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21 December 2017

This week in "Brussels"
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  Articles from 14 December 2017 - 21 December 2017

  Banking Union
 
 
Consultative document on stress testing principles and a range of practices report issued by the Basel Committee
The Basel Committee on Banking Supervision today released a consultative document on stress testing principles and a range of practices report on supervisory and bank stress testing.  View Article
EBA RTS will help reduce divergent practices in the application of simplified obligations and waivers in recovery and resolution
The EBA published a Report on the application of simplified obligations and waivers in recovery and resolution planning and its final draft RTS specifying the eligibility criteria to determine whether institutions could be subject to simplified obligations when drafting such plans.  View Article
EBA publishes discussion paper on EU implementation of the revised market and counterparty credit risk frameworks
This paper discusses some of the most important technical and operational challenges to implement the FRTB and SA-CCR in the EU. The paper aims at providing some preliminary views on how these implementation issues could be addressed and, at the same time, seeks early feedback from the stakeholders on the proposals.   View Article
ECB seeks industry feedback on assessment of internal models used for calculating counterparty credit risk
The European Central Bank (ECB) published the draft ECB guide on the assessment methodology (EGAM) for the internal model method and the advanced CVA capital charge for counterparty credit risk.   View Article
EBA publishes its standardised data templates as a step to reduce NPLs
The templates will provide a common EU data set for the screening, financial due diligence and valuation during NPL transactions. An extended use of the templates is expected to widen the investor base, lower entry barriers to potential investors, improve data quality and availability, support price discovery and facilitate the development of the NPL secondary market.  View Article
EBA consults on amended technical standards on benchmarking of internal models
The European Banking Authority launched a consultation to amend the Commission Implementing Regulation on benchmarking of internal models to adjust the benchmarking portfolios and reporting requirements in view of the benchmarking exercise the EBA will carry out in 2019.   View Article
EBA report shows that EU banks comply with LCR requirement of 100% ahead of its full implementation
The EBA published an impact assessment report which shows that EU banks have continued to improve their LCR since 2011. A more in-depth analysis suggests that the LCR regulation, together with capital standards and stable funding, have helped banks increase their lending to real economy.   View Article
EBA: ESAs publish final draft technical standards amending margin requirements for non-centrally cleared OTC derivatives
These amendments aim at aligning the treatment of variation margin for physically-settled FX forwards with the supervisory guidance applicable in other key jurisdictions.  View Article
European Commission: Public consultation on building a proportionate regulatory environment to support SME listing
Facilitating access to finance for SMEs through all their development stages is a key element of the Commission's Capital Markets Union initiative. The CMU Mid-term Review raised the project's level of ambition and strengthened its focus on capital-raising by SMEs on public markets.   View Article
Paul N. Goldschmidt: Bickering over the Banking Union!
One of the few elements of consensus surrounding the debate on reinforcing the Eurozone is that a first and indispensable step is completing the Banking Union, writes Paul N. Goldschmidt.  View Article
Financial Times: Battle for banking union hangs over the eurozone
After surging back to economic life this year, the eurozone now has grandiose ambitions for its own budget and finance minister. But the plans are unlikely to go anywhere unless the bloc’s leaders can agree on a more prosaic issue: banking union.  View Article
ECA: Bank resolution - work started, but still a long way to go
The SRB, which was setup to ensure the resolution of banks in the EU, is still “very much a work in progress”, according to a new report from the ECA. Resolution is the restructuring of a failing bank in order to safeguard financial stability and public interests, with minimal costs to taxpayers.  View Article
ECB Banking Supervision: SSM supervisory priorities 2018
The supervisory priorities set out focus areas for supervision in 2018. Taking into account the relevant developments in the economic, regulatory and supervisory environment, the supervisory priorities build on an assessment of the key challenges faced by supervised banks.  View Article
EBA publishes Opinion on the transition from PSD1 to PSD2
In its Opinion, the EBA clarifies a number of issues identified by market participants and competent authorities, including with regard to the transitional period foreseen under PSD2.  View Article
Commercial Risk Europe: New banking technology could cause next financial crisis, warns Parker Fitzgerald
Digitalisation of financial services is at risk of creating the next financial crisis unless regulators step up to the plate, according to a new report from risk consultancy Parker Fitzgerald. It says that current regulations often conflict and businesses are given “mixed signals” about emerging risks caused by the digitisation of financial services.  View Article
City A. M.: Bitcoin not a threat to financial stability say economists
Bitcoin does not pose a risk to financial stability, despite growing scrutiny amid manic buying around the world, according to a poll of respected economists.  View Article
 
