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05 September 2013

This week in "Brussels"
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Articles from 25 July 2013 - 05 September 2013

Banking

Bloomberg: EU's Barnier says no plan B for single bank resolution system
The EU's top financial services official warned euro area nations that there is no alternative to a single system for handling failing banks, as he urged them to reach rapid agreement on a draft law to pool decision-making.  View Article
ECB/Asmussen: On the way to Banking Union - The ECB's point of view
Asmussen said that a European Banking Union was a prerequisite for a genuine, integrated European financial market, adding that it was very important for a central bank and that it ensured that monetary policy signals could be properly accessed anywhere in the euro area.  View Article
ECB/Mersch: The Single Market and Banking Union
Mersch highlighted three specific channels where he thought Banking Union could be strongly positive for the Single Market: By encouraging greater cross-border banking integration; by increasing confidence in banks' balance sheets; and by helping to break the bank-sovereign nexus.  View Article
Reuters: Lithuania says EU says banking deal faces national hurdles
Lithuania's central bank chief said that national interests will have to be overcome if the European Union is to secure the next step of banking union by the end of 2013.  View Article
BoF/Hakkarainen: Banking Union in the Nordic context
Hakkarainen emphasised the Nordic perspective - but with a Finnish twist, Finland being the only country in the Nordic region which is a member of the euro area, and thus by definition a full participant in the Banking Union project.  View Article
Deutsche Bank: EU Banking Union - Right idea, poor execution
Bernhard Speyer warns that there is a strong probability that the institutional arrangements will fall well short of the consistent, effective framework required to attain the objectives of Banking Union.  View Article
Finance Watch: Europe's banking trilemma - A report on Banking Union and bank structure reform
This report concludes that despite its intention, Banking Union will fail to prevent European citizens from bearing the losses of failed banks in the event of a systemic banking crisis, unless there are meaningful structural and capital reforms to Europe's largest banks.  View Article
Bundesbank/Weidmann: Banking supervision and regulation - What action does the Bundesbank consider necessary?
Speaking in Hamburg, Weidmann gave a brief overview of the state of play in banking supervision and regulation, and highlighted the steps that still needed to be taken.  View Article
CFS/Tröger: The Single Supervisory Mechanism – Panacea or quack banking regulation?
This paper analyses the evolving architecture for the prudential supervision of banks in the euro area. It is primarily concerned with the likely effectiveness of the SSM as a regime that intends to bolster financial stability in the steady state.   View Article
Reuters/Welt: Germany may file complaint against EU banks plan
The German government is considering whether to file a complaint at a European court against the European Commission's proposals on bank resolution, which it thinks might be unlawful and would require a treaty change.  View Article
ECB/Cœuré: Outright Monetary Transactions, one year on
One year after the inception of the ECB's Outright Monetary Transactions (OMTs), financial markets in the euro area are in much calmer conditions and fragmentation is receding. Yet OMTs have created turmoil elsewhere: today, it is not government bond spreads but emotions that are running high.  View Article
Basel Committee issues report to G20 leaders on monitoring implementation of Basel III regulatory reforms
BCBS has published its fourth Report to G20 Leaders on progress made in the implementation of Basel III regulatory reforms. The report has been prepared for the G20 Leaders' Summit in St Petersburg on 5-6 September.   View Article
BCBS: Instructions for Basel III monitoring
The descriptions of data items in these instructions are intended to facilitate the completion of the monitoring questionnaire and are not to be construed as an official interpretation of other documents published by the Committee.  View Article
Bloomberg: Dijsselbloem seeks tighter leverage rule for EU banks than Basel
Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of 17 euro finance ministers, will seek stricter rules on leverage for banks across Europe.   View Article
Bundesbank/Dombret: Systemic risk, too-big-to-fail and resolution regimes
Speaking at a seminar in Salzburg, Dombret rejected arguments that Basel III rules are too complex and urged that they be implemented in full: "The spirit of the Basel rules, particularly regarding risk sensitivity, should not be compromised, nor must their full implementation be called into question".  View Article
PRA consults on strengthening capital standards
The Prudential Regulation Authority published a consultation paper on changes to its rules required to implement the EU's CRD IV. These changes will affect banks, building societies and investment firms regulated by the PRA, but not insurance firms. The consultation closes on 2 October, 2013.  View Article
Reuters: EU wants one definition of bad loans for bank tests
Banks across the European Union will be asked to use a single definition for bad loans in the upcoming review of their loan books, making it harder for banks to conceal the state of their businesses behind local conventions.  View Article
FSB reports to G20 on progress and next steps towards ending "too-big-to-fail"
The report sets out the further actions that are required from the G20, the FSB and other international bodies to complete the policy initiative to end "too-big-to-fail".  View Article
Reuters: FSB's Carney warns G20 of risk of fragmented banking rules
The world's banking system risks fragmentation that could hurt growth if countries cannot settle their differences over how to handle big banks that run into trouble, a top policymaker said on Monday  View Article
ECB: A macro stress-testing framework for bank solvency analysis
This article provides an overview of the ECB's top-down stress-testing framework and presents some examples of how the framework is employed along the four policy dimensions.  View Article
BIS Working Paper: Evaluating early warning indicators of banking crises - Satisfying policy requirements
This paper claims that early warning indicators (EWIs) of banking crises should ideally be evaluated on the basis of their performance relative to the macro-prudential policy-maker's decision problem.  View Article
FINMA position paper on the resolution of systemically important banks
The Swiss Financial Market Supervisory Authority FINMA takes the view that the recovery and resolution capability of systemically important banks needs to be improved. To this end, it has published a position paper on the recovery and resolution of globally active banks.  View Article
EBF response to EBA consultation on draft RTS specifying the range of scenarios to be used for recovery and resolution
