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24 October 2013

This week in "Brussels"
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Articles from 17 October 2013 - 24 October 2013

Banking

Commission publishes results of Liikanen HLEG on structural reform
The Commission has published a list of the individual responses it received to its May 2013 consultation on "Reforming the structure of the EU banking sector", together with a summary of those responses.  View Article
ECB starts comprehensive assessment in advance of supervisory role
The ECB announced details of the comprehensive assessment to be conducted in preparation of assuming full responsibility for supervision as part of the SSM. (Includes EBF and BaFin/Bundesbank statements.)  View Article
EBA publishes final draft TS on NPLs and forbearance reporting requirements; issues AQR recommendations
The final ITS will provide consistent indicators of asset quality of banks across the EU. EBA also issued recommendations on asset quality reviews (AQRs), including the work of the SSM and its balance sheet assessment.  View Article
European Council's draft conclusions: EMU / Banking Union
Ahead of the meeting of EU leaders this week, Open Europe has published an updated version of the draft council conclusions on its website.  View Article
Bloomberg: EU lawmakers reject Draghi call for bank bondholder clemency
The EU's competition authorities should resist a challenge by ECB president Draghi to the imposition of bondholder losses at banks that receive public aid, Sharon Bowles and Sven Giegold have said.  View Article
Schäuble: The Banking Union – another step towards a tighter-knit Europe
Banking Union "emphatically is not and cannot be a mechanism to redistribute the burden of yesterday's crisis among its participants", said Schäuble. "Whatever legacy issues come to light now will have to be tackled nationally."  View Article
Bloomberg: Draghi challenges EU bank aid rules over forced losses
In a letter to Commissioner Almunia, Draghi warned that the new state aid rules – which would see significant losses for bank bondholders before any bailout – could "destroy the very confidence" in European banks which the EU is working to restore.   View Article
Reuters: European official calls for bank bail-in from 2016
According to Spiegel magazine, the head of the Eurogroup Working Group has proposed an earlier start of 'bail-in' arrangements which force bondholders to share losses in a bank failure, in a bid to win over German concerns over creating a Banking Union.  View Article
Bloomberg: EU deal on resolution mechanism faces tight deadline
Without a deal on the SRM before EP elections in May, there is a risk that the ECB will be lacking a critical tool when it starts supervising euro area lenders next year. Commission Barnier has said he is open to compromise on the plans.  View Article
ACCA: Banking Union - Towards a solid and sustainable integrated financial framework?
The ACCA President's debate showed general support for the Banking Union, while acknowledging that serious challenges lie ahead.  View Article
Single Resolution Mechanism - what the papers say
Scandinavia's banks are contesting a plan by the EBA that requires lenders to adopt a uniform approach when calculating capital buffers; the UK and Sweden are seeking EU budget safeguards; Merkel could be about to agree to the SRM - under three conditions.  View Article
Commissioner Almunia: Competition among financial markets operators
Almunia said that safeguarding competition in the financial sector remained a top priority. He clarified how the new State aid rules fitted in with the overall framework of the Banking Union, and how they would help with the transition.  View Article
ECB publishes details of ELA procedures
The ECB has revealed for the first time the details of its emergency lending programme, Emergency Liquidity Assistance (ELA).  View Article
EBA consults on draft technical standards related to liquidity requirements
EBA launched three consultations on ITS and RTS related to liquidity requirements. All three consultations will run until 22 December, 2013.  View Article
Risk.net: ECON chair Bowles calls for better ethics beyond banks
Speaking at the BBA annual international banking conference, Bowles called for higher ethical standards in banks and the lawyers and accountants that surround them.  View Article

