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22 February 2018

This week in "Brussels"
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  Articles from 15 February 2018 - 22 February 2018

  Banking Union
 
 
ECB seeks industry feedback on assessment of internal models used for calculating counterparty credit
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
Vox EU: Macroprudential stress tests
Current stress testing of banks is focused on the resiliency of individual banks to exogenous shocks. This column describes how the next generation of macroprudential stress tests aim to capture the endogenous nature of systemic risk caused by the interaction of all the institutions and markets making up the financial system.  View Article
Bank of England: Credit risk mitigation: Eligibility of guarantees as unfunded credit protection
This consultation paper sets out the PRA’s proposed changes to SS 17/13 ’Credit risk mitigation’ to clarify expectations regarding the eligibility of guarantees as unfunded credit protection under Part Three, Title II, Chapter 4 (Credit risk mitigation) of the Capital Requirements Regulation (CRR).   View Article
FCA: Operation of the MoU with the Bank of England for market infrastructure - 2017 performance statement
The Bank and FCA held a consultation with FMIs and reviewed their co-operation regarding market infrastructure in 2017. The authorities concluded that the MoU’s arrangements for co-operation remain effective, with appropriate co-ordination and no material duplication.  View Article
BIS: Sound Practices: implications of fintech developments for banks and supervisors issued by the Basel Committee
The paper assesses how technology-driven innovation in financial services, or "fintech", may affect the banking industry and the activities of supervisors in the near to medium term.  View Article
BIS: Yves Mersch: "Rencontres du Club SEPA"
Mr. Mersch in his speech calls on the industry to take the next step and develop end-user solutions that will allow consumers and businesses to enjoy the benefits of instant electronic payments in any payment situation, in addition to cash, which is still popular.  View Article
BIS: Choice and diversity are the key to quicker, cheaper cross-border retail payments - CPMI
There is room to improve the infrastructure for payments made by individuals and businesses that cross borders, according to a new report by the Committee on Payments and Market Infrastructures (CPMI), the global standard setter for payment, clearing and settlement services.  View Article
 
  Capital Markets Union
 
 
ESMA launches Stakeholder Survey
ESMA is an open and transparent EU Authority, and in order to successfully achieve its mission, ESMA welcomes and encourages stakeholders to make their views and opinions known.  View Article
IOSCO consults on guidance to address conflicts of interest in the equity capital raising process
The Board of the International Organization of Securities Commissions (IOSCO) is proposing guidance to help its members address conflicts of interest and associated misconduct risks that may arise during the equity capital raising process.  View Article
AIMA - European Securitisation Regulation - member note
The note provides a summary of the key changes brought about by the Regulation, how these will impact investors, originators, original lenders, sponsors, risk retention methodologies and disclosure requirements, and the jurisdictional scope of the Regulation.  View Article
ICMA publishes study into the European single name credit default swap market
ICMA has published a report on the current state and evolution of the European corporate single name credit default market, focused on its benefits for liquid and efficient corporate bond markets.  View Article
ECMI: Towards variable Union in Europe's capital markets
CMU must go beyond the actions set for end-2019. CMU is a long-term project that will require the support of multiple stakeholders from both the public and private sectors.  View Article
BIS: Are credit rating agencies discredited? Measuring market price effects from agency sovereign debt announcements
This paper looks at whether the information value of credit rating agency announcements relating to sovereign bonds has diminished since the Global Financial Crisis (GFC) of 2007-09. In particular, taking into account the prior credit status of the bonds, authors measure how the response of credit default swap spreads (CDS) to such announcements has changed.  View Article
 
  Clients Union
 
 
Commercial Risk Europe: AMRAE publishes GDPR and cyber research
The French risk management association AMRAE has published a technical guide to the General Data Protection Regulation (GDPR), with more cyber risk-related research in the pipeline.  View Article
 
  Insurance
 
 
Insurance Europe: Response to IAIS systemic risk pre-consultation published
Traditional insurance is not systemically risky and systemic risk from individual insurers can only originate from a very limited number of activities undertaken on a large scale in the wrong conditions, according to Insurance Europe’s response to the International Association of Insurance Supervisors' (IAIS) pre-consultation on an activities-based approach (ABA) to systemic risk.  View Article
IAIS: Consultation on its draft application paper on the use of digital technology in inclusive insurance
The Financial Inclusion Working Group (FIWG) has - through a drafting group – developed a draft application paper on the use of digital technology.  View Article
Commercial Risk Europe: Ferma plans moves to boost cyber insurance
Ferma is planning guidance on buying cyber insurance to help risk managers obtain cover that better reflects their needs.  View Article
Commercial Risk Europe: Losses and GDPR drive demand for cyber cover in France
Demand for cyber insurance is growing in France, boosted by large cyberattacks and changing regulation. But French corporate insurance buyers continue to have concerns around ‘silent cyber’ and claims.  View Article
Central Bank of Ireland: Statement on CBL Insurance Europe dac
The Central Bank has issued a direction to CBLIE instructing it to cease writing business with immediate effect, until further notice. CBLIE continues to operate and existing policies continue to remain in force.   View Article
 