EBF welcomed the EBA draft RTS specifying the range of scenarios to be used in recovery plans under the draft directive establishing a framework for the recovery and resolution of credit institutions and investment firms.   View Article
EBF response to EBA consultation on ITS on additional liquidity monitoring metrics under article 403(2) of the draft CRR
Overall, EBF feels that the amount of new information to be reported to EBA is great and that the reporting templates are complex.  View Article
EBF response to EBA consultation on the determination of overall exposure in respect of transactions with underlying assets
EBF welcomed EBA's draft RTS based on the CEBS Guidelines and the more recent experience gathered by national supervisory authorities in the application of these Guidelines and other relevant market developments.   View Article
EBF publishes comments on the EBA consultation paper on asset encumbrance
EBF welcomed the EBA's efforts to establish a common harmonised European framework for reporting and determining the level of asset encumbrance. This will contribute to ensuring consistency when assessing the asset encumbrance of financial institutions and to creating a level playing field.  View Article
EBF response to EBA consultation on draft RTS for the definition of material risk-takers for remuneration purposes
EBF responded to the consultation on EBA's draft RTS setting criteria to identify categories of staff whose professional activities have a material impact on the institution's risk profile within the framework of CRD IV.  View Article
EBF publishes TWG comments on the draft "Regulation of the ECB on oversight requirements for systemically important payment systems"
The EBF's TARGET Working Group provided comments on the draft "Regulation of the European central bank on oversight requirements for systemically important payment systems".  View Article
EBF publishes response to BCBS's consultative document, "Supervisory framework for measuring and controlling large exposures"
EBF welcomed the fact that the BCBS had based its proposal to revise the supervisory framework for measuring and controlling large exposures on proven methods under the existing capital and large exposures regimes.   View Article
EBF response to EBA consultation on draft RTS on additional liquidity outflows corresponding to collateral needs
EBF welcomed the EBA consultation paper related to the draft RTS on additional liquidity outflows corresponding to collateral needs resulting from the impact of an adverse market scenario under Article 411 (3) of the draft CRR.   View Article
Joint Forum issues final report: Mortgage insurance - Market structure, underwriting cycle and policy implications
The Joint Forum released today its final report on Mortgage insurance: market structure, underwriting cycle and policy implications.   View Article
Bloomberg: Banks face tougher risk weights as Borg seeks Swedish probe
Swedish Finance Minister Anders Borg said the financial regulator needs to look into raising risk weights on banks' mortgage assets, as he suggested levels may still be too low after being tripled this year.   View Article
EBA, EIOPA and ESMA publish RTS on the consistent application of calculation methods under FICOD
The calculation methods described in the Financial Conglomerates Directive (FICOD) cover the assessment of the financial situation of credit institutions, insurance undertakings and investment firms which are part of a financial conglomerate.  View Article
EBA publishes second interim report on the consistency of risk-weighted assets in the banking book of EU banks
This report illustrates the outcomes of the next stage in the EBA's review into RWA consistency in sovereigns, institutions and large corporate exposures, generally referred to as low default portfolios (LDP).   View Article
EBA launches discussion on possible treatments of unrealised gains measured at fair value
EBA published a discussion paper on possible treatments of unrealised gains of assets and liabilities measured at fair value, other than including them in CET 1 without adjustment. Comments should be sent to the EBA by 27 September, 2013.  View Article
EBA consults on draft Guidelines on retail deposits subject to different outflows for the purpose of liquidity reporting
EBA launched a consultation on draft Guidelines on retail deposits subject to different outflows aimed at providing greater harmonisation in the reporting of retail deposits in the EU banking sector. The consultation runs until 1 October, 2013.  View Article
EBA consults on draft RTS related to the specific risk of debt instruments in the trading book
EBA launched a consultation on draft RTS assessing the minimum materiality needed to implement internal approaches for calculating own fund requirements related to risks associated with debts instruments in the trading book. Comments can be sent to the EBA by 15 October, 2013.  View Article
EBA publishes final draft ITS on supervisory reporting requirements
EBA published its final draft Implementing Technical Standards on supervisory reporting. They set out reporting requirements related to own funds, financial information, losses stemming from lending collateralised by immovable property, large exposures, leverage ratio and liquidity ratios.  View Article
EBA publishes first final draft technical standards on own funds and credit risk adjustment
The final draft RTS and final draft ITS on own funds, as well as its final draft RTS on credit risk adjustment (CRA) will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in Europe, and specifically at strengthening the quality of capital.  View Article
EBA consults on draft RTS on methods for identifying the geographical location of relevant credit exposures
EBA launched a consultation on draft RTS setting out criteria for identifying the geographical location of all relevant credit exposures, namely credit risk, trading book and securitisation exposures. The consultation runs until 1 November, 2013.  View Article
EACB calls on EBA for more flexibility when developing standards on material risk-takers
The EACB expressed concern about the EBA's draft standard on material risk-takers, saying it did not leave room to apply the rules in line with the different banking models, such as the decentralised networks of co-operative banks.  View Article
BBA response to EBA on material risk-takers consultation
The BBA emphasised that all of its members recognise the importance of ensuring that members of staff that are able to incur material risks on behalf of their institution should be rewarded appropriately with the right mix of fixed and variable remuneration.  View Article
EPC Newsletter: Progress of SEPA migration and recent legal and regulatory developments impacting the European payments market
Payment service users should aim to complete migration at the earliest stage possible, taking into consideration that the availability of external resources offered by banks and other service providers will be stretched to the limit before 2013 is over.  View Article
AFME comments on EBA consultation paper on draft ITS on passport notifications
AFME commented on the EBA consultation paper on draft ITS on passport notifications under articles 35, 36 and 39 of the proposed Capital Requirements Directive.  View Article

