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31 May 2018

This week in "Brussels"
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  Articles from 24 May 2018 - 31 May 2018

  Banking Union
 
 
Main results - Economic and Financial Affairs Council
The Council agreed its stance on proposals to reduce risk in the banking industry, adopted rules to prevent aggressive cross-border tax planning and removed two names from the EU's list of non-cooperative tax jurisdictions.  View Article
Financial stability conditions in euro area remain favourable but risk-taking in most financial markets intensified
Systemic risk for the euro area has remained low over the past six months, the latest biannual Financial Stability Review of the European Central Bank finds. This was helped by better growth prospects, both outside and in the euro area.  View Article
Financial Times: European non-performing loan sales rise sharply
The European market for non-performing loans is becoming more active, with Italy and Spain accounting for most of the deals, according to research by the European Central Bank.  View Article
Financial Times: Europe’s bank bosses stress need for consolidation
Big banking mergers and acquisitions are back on the agenda in Europe, where top executives are stressing the need for consolidation while worrying that the election of a populist government in Italy will make deals harder.   View Article
EBA and ESMA: institutions and authorities must consider retail holders of debt financial instruments in resolutions
The EBA and the ESMA have published a joint statement encouraging institutions, market and resolution authorities to properly consider retail holders of debt financial instruments subject to the Bank Recovery and Resolution Directive (BRRD) when carrying out their respective tasks.   View Article
European Parliament: Further harmonising EU insolvency law from a banking resolution perspective?
This briefing explains why the completion of the Banking Union may need to be underpinned by further progress in harmonising Member States’ insolvency law, from a ‘banking resolution’ perspective.  View Article
EBA releases updated data on Deposit Guarantee Schemes across the EU
The European Banking Authority (EBA) published 2017 data relating to two key concepts in the Deposit Guarantee Schemes Directive (DGSD): available financial means, and covered deposits.   View Article
European Payments Council publishes position paper on Brexit and UK PSPs’ participation in SEPA schemes
On the occasion of the start of the second phase of the Brexit negotiations, in particular the negotiations on a transition period and the scoping of the future relationship between the EU and the UK, the European Payments Council (EPC) publishes a position paper on the subject.  View Article
Bank of England: Competition for retail deposits between commercial banks and non-bank operators: a two-sided platform analysis
This paper assesses competition between a bank and a non-bank operator running two-sided platforms that allow payments between consumers and merchants (besides providing their own deposit-storage facilities) under three configurations: exogenous single-homing, endogenous multi-homing and interoperability.  View Article
Bank of England: Fair and Effective Markets Review Progress Report
The Bank of England, the Financial Conduct Authority and HM Treasury have published the FEMR Progress Report which set out the significant progress made in responding to the recommendations of the Review.   View Article
ECB: Guide to fit and proper assessments
The objective of this Guide to fit and proper assessments is to explain in greater detail the policies, practices and processes applied by the ECB when assessing the suitability of members of the management bodies of significant credit institutions.  View Article
Financial Times: A transatlantic gulf is opening in banker pay
Jonathan Ford writes that the US is humming while Europe remuneration is set to slide.  View Article
 