Securities

ESMA/Maijoor: Speech on international regulatory coordination in OTC markets reform
Maijoor focused on the international coordination of OTC derivatives regulation and supervision. "While we have progressed substantially in this area, it has not been sufficient, and further steps are absolutely needed."  View Article
ESMA consults on Technical Advice to the Commission on procedural rules to impose fines on Trade Repositories
ESMA has launched a consultation on the Technical Advice it must provide to the Commission on the procedural rules for imposing fines and periodic penalty payments on Trade Repositories. The consultation is open until 15 November, 2013.  View Article
ESMA publishes updated data on performance of credit ratings
ESMA has published its latest set of semi-annual statistical data on the performance of credit ratings, including transition matrices and default rates.  View Article
FT: Europe agrees on high-speed trading regulation
European policy-makers have reached a tentative agreement over plans to regulate high-speed trading, as they strengthen the region's markets in the face of rapid technological change.  View Article
Risk.net: Libor set to remain as benchmark rate for OTC derivative contracts
Given the pervasiveness of Libor as a benchmark in OTC transactions, a move to an alternative interest rate benchmark will face significant hurdles, said ISDA chief executive Robert Pickel.  View Article
Risk.net: CCP frontloading - The pricing nightmare
From early 2014, European derivatives users will have to clear any trades executed between the point a CCP is authorised and the date of a clearing obligation determination by the ESMA, known as the frontloading requirement. Dealers remain confused about how this will work and the pricing impact.  View Article
OFT clears EMCF and EuroCCP to combine
The UK's consumer and competition authority has recommended an unconditional clearance for the two clearing houses to combine to form a new pan-European cash equities clearing house that builds on the strengths of both firms.  View Article

Insurance

Risk.net: Lack of insurer management action plans exposes governance failings
The majority of European insurers are not formally documenting how management teams plan to respond to changing economic conditions, and are not modelling the impact of such management behaviour in stress scenarios, a survey has found.   View Article
Risk.net: Insurers may be better off not separating NTNI business, says top lawyer
The costs of separating non-traditional and non-insurance (NTNI) activities from traditional insurance activities may persuade systemically significant insurance groups to leave their structure unchanged despite greater capital requirements, according to a top insurance lawyer.  View Article
Fitch: Global Insurance Capital Standard adds uncertainty
Plans by the Basel-based IAIS to develop a risk-based global insurance capital standard add further uncertainty for the insurance industry, according to Fitch Ratings.   View Article
IAIS consults on ComFrame; adopts coordinated implementation framework; releases first self-assessment and peer review report
The IAIS released the 2013 draft of ComFrame for public consultation (deadline 16.12.13). It also adopted an enhanced framework to help guide its efforts to assist members implement IAIS standards, and released its first Self-Assessment and Peer Review aggregate report.  View Article
IAIS publishes Issues Paper on policyholder protection schemes
The Insurance Core Principles call for jurisdictions to put in place sound regulatory and supervisory frameworks that reduce the risk of harm to consumers by helping to maintain fair, safe and stable insurance markets.  View Article
IAIS releases aggregate report for the self-assessment and peer review on ICPs 1, 2, and 23
A key strategic objective of the IAIS is the implementation of the Insurance Core Principles (ICPs) by insurance supervisors around the world. In support of this objective, the IAIS has developed a programme of thematic self-assessment and peer review.  View Article
Danielsson, Koijen, Laeven & Perotti: Solvency II - Three principles to respect
The authors call on policymakers to "respect" prudential principles and include full disclosure of any discounted liabilities, as well as review the measures after three years.  View Article

Asset Management

ESMA publishes signed AIFMD cooperation agreements
ESMA has published a table showing the state of play of Memoranda of Understanding (MoUs) signed by EU national supervisors.  View Article
IOSCO publishes second hedge fund survey report
The survey report looks at regulators' efforts to understand the hedge fund industry better.  View Article
FT: Regulation changes the way hedge funds grow
Targeted hedge fund rules in both the EU and the US, as well as regulations affecting the markets in which hedge funds trade and the manner in which they do so, make for an unprecedented set of rules and costs for the once freewheeling hedge fund world to get to grips with.  View Article
Hedgeweek: Hedge funds delaying the inevitable by not embracing AIFMD, says Helvetic
Hedge funds avoiding the new AIFMD framework due to concerns over increased compliance costs are delaying the inevitable, says Helvetic Fund Administration.  View Article
IPE: OECD report cites 'serious barriers' to long-term investment
Serious barriers to long-term investment do seem to exist, and governments around the world need to do something to remove them, the OECD has warned.  View Article
FESE response to the ELTIF proposal
FESE supports the objectives of the European Long‐term Investment Funds framework but says that as currently designed, the draft Regulation will not achieve its purpose because its scope of eligible assets excludes any instrument listed on regulated venues.  View Article
IPE/Woolfe: The European Commission isn't finished yet - another Green Paper on pensions?
Revisions or developments to pensions policy from the European Commission are expected in a new, (as yet) unannounced Green Paper, which will show its face in early 2014 – perhaps as early as February.  View Article