Securities

BIS: Margin requirements for non-centrally cleared derivatives - Final report issued by the Basel Committee and IOSCO
BCBS and IOSCO released the final framework for margin requirements for non-centrally cleared derivatives.   View Article
BIS: Macro-economic impact assessment of OTC derivatives regulatory reforms report issued by the MAGD
The Macro-economic Assessment Group on Derivatives' report assesses and compares the economic benefits and costs of the planned OTC derivatives regulatory reforms.  View Article
ESMA advises Commission on equivalence of non-European derivatives rules
ESMA has published its advice to the Commission on the equivalence of the regulatory regimes for OTC derivatives clearing, central counterparties (CCPs), and trade repositories (TR) of non-EU countries with EMIR.  View Article
FSB publishes reports on implementation of OTC derivatives market reforms
The FSB published a report to the G20 Leaders summarising progress in OTC derivatives reforms, together with the sixth of the FSB's semi-annual comprehensive progress reports on implementation of OTC derivatives market reforms. Feedback should be submitted by 2 October, 2013.  View Article
ECB Opinion on OTC derivatives, central counterparties and trade repositories
On 5 July 2013, the ECB received a request from the Banque Nationale de Belgique for an opinion on Articles 2 to 13 of a draft law implementing Regulation No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.  View Article
Bundesbank/Dombret: Global derivatives markets in transition
In an article published in the Börsen-Zeitung, Dombret writes: "We expect mandatory CCP clearing to be introduced in the EU under EMIR from 2014 onwards... However, we must be aware that these regulatory requirements will turn CCPs into 'juggernauts' of the international financial system".   View Article
ISDA outlines approach on cross-border issues: Principles address inter-jurisdictional recognition of derivatives regulation
ISDA has outlined a set of principles designed to help achieve the widely-held goal of a more harmonised framework of international derivatives regulations.   View Article
UK Treasury publishes FSMA (OTC derivatives, CCPs and TRs) Regulations
The Financial Services and Markets Act 2000 (FSMA) (OTC Derivatives, Central Counterparties (CCPs) and Trade Repositories (TRs)) (No. 2) Regulations 2013 SI 2013/1908 were published on 5th August. The majority of the regulations will come into force on 26th August.  View Article
ESMA proposes delay to reporting date for Exchange Traded Derivatives
ESMA has sent the European Commission a Final Report proposing an amendment to Article 5 of the ITS on reporting, in order to postpone the reporting start date of ETDs by one year.  View Article
CPSS and IOSCO issue report on authorities' access to trade repository data
The Committee on Payment and Settlement Systems (CPSS) and the International Organisation of Securities Commissions (IOSCO) have published a finalised report entitled 'Authorities' access to trade repository data' after consulting on it earlier this year.  View Article
The Trade: Trade repositories tackle reconciliation issue
Rival trade repositories have joined forces to draft recommendations for ESMA on how to share data amongst themselves.  View Article
EBF response to the EBA consultation on securitisation retention
EBF attaches great importance to regulatory proposals in the scope of securitisation, as it represents a central part of the EU financial system. Securitisations should be duly regulated and safely backed with capital requirements. Yet securitisations should still make economic sense for banks.   View Article
CPSS and IOSCO issue report on progress towards implementing the principles for Financial Market Infrastructures
The report reviews jurisdictions' progress towards implementing principles for FMIs, which includes risk management standards for financial market infrastructures such as CCPs, payment systems and securities settlement systems, and trade repositories. (Includes BIS link.)  View Article
CPSS and IOSCO issue consultative report on the recovery of FMIs
The Committee on Payment and Settlement Systems (CPSS) and the International Organisation of Securities Commissions (IOSCO) have published for public comment a consultative report on the Recovery of financial market infrastructures. Deadline for comments is 11 October, 2013.  View Article
ISDA: CCP loss allocation at the end of the waterfall
This paper is in response to industry efforts to develop an effective recovery, continuity and resolution framework for central counterparties, and reflects consensus views of the ISDA Risk and Margin Regulatory Implementation Committee (RIC).  View Article
Bloomberg: EU said to weigh curbs on collateral asset re-use in repos
Banks and brokers may face European Union curbs on the number of times a single asset can be passed on as collateral in repurchase agreements and other secured trades, according to a person familiar with the plans.  View Article
Reuters: High-frequency trading does not raise futures volatility
According to a study by Futures Industry Association, volatility in futures contracts has remained largely stable in the face of increased participation from high-speed and algorithmic traders often blamed for roiling markets.  View Article
ICE's NYSE Euronext deal will raise its game in the European derivatives market
The IntercontinentalExchange and NYSE Euronext moved closer to completing their merger after securing the requisite approval from the Securities and Exchange Commission (SEC).  View Article
Eurex to launch FX derivatives
The international derivatives market Eurex Exchange will extend its product range by introducing a further asset class.  View Article
FN: Clearing house failure could imperil buyside assets
Buyside firms could be liable for losses in the event a clearing house fails, according to a proposal outlined by a key regulatory body last week.  View Article
FSB publishes progress report and interim peer review report on credit rating agency ratings
The FSB published a progress report on reducing reliance on, and strengthening the oversight of, credit rating agencies. The progress report is accompanied by the interim peer review report on national implementation of the FSB Principles for Reducing Reliance on Credit Rating Agency Ratings.  View Article
Reuters: Europe's downgrade diary flags up new market pressures
New European rules requiring credit agencies to announce their rating decisions to a pre-set timetable are likely to expose the region's shaky sovereign borrowers to more bursts of market pressure.  View Article
IOSCO publishes recommendations for Supervisory Colleges for CRAs
IOSCO published the final report on Supervisory Colleges for Credit Rating Agencies, which recommends establishing supervisory colleges for internationally active CRAs, and provides preliminary guidelines on how to constitute and operate them.  View Article
FSB: Progress report on the oversight and governance framework for financial benchmark reform
The FSB will promote consistency in these assessments to ensure that national/regional authorities adopt a coordinated approach. It will also promote widespread support, dissemination and adoption of any principles and good practices that emerge regarding the benchmark-setting process.  View Article
Clifford Chance: Developments in European regulation on securitisation – What's left in the pipeline?
The securitisation market faces tougher regulation. Clifford Chance experts outline the current regulatory landscape and assess what may lie ahead.  View Article
FT: Financial transaction tax could 'wipe out' securities lending
Europe's proposed financial transaction tax is causing more than a little consternation among those with any involvement in the continent's securities lending industry.  View Article