  Capital Markets Union
 
 
Vice-Presidents Dombrovskis' and Katainen's remarks on the new measures to further strengthen the CMU and banking union
The European Commission presented seven new proposals on European financial markets: on sovereign bond backed securities, to help SMEs to list and issue stocks and bonds on public markets, several proposals on sustainable finance, and on the motor insurance directive.  View Article
Capital Markets Union: Making it easier for smaller businesses to get financing through capital markets
The Commission has proposed new rules to give small and medium enterprises (SMEs) better access to financing through public markets.  View Article
Financial Union: Commission launches risk reduction proposal to enable sovereign bond-backed securities
The Commission proposed new rules that will allow market-led solutions to support further integration and diversification within Europe's financial sector, leading to a stronger and more resilient Economic and Monetary Union.  View Article
ECB's Mersch: Euro Clearing – the open race
Yves Mersch said that "EU authorities must continue to be able to not only closely monitor UK CCPs but ensure they comply with EU regulations" after Brexit. Mersch outlined the rationale behind the change of the ECB's Article 22 to confer the bank bigger powers to supervise clearing houses.  View Article
ESMA promotes consistent (anti-)procyclicality margin measures for CCPs
ESMA issued final guidelines on anti-procyclicality margin measures for CCPs under EMIR. The Guidelines seek to establish consistent, efficient and effective supervisory practices and to ensure a common, uniform and consistent application of EMIR in order to limit procyclicality of CCP margins.  View Article
ESMA updates the EMIR Q&As
The European Securities and Markets Authority (ESMA) has updated its Questions and Answers (Q&As) regarding the implementation of the European Market Infrastructure Regulation (EMIR).   View Article
ESMA updates Q&A on MiFIR data reporting
The Q&As provide clarifications in relation to the requirements for submission of transaction reports and reference data under MiFIR. In particular, the Q&As relate to Complex Trades and National client identifiers for natural persons.  View Article
ESMA publishes update to MiFID II Q&As on investor protection and intermediaries topics
The new or updated Q&As cover the topics of best execution, client categorisation, provision of investment services and activities by third country firms, and other issues.  View Article
ESMA updates Q&A on Short-Selling Regulation
The overall SSR Q&A revises a pre-existing answer regarding locate arrangements, further specifying the requirements for ‘easy-to-borrow and purchase’ lists.  View Article
ESMA updates its MiFID II / MiFIR Q&As on transparency and market structures topics
ESMA updated its Questions and Answers regarding transparency and market structures issues under the Market in Financial Instruments Directive and Regulation.  View Article
ESMA publishes final Guidelines on MiFID II suitability requirements
ESMA published its Final Report on Guidelines on certain aspects of the MiFID II suitability requirements.  View Article
Bloomberg: Nordea says MiFID II to exacerbate slump in analyst coverage
The biggest bank in the Nordic region says Europe’s revision of market rules is likely to exacerbate a slump in the number of analysts covering smaller companies, making it harder for them to raise capital.  View Article
ESMA publishes latest data on credit rating agencies performance
ESMA published its latest set of semi-annual statistical data on the performance of credit ratings, including transition matrices and default rates.  View Article
ESMA updates the CSDR Q&As
The European Securities and Markets Authority (ESMA) has updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR).  View Article
ESMA updates Benchmarks Regulation Q&As
The purpose of this Q&A is to promote common supervisory approaches and practices in the application of BMR. It aims at providing investors and other market participants with clarifications on the applicable requirements.  View Article
ISDA: Uses of Notional Amount in Derivatives Regulation
This paper highlights a number of areas where derivatives rules are based on notional amount and similar measures. In so doing, the intention is to contribute to the important policy discussion about the merits of a risk-based regulatory framework.  View Article
Margin Rules and ISDA SIMM
ISDA will continue to manage the SIMM’s development through the established governance framework to preserve its stability and reliability as more users take up the methodology and invest in associated infrastructure.  View Article
AFME welcomes proposal on sustainable finance and SME growth markets
Policymakers must continue their ongoing efforts to build the CMU, which can help build up Europe’s capital markets’ capacity so that promising small firms can raise risk capital at all development stages.  View Article
Anneli Tuominen reappointed Vice Chair of ESMA
Board of Supervisors of the European Securities and Markets Authority reappointed Anneli Tuominen as its Vice Chair. Ms. Tuominen, who is the Director-General of the Finnish Finanssivalvonta, will serve a further 2½ year term effective immediately.  View Article
 
  Clients Union
 
 
General Data Protection Regulation enters into application
As of 25th May 2018, the new EU-wide data protection rules are becoming applicable after a two year transition period.  View Article
ECIIA: GDPR moves into the next phase
Europe’s General Data Protection Regulation came into effect on 25 May. While internal auditors in many organisations will have been helping their organisations prepare for the new requirements, now that the legislation is live, they are more likely to be providing assurance.  View Article
 
  Insurance
 
 
Insurance Europe: Bold policymaker action is vital to close global protection gaps
Policymakers must act decisively to stimulate individuals to save more for their retirement, encourage the uptake of cyber risk insurance and mitigate the impacts of natural catastrophes and cyber risk, said Insurance Europe’s newly elected president, Andreas Brandstetter.  View Article
 
  Asset Management
 
 
EFAMA: Strong uncertainty in markets boosted net sales of multi-asset funds in March
The European Fund and Asset Management Association (EFAMA) has published its latest Investment Funds Industry Fact Sheet, which provides net sales of UCITS and AIFs for March 2018.  View Article
ESMA updates UCITS Q&A
The purpose of this Q&A document is to promote common supervisory approaches and practices in the application of the UCITS Directive and its implementing measures.   View Article
Financial Times: Wealth management most fragmented in global finance
The 32 biggest wealth managers in the world have a collective market share of just 50 per cent, making the industry one of the most fragmented in global finance and ripe for consolidation, a new report from JPMorgan has found.   View Article
Investment & Pensions Europe: EC projections put peak public pension spending in 2040
Public spending on pensions by EU member states is expected to peak in 2040, according to projections from a study mandated by the European Commission.  View Article
Investment & Pensions Europe: PensionsEurope: ‘Commission should not dictate ESG rules’
A proposal from the European Commission on sustainable investing rules would subject European pension funds to an unprecedented level of prescriptiveness, according to PensionsEurope.  View Article
 
