts.  View Article
EBA publishes a Recommendation on the preservation of capital
The EBA published a Recommendation on capital preservation addressed to supervisory authorities in all EU Member States. The Recommendation aims to preserve the enhanced capital base that banks built by 30 June 2012, in response to the EBA's 2011 recapitalisation Recommendation.  View Article
EBA launches QIS exercise on prudent valuation
Following the publication of the consultation paper on draft RTS on prudent valuation, the EBA launched a Quantitative Impact Study to assess the capital impact of the proposals for the calculation of additional value adjustments (AVAs).  View Article
EBA consults on draft RTS on close correspondence for own-issued covered bonds
EBA launched a consultation on draft RTS on close correspondence between the fair value of an institution's covered bonds and the fair value of its assets. The consultation runs until 1 September, 2013.  View Article
BaFin: Manipulation of reference interest rates
"Our ultimate goal has to be to find alternatives to these reference interest rates. The global financial system cannot afford to work with benchmarks that are largely based on estimates", said BaFin president, Dr Elke König.  View Article
Barr & Vickers: Banks need far more structural reform to be safe
Services upon which people depend should be better protected, write Barr & Vickers in this FT article.  View Article

Securities

ECB further reviews its risk control framework allowing for a new treatment of asset-backed securities
To maintain adequate risk protection, the ECB regularly adjusts its collateral eligibility rules and haircuts applied when accepting collateral in Eurosystem monetary policy operations. In addition, some measures aim to improve the overall consistency of the framework.  View Article
EBF welcomes EU/US agreement on derivatives
Banks have consistently supported convergence of rules and close and efficient cooperation between regulators of the derivatives market, which is largely transatlantic.  View Article
Derivatives Reform: Preparing for an uncertain data landscape
A shift to derivatives, coupled with the creation of swap execution facilities and the potential "futurisation" of swaps onto exchanges, will make location key for derivatives markets and brokers seeking to bolster the value of their data.  View Article
2003 ISDA Credit Derivatives Definitions – Note on implementation timing proposal and key changes
An ISDA working group comprising members of ISDA's Credit Steering Committee (ISDA's product steering committee for credit derivatives) has been discussing proposals to amend the 2003 ISDA Credit Derivatives Definitions.  View Article
ISDA publishes 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol and Reporting Guidance Note
The Reporting Guidance Note provides guidance on some of the issues that arise in respect of the reporting obligations under EMIR, and includes draft language that market participants can use as part of their tool kit for compliance with those reporting obligations.  View Article
FN: Dark pool call to transform corporate bond trading
European buyside traders have called for a fresh approach to corporate bond trading to ease the problems of liquidity which the market is expected to face when new regulations come in for fixed income next year.  View Article