Insurance

Insurance Europe: Insurance does not hinder EU freedom of movement
Availability of insurance cover is not hindering service providers or other professionals looking to provide services in an EU Member State other than their own, Insurance Europe says in its response to a European Commission consultation.  View Article
Risk.net: Insurers oppose EIOPA power grab
Insurers fear that promoting EIOPA to a de facto insurance regulator status would infringe on the national sovereignty of Member States and lead to regulations that fail to take account of the regional differences between insurance markets.  View Article
Risk.net: European Council cooks up Solvency II volatility balancer revamp
EU Member States are edging closer to an agreement on an overhaul of the volatility balancer and other elements of Solvency II's long-term guarantees package, ahead of the next round of political discussions on the Directive.  View Article
Risk.net: Bail-in tool required to resolve systemic insurers, says BoE
UK authorities should be given the power to bail-in insurers' liabilities, as part of a legislative revamp to align the national resolution framework with proposed global standards for the resolution of systemic insurers, says the Bank of England.  View Article
Reuters: German regulator fires warning shot over insurance rules
Germany could quit talks on new risk rules for Europe's insurance industry if regulators try to impose a 'one size fits all' deadline for insurers to adapt to them, a senior official at financial watchdog BaFin said.  View Article
S&P Global Credit Portal: Europe's insurers welcome EIOPA's assessment on long-term guarantees, but Solvency II uncertainty remains
EIOPA's recent assessment of the potential effect of Solvency II regulation on LTGs on life insurance products is a welcome step towards the finalisation of the new solvency regime. But S&P believes numerous hurdles remain, leaving even a planned 2016 implementation of Solvency II far from certain.  View Article
Moody’s Analytics Solvency II practitioner survey – European insurers still have substantial work to do to comply with Solvency II
This report provides an update on the progress made by the European insurance industry towards achieving regulatory compliance. It evaluates the practical approaches taken and highlights the challenges faced by insurers in implementing their Solvency II programmes.  View Article
Bloomberg: FSB extends too-big-to-fail bank resolution to insurers
The Financial Stability Board said an extended version of its guidance on the resolution of systemically important banks will apply to non-bank financial institutions, such as Allianz SE (ALV) and other large insurers.   View Article
Risk.net: Divergence fears over insurer resolution proposals
The scope of the recently-proposed global standards for the resolution of failing insurers is unclear and could lead to divergent national resolution regimes, experts are warning.  View Article
Business Insurance: SWERMA calls for Solvency II clarity for Swedish captive insurers
The Swedish Risk Management Association has written to Sweden's financial regulator to ask that its application of Solvency II rules take into account the characteristics of captive insurance companies.  View Article
Risk.net: New Danish solvency rules 'will increase capital requirements'
Danish insurers are facing increased solvency capital requirements from 2014, as the national regulator pushes forward with proposals to bring the calculation methodology more in line with Solvency II.  View Article
Risk.net: Insurers spur changes in commercial real estate loan market
Yield-hunting European insurers are slowly reshaping commercial real estate (CRE) loan structures, as they step in to fill the hole left by banks' withdrawal from the sector, market experts say.  View Article
Risk.net: Cat bond 'lite' structures raise contamination risk and insolvency fears
Experts are divided on the use of segregated accounts companies (SAC) in so-called catastrophe bond 'lite' transactions, with some suggesting they introduce an increased element of risk compared with more traditional structures.  View Article
Risk.net: Insurers developing internal model risk calibrations for non-standard credit assets
UK insurers are beginning to model non-standard credit asset classes such as infrastructure debt within their internal models, demonstrating the growing importance of these new asset classes, a survey has found.  View Article
German Financial Stability Act expands cooperation between BaFin and Bundesbank to include insurance supervision
The collaboration between BaFin and the Bundesbank has been expanded under the Financial Stability Act and now extends to BaFin's insurance supervision. Previously, there were only certain points of contact in this area: BaFin and the Bundesbank collaborated primarily on banking supervision.  View Article
Reuters: UK insurer warns on EU capital rules delay
New EU rules forcing insurers to hold enough capital must be finalised this year to avoid prolonged delay and uncertainty for markets, a top UK industry executive said.  View Article
CRE: Enhanced regulation of nine named GSIIs receives cool reception
A number of insurance associations in the US and Europe have reacted negatively to plans to regulate nine 'globally systemically important insurers' (GSIIs), branding the move premature and inappropriate.  View Article
Insurance Europe's response to Discussion Paper IV on European insurance contract law
Insurance Europe commented on Discussion Paper IV, forming the basis of discussions during the fourth meeting of the expert group on European insurance contract law (EICL) (held on 17-18 July 2013).  View Article
GFIA response to IAIS' public consultation on the issues paper on the supervision of cross-border operations through branches
Overall the Global Federation of Insurance Associations believes the Issues Paper now provides a useful account of current practices in supervising branches.  View Article
GFIA comments on OECD "Contribution of insurance to economic growth and financial stability"
If a more direct link were made between insurers as long-term investors and real economic growth as well as financial stability, the insurance industry would be shown to have a counter-cyclical and stabilising effect on financial markets and the economy.  View Article
GFIA: Upcoming G20 Summit includes a number of issues of real importance to the global insurance industry
In a letter to the G20 Presidency, GFIA highlighted four key messages which it believes should be explicitly referenced in the St Petersburg action plan.  View Article
GFIA comments on IAIS Issues Paper on policyholder protection schemes
GFIA said the IAIS's paper provided a useful overview of the features and functions of a PPS, while acknowledging that specific features need to take into account the legal and regulatory systems and culture of each jurisdiction.  View Article
Risk.net: NAIC calls for coordination of US and international systemic risk regimes
Global and US initiatives to supervise systemically important insurance companies need to be coordinated to ensure that international rules are enforceable in the US, according to officials at the National Association of Insurance Commissioners.  View Article
CRE: FSB calls for US federal insurance supervision
Completing its review of US financial services regulation, the FSB has recommended that the US authorities move toward federal oversight of insurance, as opposed to the current fragmented state-based supervision.  View Article