  Capital Markets Union
 
 
Financial Times: EU regulators grant more last-minute relief on Mifid II
The European Securities and Markets Authority granted an extra six months to allow compliance with new rules that force all institutions, as well as companies issuing securities, to have individual reference numbers for trading.  View Article
ESMA updates MiFID II trading halts procedure
The reporting template has been amended with the main objective to reduce, to the extent possible, fields with free text and replace those fields with hard-coded input. This is to facilitate extraction, computation and ultimately the analysis of the files.  View Article
Investment & Pensions Europe: How Europe's top institutional managers will pay for research
IPE research has found that 92 out of the 120 biggest managers of European institutional assets – responsible for more than €8trn – plan to absorb the cost of external investment research.  View Article
ESMA provides guidance on cross-border investment services and MiFID transposition
ESMA guidance to NCAs and market participants on the topic of continuity of cross-border provision of investment services in the transition between MiFID I and MiFID II, including in the event that there is late transposition of the Directive by some Member States.  View Article
ESMA updates its MiFID II Q&As on transparency and market structures
ESMA updated its Questions and Answers regarding transparency and market structure issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).  View Article
ESMA updates its Q&As on MiFID II/MiFIR Investor Protection topics
The new Q&As cover the topics of inducements, suitability, and provision of investment services and activities by third country firms.  View Article
ESMA updates Q&A on MiFIR data reporting
ESMA updated its Questions and Answers regarding data reporting under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).  View Article
ESMA issues updated statement on preparatory work in relation to CFDs, binary options and other speculative products offered to clients
ESMA has issued a statement updating its work in relation to the sale of contracts for differences, binary options and other speculative products to retail investors.  View Article
ESMA provides further guidance for transactions on 3rd country trading venues for post-trade transparency and position limits under MiFID II
ESMA has published two revised opinions providing guidance related to third-country trading venues for post trade transparency and position limits under MiFIDII/MiFIR.   View Article
ESMA provides overview of MiFID II deferral regimes
ESMA published a table compiling the supplementary deferral regimes applicable in different Member States for trading in non-equity instruments under the Market in Financial Instruments Regulation.  View Article
ESMA consults on securitisation requirements
ESMA published three consultation papers on draft technical standards implementing the Securitisation Regulation.  View Article
EBA consults on draft Technical Standards on risk retention for securitisation transactions
The European Banking Authority (EBA) launched a public consultation on its draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors and original lenders related to risk retention as laid down in the new EU securitisation framework (STS Regulation).   View Article
EBA consults on the homogeneity of underlying exposures in securitisation
The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) specifying a set of criteria for the underlying exposures in securitisation to be deemed homogeneous, as part of the requirements under the new EU securitisation framework.   View Article
International standard-setting bodies launch surveys on incentives to centrally clear OTC derivatives trades
The survey covers areas such as the effects of G20 reforms on derivatives markets, client clearing service provision, and other market structure issues and observations.  View Article
ESMA Consults on draft RTS for prospectuses
ESMA launches a consultation on draft Regulatory Technical Standards under the new Prospectus Regulation (Regulation (EU) 2017/1129).   View Article
ESMA publishes CRA Market Share calculation
The purpose of the market share calculation is to facilitate issuers and related third parties in their evaluation of a CRA with no more than 10% total market share in the EU.  View Article
Capital Markets Union: Commission consults on how to make it easier for SMEs to tap capital markets
The Commission is launching a public consultation on how to make it easier for small and medium enterprises to access public markets.  View Article
New rules make EU issuers’ annual financial reports machine-readable
ESMA published the final draft Regulatory Technical Standards setting out the new European Single Electronic Format (ESEF). Starting from 2020, this format shall be used by all issuers to prepare their annual financial reports.  View Article
 
  Clients Union
 
 
Removing barriers to free flow of data – Council agrees its position
The EU is developing new rules to allow non-personal data to move freely and easily across country borders.   View Article
 
  Insurance
 
 
EIOPA analyses the first Solvency and Financial Condition Reports and identifies areas for improvement
The European Insurance and Occupational Pensions Authority (EIOPA) published a supervisory statement based on an analysis of Solvency and Financial Condition Reports (SFCRs) of (re)insurance undertakings and insurance groups. The aim of the statement is to improve future disclosure of these reports.  View Article
EIOPA updates representative portfolios to calculate volatility adjustments to the Solvency II risk-free interest rate term structures
The European Insurance and Occupational Pensions Authority published updated representative portfolios that will be used for calculation of the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II.   View Article
Insurance Europe: Position paper on collective redress published
Insurance Europe has published a position paper on collective redress, which says that, because many member states either have only just introduced or are considering introducing collective redress mechanisms, it is too early following the 2013 recommendations to take action at EU level.  View Article
Commercial Risk Europe: Blockchain to revolutionise risk transfer industry
Recent months have seen commercial insurers and reinsurers testing a range of blockchain applications, which some believe could radically change the insurance market.  View Article
Commercial Risk Europe: Insurance industry responding to cyber threat but challenges ahead
Experts at Risk Frontiers event said the insurance industry’s credibility is on the line over cyber insurance but suggested the market is increasingly responding well to the needs of clients. The big question now seems whether the insurance industry will continue to be able to deliver as cyber grows into potentially the largest risk of them all.  View Article
 