Corporate Governance/Accounting

FEE's paper on the auditor selection process
FEE's new paper, "Auditor selection: towards best practices", examines the governance aspects around the selection of the auditor and the phases of the process, and offers criteria to be assessed.  View Article
IFAC: Roles and importance of professional accountants in business
Professional accountants in business often find themselves at the front-line of safeguarding the integrity of financial reporting. Their role cannot be emphasised enough.  View Article
IFAC: IPSASB publishes EDs 48-52 on accounting for interests in other entities
IPSASB has published the following EDs for comment: ED48/Separate Financial Statements; ED49/Consolidated Financial Statements; ED50/Investments in Associates and Joint Ventures; ED51/Joint Arrangements; and ED52/Disclosure of Interests in Other Entities. Deadline: February 28, 2014.  View Article
Economia/Percy: The trouble with true and fair
Following a controversial opinion published by George Bompas QC on the legality of IFRS, the FRC has said that IFRS is legally binding and that compliance will result in a true and fair view in most circumstances.  View Article

Financial Services Policy

Lithuanian Presidency: Protection of consumers' interests at the centre of newly-agreed EU programme (2014-2020)
COREPER I approved the agreement on the Proposal for a Regulation of the EP and of the Council on a consumer programme 2014-2020, which will support EU consumer policy.  View Article
Give small investors key facts, says ECON Committee
Small investors should receive a Key Information Document (KID) giving clear, comparable and complete information on any investment product before signing a binding contract, said ECON Committee MEPs voting on a draft law. (Includes comments from Sharon Bowles and Rapporteur Berès.)  View Article
Commissioner Barnier: Retail payments - A lever for inclusive and innovative growth in Europe
Retail payments are not simply a technical issue, they form an important lever for our response to the crisis, said Barnier at a joint ECB/Banque de France conference.  View Article
ECB/Cœuré: Retail payments at a crossroads
Cœuré argued that retail payments have reached a turning point as regards integration and innovation.   View Article
Bloomberg: Germany's SPD seeks to tap transaction tax for bank failure fund
Merkel's potential coalition partners, the Social Democrats, want to make implementation of a proposed financial transaction tax a requirement for participation in the Banking Union.  View Article
WSJ: France weighs softening proposed transaction tax
France's Finance Ministry is considering transforming a stick into a carrot in a bid to gain French banks' support in reviving the country's stock exchange.  View Article

International/G20

European Commission: EU and Canada conclude negotiations on trade deal
President Barroso and Canadian PM Harper have reached a political agreement on the key elements of a Comprehensive Economic and Trade Agreement (CETA). This agreement will remove over 99 per cent of tariffs between the two economies. (Includes EPP/S&D responses.)  View Article

European Council/Parliament

Plenary Session: EU economic and budget coordination must improve, say MEPs
Economic and budgetary policies of EU countries need to be far better coordinated in order to give a boost to growth, employment and investment. The European Semester, designed to do just that, is not delivering the goods, MEPs warned in a resolution.  View Article
Plenary Session: Parliament votes urgent €2.7 billion amending budget to close resources gap
Parliament has approved €2.7 billion in additional EU funding for 2013. The amending budget (N° 6) was needed to avert a 'shutdown'.  View Article
Plenary Session: Budget 2014 - Parliament reverses Council cuts in research and jobs expenditure
Parliament reversed the Council's proposed cuts in research and employment expenditure in 2014 in a plenary vote in Strasbourg. (Includes statement by Commissioner Lewandowski.)  View Article





© Graham Bishop

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