Asset Management

Commission's roadmap for tackling the risks inherent in shadow banking [Proposal]
The Commission has adopted a communication on shadow banking and proposed new rules for money market funds (MMFs).  View Article
S&D: All sectors of financial markets should be regulated
S&D MEPs welcomed the Commission's proposal to regulate money market funds and shed light on the shadow banking system.  View Article
EBF welcomes Commission’s communication on shadow banking, but is concerned by potential funding impact of MMF proposal
EBF welcomed the European Commission's Communication on shadowbBanking but expressed concern over aspects of the proposal for a Regulation on Money Markets Funds: "Some of these proposals do not seem particularly well-suited to Europe's reality".  View Article
ACCA: Shadow banking - Towards better identification, measurement and transparency?
ACCA said that the Commission's publication of its communication on shadow banking and the proposal for a Regulation on MMFs was a step in the right direction, but it failed to acknowledge fully the role of regulation in both creating and tackling the 'dark corners' of the financial system.  View Article
FT: EU clamps down on money market funds
Regulatory divisions over reining in "shadow banking" were laid bare by a Brussels clampdown on money market funds that falls short of Franco-German demands for a "brutal" ban yet still riles the industry and goes beyond US proposals.  View Article
Handelsblatt: Merkel plans to tackle shadow banks
Chancellor Angela Merkel still sees the need for action in the international regulation of shadow banks and hedge funds. She announced that Germany would address this issue at this week's G20 summit in St Petersburg.   View Article
SZ: Schäuble, Moscovici call for stricter rules for shadow banks
The EU wants to tighten the rules for so-called shadow banks that move billions without supervision. However, the proposal doesn't go far enough, said the German and French Finance Ministers in a letter to Commissioner Barnier.   View Article
Bundesbank/Dombret: Regulatory reforms between ambitions and reality
Dombret said that attention should be focused on the so-called shadow banking system, referring to the system as "non-bank banking".  View Article
FSB publishes policy recommendations to strengthen oversight and regulation of shadow banking
These recommendations take into account public responses received on the consultative documents issued on 18 November, 2012.  View Article
Bundesbank/Dombret: Systemic risks of shadow banking
Speaking at the Salzburg Global Seminar, Dombret said: "Addressing the liquidity risk of money market funds, procyclical credit expansion via securitised financing, and interconnections between banks and shadow banks are key regulatory reforms".  View Article
ECON Committee: Shadow Banking - Minimum Haircuts on Collateral
This note discusses the recommendations that were made in the consultation paper published by Work Stream 5 of the FSB in November 2012 on haircuts applied to the collateral used in securities financing transactions (principally 'repos' and securities lending).  View Article
Reuters: 'Shadow' banks face 2015 deadline to comply with first global rules
The $60 trillion "shadow banking" sector has been given until 2015 to comply fully with its first set of global rules, after an international regulatory task force unveiled plans to curb risk without strangling economic recovery.  View Article
EIOPA Annual Report 2012
In the course of 2012, EIOPA continued its work in its seven core areas: regulatory tasks; supervisory tasks; consumer protection and financial innovation; creation of the common supervisory culture; financial stability; crisis prevention, management and resolution; external relations.  View Article
Joint Forum publishes consultative papers on Longevity Risk Transfer Markets and Point of Sale Disclosure
The Joint Forum released two consultative reports: "Longevity risk transfer markets: market structure, growth drivers and impediments, and potential risks" and "Point of Sale disclosure in the insurance, banking and securities sectors". Deadline for comments on both reports is 18 October, 2013.  View Article