  Asset Management
 
 
EIOPA’s stress test identifies spill-over risks into the real economy from shocks to the European occupational pensions sector
The EIOPA published the results of its 2017 Occupational Pensions Stress Test. This year’s exercise assessed the resilience of Institutions for Occupational Retirement Provision (IORPs) to a "double-hit" scenario, combining a drop in risk-free interest rates with a fall in the price of assets held by IORPs.   View Article
Investment & Pensions Europe: PensionsEurope hits back at EIOPA over stress test conclusions
The conclusions the European Insurance and Supervisory Authority has drawn from its stress tests of European pension funds are “too strong”, the region’s pension fund umbrella association has said.  View Article
Investment & Pensions Europe: EIOPA stress tests find Europe-wide deficit of up to €700bn
EIOPA has warned European pension funds against “kicking the can down the road” and unfairly burdening the younger generation after its latest stress test of the sector pointed to large deficits and potential adverse effects on the real economy.   View Article
ECB: Manual on investment fund statistics
This manual aims to further clarify and illustrate the requirements laid down in the Regulation and the Guideline; it contains no additional requirements and has no legally binding status.  View Article
Investment & Pensions Europe: The challenges facing asset managers in 2018
The asset management sector faces “fundamental” challenges in the near future, despite the industry’s outlook stabilising, according to Moody’s.  View Article
 
  Corporate Governance/Accounting
 
 
EFRAG requests comments on its draft endorsement advice on Amendments to IAS 28
EFRAG has issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28).  View Article
IASB: Q&A guidance published on accounting for the issue of financial guarantee contracts under the IFRS for SMEs Standard
The IFRS Foundation has published Standard IFRS for SMEs guidance on the following public consultation. The guidance has been developed by the SME Implementation Group (SMEIG).  View Article
FRC Strategy for businesses, investors and public trust
The FRC has published its three year (2018/21) strategy and its budget for the 2018/19 financial year. Its strategy is to deliver increased confidence and public trust in UK companies in line with its mission to promote transparency and integrity in business.  View Article
FRC: Investor confidence enhanced by good practice audit committee reporting
Audit Committee reports create trust and confidence among investors according to a new report from the FRC. Investors welcome that the interests of the company’s shareholders are represented in matters of financial reporting, external and internal audit, and internal control.  View Article
ESMA: Guidance on the new European Single Electronic Format
ESMA published the final draft Regulatory Technical Standards setting out the new European Single Electronic Format (ESEF). Starting from 2020, this format shall be used by all issuers to prepare their annual financial reports.  View Article
 
  Anti-Money Laundering
 
 
Money laundering and terrorist financing: Presidency and Parliament reach agreement
EU ambassadors confirmed the political agreement reached between the presidency and the European Parliament on strengthened EU rules to prevent money laundering and terrorist financing.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
Completing Banking Union: Eurobills as an Easy Step
As 2017 ends on a high note for economic activity, EU leaders have continued to call for the completion of banking union. However, there are many large and complex issues to be resolved to bring banking union to full fruition and the desired timescale is short.  View Article
Banking Union: the State of Play
The push is on to complete Banking Union, writes Graham Bishop, who takes stock of the progress so far and next steps, and recognises that, once the EU27 has completed this huge project, "it is difficult to see an offer of re-shaping it just to meet the wishes of British exceptionalism."   View Article
 
  Friends Services
 
 
A ‘moderate’ breakthrough in the Brexit impasse: the Commission decides to move on to phase II but sticky issues drag on
This month's 136th Brussels for Breakfast debate and CPD Notes took stock of Theresa May's last-minute deal with the Commission to recommend 'sufficient progress' to begin trade talks. The endorsement of Basel III revamped rules and the upcoming MiFID II and IFRS9 packages were also topical.  View Article
 
  Temporary Eurobill Fund (TEF)
 
 
Completing Banking Union: Eurobills as an Easy Step
If the EU wishes to take a small step that can be done swiftly, and without changing the TFEU, then my plan for a Temporary Eurobill Fund could even be implemented before the 2019 European Parliament elections.   View Article
 
  Economic
 
 
SUERF: Deepening the Economic and Monetary Union: the EU priorities by 2025 and beyond
This paper identifies the priorities to strengthen the European Economic and Monetary Union (EMU) by 2025 and beyond.   View Article
ECA: EU auditors announce “fresh approach” to auditing cohesion spending
The ECA is piloting a modified approach in its compliance audits of cohesion spending. In particular, they will verify information on the legality and regularity of EU spending, while making better use of the work of audit authorities in Member States.  View Article
Commercial Risk Europe: European Commission says US tax proposals are unfair
Tax reforms being considered by the US Treasury could disrupt international insurance and reinsurance business, the Commission has warned. The reform bill, which includes base erosion and profit shifting measures, could also violate international treaties against double taxation, the EC elieves.  View Article
Annual inflation up to 1.5% in the euro area
Euro area annual inflation was 1.5% in November 2017, up from 1.4% in October. In November 2016, the rate was 0.6%. European Union annual inflation was 1.8% in November 2017, up from 1.7% in October. A year earlier the rate was 0.6%.   View Article
Euro area international trade in goods surplus €18.9 bn
The first estimate for euro area (EA19) exports of goods to the rest of the world in October 2017 was €187.9 billion, an increase of 8.8% compared with October 2016 (€172.6 bn).   View Article
 

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