Insurance

EIOPA publishes results of peer reviews on internal models
The Report summarises best practices in the areas of communication, reviews, planning, pre-application packages, training and colleges of supervisors, and outlines a number of recommendations addressed to NSAs and EIOPA.  View Article
Insurance Europe: Key messages on the EIOPA report on the LTGA
Insurance Europe believes the EIOPA proposals do not fully address the underlying issues and concerns, particularly the volatility and pro-cyclical incentive features of Solvency II. It lists changes needed to the design and the calibration of the EIOPA proposals in order to make them workable.  View Article
Risk.net: Solvency II interim measures 'inconsistent' and 'overly prescriptive', say insurers
European insurers have branded proposals for Solvency II interim measures as inconsistent and overly prescriptive, warning they risked piling additional costs on the sector.  View Article
Risk.net: Insurers protect against Solvency II disqualification with transforming instruments
Insurers are adding new features to their hybrid debt instruments in response to continued uncertainty around Solvency II, in order to protect themselves should the instruments fail to meet the requirements of the new capital rules.  View Article
IAIS Releases G-SII assessment methodology and policy measures, macro-prudential policy and surveillance framework
The International Association of Insurance Supervisors released its assessment methodology and policy measures for global systemically important insurers, or G-SIIs, as well as an overall framework for macro-prudential policy and surveillance.   View Article
Insurance Europe: Proposals to address systemic risk in insurance are inappropriate
Insurance Europe supports efforts by policymakers to ensure financial stability but believes that a system that leads to the identification of insurers, rather than specific activities, that might pose systemic risk is not correct.  View Article
IIF: Leading insurers support FSB and IAIS's objective to preserve resilience of global financial system
The IIF supports the work of policy-makers to contain systemic risk and foster stability of the global financial system, and emphasises the stabilising role of international insurance groups in the global economy.  View Article
Risk.net: G-SII proposals signal acceleration of plans for global capital standard
The IAIS's new capital requirements for G-SIIs will lay the foundation for a global capital standard for all insurance groups. But there are concerns as to whether a global capital standard could be applied uniformly across all jurisdictions, despite efforts to converge accounting practices.  View Article
FSB identifies an initial list of G-SIIs
The FSB has endorsed the assessment methodology and policy measures published by the IAIS, and has named the first nine globally systemically important insurers (G-SIIs).  View Article
GFIA: Insufficient recognition of insurance specificities in G-SII proposal
The GFIA is disappointed that greater recognition has not been given to the specific characteristics of the insurance business model in the FSB's publication of a methodology to identify G-SIIs, a list of G-SIIs and the measures to be applied to them.  View Article
Deloitte: Treatment of systemic insurers must reflect fundamental differences between banking and insurance
Deloitte commented on the FSB's list of global systemically important insurers, saying that publication of the list would not end the debate or controversy,  View Article
PwC comments on FSB announcement of G-SII companies
"Whilst the debate around whether an insurer is systemically important is still contested, the release of this list represents the first step in a process which will potentially culminate in additional levels of regulatory capital being held."  View Article
Risk.net: 'Opaque and arbitrary' systemic risk methodology frustrates insurers
G-SIIs have been designated using an opaque and arbitrary assessment methodology that provides no guidance to firms on how to reduce their systemic riskiness, experts say.  View Article
CRE: Risk managers must consider eurozone breakup when structuring insurance, say experts
Risk managers should consider the implications of a eurozone breakup when structuring their insurance programmes, according to speakers at an AIG event in London this week.  View Article

Asset Management

EIOPA publishes Report on Market Developments in cross-border IORPs
This report provides a general overview on the developments in cross-border arrangements of IORPs, and shows the evolution in the number of cross-border IORPs, as formally notified to Member States during the course of a 12-month period from June 2012 until June 2013.  View Article
Insurance Europe: Consumer protection in pensions requires different approach
EU-wide certification schemes and voluntary codes are not the right tools for improving consumer protection in pension products across the EU, Insurance Europe said in its response to a European Commission staff working document on consumer protection in third-pillar (private) retirement products.  View Article
ALFI response to the Commission's Consultation on consumer protection in third-pillar retirement products
ALFI underlined its conviction that better informing and educating the investor will be absolutely key to achieving successful third-pillar retirement products.  View Article
EuroFinUse: Response to the Consultation by DG SANCO on Consumer protection in third-pillar retirement products
EuroFinUse is pleased that the EC is aware of some of the severe problems currently existing in the area of private pensions, such as regulatory fragmentation, lack of transparent and clear information for consumers, and difficulties for consumers to choose between different substitutive products.  View Article
FT: Private Polish pensions face the chop
Investment managers such as Aviva, ING and Axa risk being stripped of assets in a mooted dismantling of Poland's private pension system.  View Article
IPE: Austrian pension reform best possible given circumstances
The PKG-Novelle – Austria's latest reform of the law governing Pensionskassen – was the "best possible solution" within the existing system, but more reform is needed at the European level, according to Peter Braumüller, head of the insurance and Pensionskassen division at supervisor FMA.  View Article
ESMA finalises supervisory cooperation agreements for alternative investment
ESMA has approved seven cooperation arrangements between EU securities regulators and their global counterparts with responsibility for the supervision of alternative investment funds, including hedge funds, private equity and real estate funds.  View Article
FN: AIFMD - How far has it come?
On 22nd July, four years after its initial draft in 2009, the new AIFMD legislation came into force. So far, only seven of the 28 EU Member States have put the laws in effect: Sweden, the UK, Denmark, Germany, Malta, Ireland and Luxembourg.  View Article
Ireland implements the AIFMD
Ireland is among the first European jurisdictions fully to implement the Alternative Investment Fund Managers Directive (AIFMD) in advance of the 22 July 2013 deadline.  View Article
AIMA/EY survey finds mixed progress towards AIFMD transposition
Uneven progress is being made in implementing the AIFMD across the EU, according to a joint study by the Alternative Investment Management Association (AIMA), the global hedge fund industry association, and EY, the multinational professional services firm.  View Article
EVCA comments on the AIFMD entering into force across the EU
EVCA Chairman George Anson said: "European private equity has invested more than €270 billion into 22,000 European companies in the last five years. It is appropriate that private equity is regulated at a European level, as befits a significant and established asset class."  View Article
EVCA urges European Commission to ensure AIFMD is implemented consistently
EVCA's Michael Collins looks at what the entry into force of the AIFMD signifies for the industry and for the European businesses in which it invests.  View Article
Investment Europe: AIFMD may work if AIFMs and investors act responsibly, says BDO's Carroll
Michelle Carroll, partner in the financial service team at BDO, says investors and providers alike cannot shirk responsibilities just because AIFMD puts alternative investment funds within an EU regulatory framework.  View Article
Deutsche Bank: Charting a smooth course through AIFMD implementation
The AIFMD will certainly impact responsibilities, liabilities and risk for EU AIF managers and their prime brokers, depositaries, administrators and custodians. But with the right approach, implementing its provisions need not be as disruptive as some fear.  View Article
Hedgeweek: AIF managers need to adopt a UCITS mindset for AIFMD
The EU-wide AIFM Directive is set to shake up the apple cart somewhat, in terms of how hedge fund managers approach internal governance. Many London-based managers are, of course, perfectly comfortable with their compliance obligations under the FCA (formerly FSA).  View Article
Taxand: AIFMD - The positive and negative tax implications
The AIFMD creates supervision and monitoring for managers of alternative funds. Although it does not primarily address tax, it will have significant tax implications.  View Article
ASIC and European Union authorities cooperate on alternative investment funds
ASIC has entered into 29 supervisory cooperation arrangements with EU securities regulators, agreeing to help each other supervise fund managers operating across borders.  View Article