ESMA publishes opinion on draft RTS on types of AIFMs
ESMA submitted its formal opinion to the European Commission on 13 August, in response to a letter received on 8 July on draft RTS under Article 4(4) of Directive 2011/61/EU.   View Article
ESMA issues Opinion on practical arrangements for the late transposition of the AIFMD
Without prejudice to any initiatives taken by the European Commission in case of late transposition by Member States, ESMA intends to address the situation at an operational level in order to minimise, as far as possible, the impact on industry and investors deriving from lack of transposition.  View Article
Hedgeweek: Implementation of the AIFMD in Italy – First ground-breaking steps
The AIFMD entered into force on 22 July 2013, but the legal framework for the full transposition of the AIFMD in Italy is not yet in place.  View Article
PensionsEurope response to EIOPA consultation on a possible EU single market for personal pension products
PensionsEurope highlighted the need to define adequately the scope of private personal pensions, clearly differentiating personal pensions from workplace pensions. EIOPA's powers to adopt effective policy actions in this field were also examined, underlying its lack of competence in fiscal matters.  View Article
IPE: European Commission cancels assessment of IORP capital requirements
The European Commission has cancelled two impact assessments for the first pillar of the revised IORP Directive commissioned from the ECB and the Commission's Joint Research Centre in Ispra, Italy, IPE understands.  View Article
IPE: EC should avoid unnecessary changes to IORP
According to Aon Hewitt, the European Commission should drop plans to revise the current IORP Directive for occupational pensions and focus instead on tackling issues surrounding accrued pension rights.  View Article
Hedgeweek: Pension funds increasing alternative asset allocations
Pension fund alternative assets allocations now account for nearly 20 per cent of all pension fund assets across the globe, according to a study by Towers Watson.  View Article
FT: France avoids radical overhaul in pension reforms
The French government has unveiled a much-anticipated reform of its deficit-hit pension system, raising the level and duration of contributions but avoiding some of the measures demanded by the EU and others seeking a more radical overhaul.  View Article
FT: EU pension proposals 'crippling' for the UK
Deferred EU plans to force companies to plug "black holes" in their corporate pension schemes would cost the UK a "staggering" 46 per cent of GDP to implement, "crippling" the British economy, according to pension actuaries LCP.  View Article
IPE: UK state pension reform to trigger DB scheme closures
The large majority of companies already planning for the end of contracting out of the UK state pension intend to close their defined benefit (DB) scheme when the change occurs.  View Article
IPE: Irish regulator proposes minimum standards for DC
According to guidelines proposed by the Pensions Board, defined contribution (DC) funds in Ireland may soon be forced to meet minimum quality standards before they can register with the regulator.  View Article
Hedgeweek: Hedge funds and private equity funds must be ready for partnership changes
London-based consulting and outsourcing firm HedgeStart has questioned the readiness of hedge and private equity fund managers for the proposed changes to the taxation of limited liability partnerships.  View Article
The Kay Review of UK Equity Markets and Long-Term Decision-Making
The House of Commons Business, Innovation and Skills Committee reports on Professor Kay's Review, which makes recommendations for the UK Government to bring about a cultural change in the incentives driving fund-manager behaviour and to develop a set of longer-term measures of success.  View Article
FCA Consultation Paper: Capital requirements for investment firms
This Consultation Paper sets out proposed changes to the FCA Handbook as a result of the transposition of CRD IV in relation to a large number of investment firms prudentially regulated by the FCA, and subject to the Capital Requirements Directive. Deadline for comments is 30 September, 2013.  View Article