  Asset Management
 
 
European Commission: Study on EU markets for private placements
The study shows that private placement of debt instruments with institutional investors could play a greater role in financing medium-sized companies in the future and highlights a considerable growth potential for private placements in the EU due to new domestic markets and increased cross-border activities.  View Article
AIMA: ESRB publishes recommendation on liquidity and leverage risks in investment funds
The European Systemic Risk Board (ESRB) has published a Recommendation addressed to the European Securities and Markets Authority (ESMA) and the EU Commission on actions to address systemic risks related to liquidity mismatches and the use of leverage in investment funds.  View Article
ECB: Responses to the public consultation on the draft ECB regulation on statistical reporting requirements for pension funds
The proposed draft Regulation will remedy shortcomings of the current unharmonised and incomplete quarterly statistics on pension funds published since June 2011, in particular the limited dissemination of transaction data due to insufficient data quality.  View Article
BIS: An explanation of negative swap spreads: demand for duration from underfunded pension plans
This paper examines the reasons for the persistent negative 30-year swap spread. Because of the credit risk implicit in Libor, swap rates should exceed the (theoretical) risk-free rate and rise when bank credit risk increases.   View Article
Investment & Pensions Europe: Dutch industry associations lobby for access to PEPP market
Industry associations in the Netherlands say they want premium pension institutions (PPI) to be able to offer personal European pension plans (PEPP).  View Article
Investment & Pensions Europe: Italy’s pensions regulator eases path for ‘direct’ fund investments
Italy’s pensions regulator COVIP has moved to simplify the approval process schemes need to go through in order to invest directly in investment funds, rather than using an intermediary.   View Article
Almost 80% in favour of stronger checks to avoid pension scams: PLSA calls for authorisation regime to help stop scammers in their tracks
New research from the Pensions and Lifetime Savings Association (PLSA) highlights the difficulty people have in spotting pension scams and backs stronger checks to help people avoid them. This research builds on the PLSA’s call for an authorisation regime for pension schemes receiving transfers to help stop fraudsters in their tracks.  View Article
Hedgeweek: Investors have renewed optimism for hedge funds in 2018, says Deutsche Bank survey
Hedge fund investors are optimistic in their outlook for the industry in 2018, expecting hedge funds to receive USD41 billion in net new investor capital for the year versus USD10 billion last year. That’s according to Deutsche Bank’s 16th annual Alternative Investment Survey.  View Article
 
  Corporate Governance/Accounting
 
 
ECA: Auditors call for greater accountability in EU finances
The ECA has called for an increased emphasis on value added in the EU Budget, along with more flexibility and transparency, and greater accountability. The proposals are made in a briefing paper entitled “Reforming how the EU Budget operates”.  View Article
ACCA calls for open and honest debate about quality of audit
ACCA has published a guide to the features that a quality audit should possess, recognising their interrelation and occasional tension.  View Article
FCA launches call for input on the use of technology to achieve smarter regulatory reporting
The Financial Conduct Authority (FCA) has announced that it is seeking views on how technology can make it easier for firms to meet their regulatory reporting requirements and improve the quality of the information they provide.  View Article
Accountancy Europe: FAQ on the auditor’s role in tackling financial crime
Society expects the auditor to play an important role in uncovering financial crime. This FAQ aims to further explain the auditor’s role. The publication builds on the information paper Auditor’s role in fighting financial crime which provides an overview of the auditor’s key responsibilities.  View Article
AIMA responds to FCA consultation on transitioning firms and individuals to the Senior Managers & Certification Regime
The FCA’s consultation proposes to automatically convert of the majority of individuals in existing controlled functions (CF) to the equivalent Senior Management Function (SMF) role under the extended SMCR. This will apply for the majority of firms subject to the extended regime (Core SMCR firms).   View Article
 
  Financial Services Policy
 
 
FCA and US CFTC sign Arrangement to collaborate on FinTech innovation
The Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) have signed an arrangement that commits the regulators to collaborating and supporting innovative firms through each other’s financial technology (FinTech) initiatives – LabCFTC and FCA Innovate.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
Building the Brexit castle on a foundation of quicksand: 138th Brussels for Breakfast – CPD Notes
The Brexit shambles in Britain contrast starkly with the neat negotiation strategy in Europe. The EU would welcome back - with relief - UK's membership, but it is moving fast towards new horizons of reform and it has signalled it won't wait for anyone that isn't on board and fully committed.  View Article
 
  Friends Services
 
 
Building the Brexit castle on a foundation of quicksand: 138th Brussels for Breakfast – CPD Notes
The Brexit shambles in Britain contrast starkly with the neat negotiation strategy in Europe. The EU would welcome back - with relief - UK's membership, but it is moving fast towards new horizons of reform and it has signalled it won't wait for anyone that isn't on board and fully committed.  View Article
 
  Economic
 
 
Economic and Financial Affairs Council, 20/02/2018
Ministers discussed the recommendations of a high-level group of experts on sustainable finance, and approved guidelines for the 2019 EU budget and a recommendation on a 2016 budget discharge.   View Article
Main results - Eurogroup, 19/02/2018
The Eurogroup gave its support to the candidacy of Luis de Guindos for the position of ECB Vice President. It also discussed Greece's economic adjustment programme and the ESM reform. The Eurogroup in inclusive format discussed progress achieved in the completion of the banking union.  View Article
IMF: The Euro Area Needs a Fiscal Union
The euro area is experiencing a robust recovery, but the architecture supporting Europe’s currency union remains incomplete and leaves the region vulnerable to future financial crises, economists at the IMF warned.  View Article
Bloomberg: Germany flexes financial muscle in push for EU ‘solidarity’
German Chancellor Angela Merkel’s government called for a fundamental overhaul of European Union finances as Britain’s exit from the 28-nation bloc is about to tear a hole in the group’s 140 billion-euro annual budget.  View Article
BIS: The negative interest rate policy and the yield curve
The European Central Bank has cut interest rates four times under zero since 2014. This paper extracts the market expectations embedded in the euro area's yield curve to study the impact of the ECB's negative rate policy on that yield curve.  View Article
 

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