Corporate Governance/Accounting

ESMA: Consultation on accounting enforcement guidelines
ESMA has launched a consultation on Guidelines on the enforcement of financial information published by listed entities in the EU. The closing date for responses to this consultation is 15 October, 2013.  View Article
ESMA: Activity Report of the IFRS Enforcement activities in Europe in 2012
This report provides an overview of the monitoring of compliance of financial information with IFRS and the taking of appropriate enforcement actions in the EEA in the year ended 31 December, 2012.  View Article
EFRAG: Invitation to comment on IFRIC 21 Levies
EFRAG has issued an Invitation to Comment relating to the endorsement for use in the EU of the IFRIC Interpretation 21 Levies. Comments are requested by 2 September, 2013.  View Article
EFRAG's feedback statement on employee contributions
EFRAG has issued a feedback statement following the publication of its final comment letter on the IASB Exposure Draft, 'Defined Benefit Plans: Employee Contributions'.  View Article
EFRAG reports on the findings of the field test on the IASB ED Financial Instruments (expected credit losses)
EFRAG published a field test report summarising the findings from its field test on the IASB ED Financial Instruments: Expected Credit Losses. The field test was undertaken by EFRAG and the National Standard-Setters from France, Germany, Italy and the UK.  View Article
EFRAG's feedback statement on Financial Instruments (expected credit losses)
EFRAG has issued a feedback statement following the publication of its final comment letter on the IASB Exposure Draft Financial Instruments: Expected Credit Losses.   View Article
IASB publishes discussion paper on the conceptual framework
IASB published for public comment a Discussion Paper exploring possible changes to the IASB's Conceptual Framework for Financial Reporting. The Discussion Paper is the first step towards issuing a revised Conceptual Framework. It is available for comment until 14 January, 2014.  View Article
IASB/Coopen: Framework rethink will shape the landscape for investors
IASB's Stephen Coopen reviews the IASB's Discussion Paper on conceptual framework and its changes for financial reporting.  View Article
FRC highlights importance of IASB's conceptual framework
The FRC welcomed the publication by the IASB of its Discussion Paper on a new version of its Conceptual Framework, which provides the fundamental basis for development of IFRS.   View Article
IASB: Post-implementation review of IFRS 8 Operating Segments
The IASB announced the completion of its Post-implementation Review of IFRS 8 Operating Segments. The purpose of the review was to consider whether the new Standard is functioning as anticipated, has achieved its objectives, and has improved financial reporting.   View Article
EuropeanIssuers: AFEP position on Integrated Reporting
The French Association of Private Companies (AFEP) commented on the IIRC's consultation draft on the international integrated reporting framework.  View Article
ACCA: Current levels of non-financial disclosure are not sufficient for assessing materiality
According to a survey by Eurosif and ACCA, the overwhelming majority of investors want European companies to be more consistent and transparent in their non-financial reporting.   View Article
FT: Quarterly reports come too late for modern investors
Mark Schneider looks at how information technology has reshaped the world of finance, saying that there is one part of the industry where it appears to be frozen in time: quarterly reporting.  View Article
IAASB reports on findings from post-implementation review of the clarified ISAs
The IAASB published its Post-Implementation Review, a Report that highlights the results of the IAASB's efforts to learn whether the clarified ISAs are being consistently understood and implemented in a way that achieves the IAASB's goals in clarifying and revising them.   View Article
UK Competition Commission: Measures to promote a more competitive audit market
The CC published a provisional decision regarding the remedies it is considering introducing when it publishes its final report on the supply of statutory audit services to large companies in the UK this autumn. Responses are requested in writing by 13 August, 2013.  View Article
FRC response to Competition Commission's proposed remedies
The FRC appreciates that the Competition Commission has removed the proposed requirement for mandatory auditor rotation. However, the FRC has concerns over a number of its other proposed measures and the related costs.   View Article
BDO LLP response to UK Competition Commission's proposed remedies
"We are pleased that the Competition Commission is proposing a package of measures to address the flawed structure of the larger company audit market. BDO LLP has long campaigned for change in the market and welcomes the Commission's proposed remedies."  View Article
FT: Audit remedies fail to please Big Four's critics
The Competition Commission's investigation into the dysfunctional UK audit market has generated a mountainous mass of paperwork since it started in late 2011. The remedies it announced on Monday were too lightweight for some, however.  View Article
Jonathan Guthrie: Watchdog bottles out of auditing challenge
Writing for the FT, Guthrie says that although British sportsmen may no longer bottle out of big challenges, the propensity lives on at the Competition Commission, which has decided against mandatory switching of auditors.  View Article