Corporate Governance/Accounting

FT: EU lawmakers seek review of accounting standards compatibility
A group of lawmakers in Brussels has added its weight to concerns about widely used accounting standards in the wake of the financial crisis. Five MEPs have called for a review of the compatibility of IFRSs – which are used in the EU and many other countries – with European company law.  View Article
IFAC: Project and investment appraisal requires greater rigour
The PAIB Committee of the IFAC released International Good Practice Guidance, Project and Investment Appraisal for Sustainable Value Creation.  View Article
EFRAG: Feedback statement on the EFRAG Round table on long-term investing activities business models
On 8 July, EFRAG organised a round table to get views on the financial reporting aspects of long-term investing business models and financial reporting issues raised in the Commission's Green Paper.  View Article
FASB: Private company council proposal on consolidation of variable interest entities
The FASB issued for public comment a proposal outlining an alternative within US GAAP for applying consolidation guidance to leasing companies under common control. Stakeholders are asked to provide comments on the ED by October 14, 2013.  View Article
FASB and IASB: Joint transition resource group for revenue recognition
The IASB and the FASB formally announced plans to create a joint transition resource group focused on the upcoming final converged standard on revenue recognition.  View Article
IASB: Post-implementation Review of business combinations standard
The IASB has begun its Post-implementation Review of IFRS 3 Business Combinations. The Business Combinations Standard sets out how an entity should account for the acquisition of another entity.   View Article
FEE: Audit policy under the Lithuanian Presidency
FEE has issued an article analysing in depth whether the European debate on audit policy will find a better way forward under the Lithuanian Presidency of the Council of the European Union.  View Article
FEE commented on financial reporting and auditing in the EU for the period of 2014-2020
FEE provided its comments to Rapporteur Theodor Dumitru Stolojan in light of the current the debate on the EU programme to support specific activities in the field of financial reporting and auditing for the period of 2014-2020.  View Article
FRC: UK and US regulators agree to continue arrangements for cooperation on cross-border supervision of audit firms
The FRC and the PCAOB have agreed to continue their cooperation agreement. This follows recent EC decisions that allow such agreements until 31 July, 2016.  View Article
FRC: Response to Competition Commission's provisional decision on remedies
The FRC has published its response to the Competition Commission's summary of provisional decision on remedies for the statutory audit market.  View Article
FRC welcomes IAASB's proposals to transform auditor's reports
The FRC believes the IAASB's proposals on the form and content of auditor's reports provoke an important debate amongst global stakeholders and respond to calls from users of audited financial statements for more informative and insightful auditor's reports.   View Article
EuropeanIssuers' position paper on the reform of statutory audit in the EU
EuropeanIssuers published their position paper on the Parliament position and on the current Council position on the reform of statutory audit. They considered the current Council negotiations and preparation for trialogue negotiations.  View Article
FRC updates guidance for the audit of financial instruments
The FRC issued updated guidance for audits of entities of all sizes that may be subject to the risks associated with using financial instruments. The guidance aims to enhance investor confidence in the depth and reliability of the audit.  View Article
Fitch Ratings: Audit report proposal likely helpful for investors
According to Fitch Ratings, efforts to improve transparency around audit reports would be helpful for investors and would be likely to help highlight major financial reporting issues.  View Article
FSB welcomes implementation progress report by the EDTF
The FSB welcomes the publication of the progress report by the Enhanced Disclosure Task Force on the level and quality of the implementation of their report, 'Enhancing the Risk Disclosures of Banks' in major banks' 2012 annual reports.  View Article
FRC consults on strategic report guidance
The FRC issued an ED for consultation: 'Guidance on the Strategic Report'. It applies the requirements for the strategic report in the recently issued Companies Act 2006 Regulations 2013. Feedback on the draft guidance should be provided by 15 November, 2013.  View Article
FEE: Comment letter on IPSASB Conceptual Framework ED 4
FEE agrees with the concepts set out in the ED and welcomes the IPSASB’s approach to information selection for the presentation of information in General Purpose Financial Reports of public sector entities.  View Article
IFAC: IPSASB publishes RPG 2 on financial statement discussion and analysis
The IPSASB has issued Recommended Practice Guideline 2 (RPG 2) on financial statement discussion and analysis.  View Article
EFRAG: Draft comment letter on the IASB’s revised ED insurance contracts
EFRAG issued its Draft Comment Letter on the IASB’s revised Exposure Draft Insurance Contracts (ED/2013/07). Comments on the letter are invited by 18 October 2013.  View Article
FRC: Proposal to update UK GAAP for insurance
The FRC has issued a draft new UK accounting standard for insurance (FRED 49: Draft FRS 103 Insurance Contracts). The proposals rationalise existing UK accounting provisions for insurance rather than establishing new requirements.   View Article