  Corporate Governance/Accounting
 
 
EFRAG’s endorsement advice on amendments to IAS 19
EFRAG has completed its due process regarding Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) and has submitted its Endorsement Advice Letter to the EC.  View Article
ISDA responds EFRAG Paper on Equity Instruments
ISDA’s Accounting Committee responded to the European Financial Reporting Advisory Group’s (EFRAG) discussion paper ‘Equity Instruments – Impairment and Recycling’.   View Article
Accountancy Europe: EFRAG´s equity instruments – impairment and recycling
Accountancy Europe responded to EFRAG on its discussion paper on equity instruments – impairment and recycling.  View Article
ECA: EU auditors to examine public participation in law-making
The ECA is conducting an audit of public participation in EU law-making. In particular, they will examine the public consultations with stakeholders undertaken by the EC when preparing its legislative proposals.  View Article
IIA: CBOK stakeholder report “Auditing Strategic Risks: Practical Insights from Internal Audit Leaders”
The latest Global Internal Audit Common Body of Knowledge (CBOK) Stakeholder Study report, Auditing Strategic Risks: Practical Insights from Internal Audit Leaders, reveals that nearly two-thirds (64%) of stakeholders want internal audit to take a more active role in strategic risks.  View Article
IFAC: Envisioning the future—survey on the IAASB’s future strategy
The IAASB has started the consultation process about its future strategy. It released a Strategy Survey to seek views and insights from its stakeholders on emerging developments and trends that are likely to be important to its 2020-2023 strategy.  View Article
IFAC: Helping small and medium practices thrive in the global economy
Small- and medium-sized practices (SMPs) in a digital, globalized world need to adopt ‘good practices’ to best serve their clients. IFAC has released an updated publication—the Guide to Practice Management for Small- and Medium-Sized Practices Fourth Edition to help SMPs meet this challenge.  View Article
 
  Financial Services Policy
 
 
EC: Sustainable finance - Making the financial sector a powerful actor in fighting climate change
The EC is delivering the first concrete actions to enable the EU financial sector to lead the way to a greener and cleaner economy.  View Article
ICMA welcomes European Commission’s proposals for implementing its Action Plan on Sustainable Finance
The International Capital Market Association welcomes the Commission’s first proposals for implementing its Action Plan on Sustainable Finance aimed at delivering concrete actions to enable the EU financial sector to lead the way to a greener and cleaner economy.  View Article
 
  Economic
 
 
Main results - Eurogroup
The Eurogroup first met in regular format and later in inclusive format. Ministers were informed about the staff-level agreement between the institutions and the Greek authorities. They also discussed the European Commission spring forecast, spending reviews and the future role of the ESM.  View Article
POLITICO: German economic adviser: ‘Italy is another argument for reforming now’
Bonn University’s Isabel Schnabel, who co-authored the policy brief put forward by French and German economists in January proposing a "constructive approach to euro area reform", says even small-step eurozone reforms would be better than no deal.  View Article
May 2018: Economic Sentiment stabilises further
In May, the Economic Sentiment Indicator (ESI) remained broadly unchanged in the euro area again (-0.2 points to 112.5). Sentiment picked up slightly in the EU (+0.4 points to 112.8), 1 offsetting a roughly commensurate drop in April.  View Article
VoxEU: Make euro area sovereign bonds safe again
This column argues that an improved euro area architecture would, in the long run, make all euro area sovereign bonds safer, and thus make the provision of safe assets through untested and potentially disruptive sovereign bond-backed securities unnecessary.  View Article
CEPS: Does the euro area need a safe or a diversified asset?
The banking system of the euro area can be stabilised even without creating a new ‘safe’ asset. The real problem is the concentration of risk on bank’s balance sheets in the form of large holdings of bonds of the home sovereign. Diversification should be the first priority, argues Daniel Gros.  View Article
Project Syndicate: The Perils of European Deposit Insurance
The European Commission and the European Central Bank are wrong to advocate a Europe-wide deposit insurance scheme. While some form of deposit insurance is not a bad idea, a one-size-fits-all state-provided solution would do more harm than good, writes Hans-Werner Sinn.  View Article
ECB Vice President Constâncio: 'Italy Knows the Rules'
In an interview with Spiegel Online, outgoing European Central Bank Vice President Vítor Constâncio issues a timely reminder that ECB assistance is tied to conditions, but insists the eurozone is in good shape despite the problems in Italy.  View Article
EU budget: €181 million to strengthen the fight against fraud affecting the EU budget
For the next long-term EU budget 2021-2027, the Commission proposes to make €181 million available to support Member States' efforts to fight fraud, corruption and other irregularities affecting the EU budget.  View Article
Bruegel: The Commission’s proposal for the next MFF: A glass half-full
The Commission’s proposal for the next Multiannual Financial Framework provides a good basis for subsequent negotiations and includes a number of bold suggestions. But it has a number of deficiencies and some of the proposed tools are conceptually weak, write Grégory Claeys and Zsolt Darvas.   View Article
ECA highlights key areas for simplifying Cohesion policy after 2020
Simplifying rules for Cohesion spending is a key challenge to be addressed for the post-2020 period. The ECA sets out a series of principles to be followed and key areas that need attention by the EC, the European Parliament and the Member States when deciding on new rules.  View Article
Tax fraud: Standard provision agreed for agreements with third countries
The Council approved a standard provision on good tax governance to be included in EU agreements with third countries.  View Article
Mutual recognition of goods: Council agrees position to reinforce the single market
The Council today agreed on a general approach on a draft regulation aimed at improving the mutual recognition of goods marketed in another member state.  View Article
Economic governance: Conclusions on macroeconomic imbalances
The Council adopted conclusions assessing the Commission's in-depth reviews of macroeconomic imbalances in 12 member states.  View Article
Public finances: Conclusions on age-related spending
The Council endorsed a report highlighting the challenges posed by ageing populations for the sustainability of public finances in Europe.  View Article
 

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