Financial Services Policy

Fighting fraud: Annual report underlines need for strong measures to protect EU budget
Fraud affecting the EU budget increased slightly in 2012 compared to 2011, according to the Commission's annual report on the "Protection of the EU's Financial Interests".  View Article
ECP/Pardo: The Transatlantic Trade and Investment Partnership - A long hard road to multilateralism?
Pardo argues that the great expectations generated by TTIP, unprecedented in its scope and ambition, will be hard to meet in reality. Numerous obstacles will have to be overcome for the successful conclusion of an ambitious agreement.  View Article
Robert Schuman Foundation/Rodary: Financial reforms - Progress or regression?
The aim of this study is to make a mid-term assessment of the reforms implemented in the wake of the 2008 financial crisis.  View Article
Ensuring markets work well for consumers and for firms: FCA publishes guidance on its approach to objectives
The FCA's mandate to ensure there is effective competition in financial services markets represents the most significant change to the new regulatory regime, said Chief Executive Martin Wheatley. Comments and feedback on the guidance can be submitted to the FCA by 27 September, 2013.  View Article

European Council/Parliament

Council approves measures to tackle VAT fraud schemes
The Council adopted two Directives that will enable Member States better to combat VAT fraud, facilitating rapid reaction and allowing a specific measure to tackle so-called carousel fraud.  View Article
Council agrees position on 2014 EU budget
The Permanent Representatives Committee has endorsed the Council's position on the 2014 EU draft budget. This is the first annual budget relating to the period of the new MFF 2014-2020, on which a political agreement was reached by the Council and the EP at the end of June.  View Article

International/G20

Joint G20 summit letter: Improving global confidence and supporting global recovery
In a joint letter to the 28 EU Heads of State and Government, Presidents Barroso and Van Rompuy highlighted the key issues coming up for discussion at the G20 summit in Saint Petersburg on 5-6 September, 2013. (Includes link to IMF/Lagarde statement.)  View Article
G20 emphasises growth ahead of austerity
G20 finance chiefs agreed to place growth before austerity — a win for US views amid concern that the global recovery remains perilously weak and uneven.  View Article
Commissioner Šemeta welcomes G20 Finance Ministers' commitments on new measures to fight tax evasion and avoidance
Šemeta said the Finance Ministers' commitments confirmed a paradigm shift in international taxation – "one that will make it fairer, more effective and better equipped for the 21st century economy". (Includes VP Rehn remarks.)  View Article
OECD calls on G20 finance ministers to support next steps in clampdown on tax avoidance
The OECD presented G20 finance ministers with plans for a two-pronged attack on tax avoidance and evasion from both companies and individuals. (Includes PM Cameron statement.)  View Article





© Graham Bishop

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