Financial Services Policy

European Supervisory Authorities highlight cross-sectoral risks
The Joint Committee of the European Supervisory Authorities (ESAs) has published its second bi-annual Report on Risks and Vulnerabilities in the European Union's Financial System.  View Article
ESMA publishes SMSG contribution to the ESFS Consultation
ESMA's Securities and Markets Stakeholder Group commented on the Commission's EFSF consultation, making short- and long-term proposals referring in general to all the ESAs, and enclosing a self-assessment.  View Article
Insurance Europe: EIOPA should be maintained as separate supervisory authority
In its response to the European Commission's consultation on the review of the European System of Financial Supervision, Insurance Europe highlighted its support for maintaining EIOPA as a separate European authority.   View Article
PensionsEurope publishes response to EC consultation on the review of the European System of Financial Supervision
PensionsEurope raised concerns about the increasing political role being assumed by EIOPA, ESMA and the EBA. It is PensionsEurope's view that the work of the ESAs should remain technical and that they should refrain from adopting political decisions.  View Article
EFAMA reply to European Commission's Consultation on the review of the European System of Financial Supervision
EFAMA's appreciation of the effectiveness of the ESAs, based in particular on the practical experience with ESMA and, to a lesser extent with EIOPA, is globally positive.  View Article
Finance Watch response to the consultation on the review of the European System of Financial Supervision
Responding to the Commission's consultation, Finance Watch says that in future it sees an increased role for ESAs in the fields of supervisory convergence, risk identification and consumer protection. To do this, the ESAs will need additional resources and better governance arrangements.  View Article
IIF/EY report: "Remaking financial services - Risk management five years after the crisis"
Among the key findings of the report, a renewed emphasis on risk culture has moved to the top of the list as a chief focus for boards and senior management.  View Article
WSJ/Steinhauser: Pivotal dates are ahead for European financial reform
This autumn will make or break the EU's efforts to fix its financial system. It's a final chance to decide on post-crisis laws and strategy before EU institutions turn their attention to the 2014 elections.  View Article
FT: UK markets supervisor rejects EU regulatory guidance
The new UK markets supervisor has for the first time rejected formal EU guidance on financial regulations this summer, adopting alternative rules that favour bankers and brokers.   View Article
Chatham House/Stokes: Challenges to the EU-US Free Trade Deal
The creation of a Transatlantic Trade and Investment Partnership offers important economic and strategic opportunities to both the EU and US, but it is not without its challenges.   View Article
IPE: Italy exempts pension funds from FTT
The Italian government has exempted pension funds and sovereign wealth funds from having to pay the controversial financial transaction tax, which will come into force on 16th October.  View Article
The Trade: French equities take 25 per cent hit from FTT
France's market share of European equities has plummeted nearly a quarter since the introduction of a national financial transaction tax (FTT) last August, which could prove crucial for the development of a Europe-wide levy.  View Article
New Direction: The real economic impact of a European Financial Transaction Tax
A new report by the Brussels think tank says that while the Commission believes the tax will raise €34 billion, this figure does not take into account the significant negative impact of the tax, particularly in jobs lost, both within the participating states and beyond.  View Article
Insurance Europe: Global approach to combating tax evasion is required
Insurance Europe commented on the OECD's consultation paper, "Developing a Secure, Effective and Standardised Model of Automatic Exchange for Financial Account Information (AEOI)".  View Article

International/G20

Remarks by Van Rompuy ahead of the G20 summit
In his statement ahead of the G20 summit in Saint Petersburg, the Council President said that the global economic outlook was steady, but risks and challenges remained.  View Article
The EU at the G20 Summit: Stepping up global efforts to restore global confidence
The EU will reiterate that financial regulatory reform remains a cornerstone of the G20 and that Europe is delivering on all fronts. It will call on its G20 partners to commit to the timely and effective implementation of the agreed measures to fill in the remaining blanks in financial regulation.  View Article
IMF/Lagarde: Monetary policies have bought time—use it wisely
Lagarde said that the unconventional monetary policies of central banks have bought global policymakers the time and space to carry out the reforms needed to lay the foundation for lasting growth.  View Article
WEF: Global Competitiveness report
The World Economic Forum has released its latest Global Competitiveness report. Germany has risen to fourth in the rankings while the UK has held its position at tenth. Although it rose, Greece remained the lowest-ranked EU member at 91.  View Article
OECD: Advanced economies growing again but some emerging economies slowing
A moderate recovery is underway in the major advanced economies, according to the OECD's latest Interim Economic Assessment. Growth is proceeding at encouraging rates in North America, Japan and the UK.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop's Blog: Shadow banking: Commission proposal on Money Market Funds surprisingly fails to underline the 'Banking Union' linkages
The intensity of the summer debate on Banking Union seems to have melted in the sunshine!  View Article
Financial World: 'Weekend' crises (Graham Bishop article)
Graham Bishop suspects that the proposed mechanism for resolving bank failures may have been fatally undermined by German criticism.  View Article
Graham Bishop's Blog: The 2014 round of EU appointments in Commissions and President - European Movement analysis and my gloomy comments
The stakes are raised for the UK in the May 2014 European elections.  View Article

Financial Services Month in Brussels - Report

July 2013 Financial Services Month in Brussels - Graham Bishop's personal overview
Lithuania took over the EU's Presidency and set priorities to include strengthening EMU and building a Banking Union. President Barroso outlined a number of economic governance developments, including the first implementation of the so called two-pack.  View Article





© Graham Bishop

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