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The Commission has bowed to the inevitable and is suspending the EU’s fiscal rules until 2022. The decline in GDP has been much worse that in 2007-9 but a BIS study suggest loans losses may be lower as the hard-hit sectors are not the big borrowers. A batch of AML comments: OECD weighs in against the “white collar professionals” who enable AML; MEP Giegold hailed the landmark decision to require public reporting of tax country-by-country. ESMA proposed changes to the Transparency Directive to shut Wirecard’s stable door.
In the UK, former Commissioner Hill announced a review of listing requirements that turns the clock back a decade to allow multiple share classes for founders and a sharp deviation from EU standards. ECB’s Panetta spoke powerfully in Frankfurt about the systemic risks to the EU of euro clearing remaining in London. With a clear probability that the equivalence decision will not be renewed next year, it may come as a great surprise in the UK - the Continent is now so cut off that not even the FT bothers to report such trivia.
Graham Bishop
Articles from 26 February - 4 March 2021
General Financial Policy
EURACTIV:Commission wants to keep fiscal rules suspended in 2022 : In spite of the roll-out of the vaccines, and the expected arrival of the EU’s recovery funds in the second half of the year, there is still a “substantial level of uncertainty”, said the Commission’s executive vice-president for Economy, Valdis Dombrovskis. View Article
ECON: Economic Dialogue with the European Commission on EU Fiscal Surveillance : VP Dombrovskis and Commissioner Gentiloni... Economic Dialogue on the fiscal part of European Semester autumn package.. including the Commission Opinions on euro area 2021 Draft Budgetary Plans, the fiscal policy recommendation for the euro area and some elements of the 2021 Alert Mechanism Report. View Article
BIS: How much stress could Covid put on corporate credit? Evidence using sectoral data : Despite substantial losses in the sectors most affected by the pandemic, total corporate credit loss rates (ie losses in relation to the stock of debt) could fall short of those during the GFC because these sectors account for a smaller share of corporate borrowing than at that time. View Article
IMF blog: Staying Afloat: New Measures to Support European Businesses : As the pandemic persists and measures—such as loan repayment moratoria—expire, bankruptcies could rise, leading to a surge in unemployment and nonperforming loans...Europe now needs to gradually change the support to firms from providing liquidity toward strengthening their equity. View Article
Banking Union
SSM's Enria: Interview with Le Monde : Wide-ranging interview...Despite the public health crisis, European banks are currently in a fairly strong position. In contrast to the financial crisis of 2008, the current economic crisis did not originate from excessive risk-taking or outright misbehaviour by banks. View Article
SRB publishes overview of Banking Union resolution and access to FMIs : The SRB has published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructures (FMIs) services in resolution View Article
OECD calls on countries to crack down on the professionals enabling tax and white collar crimes : Countries should increase efforts to better deter, detect and disrupt the activities of professionals who enable tax evasion and other financial crimes, according to a new OECD report. View Article
The EBA highlights key money laundering and terrorist financing risks across the EU : The European Banking Authority (EBA) today published its biennial Opinion on risks of money laundering and terrorist financing (ML/TF) affecting the European Union's financial sector. View Article
EBA publishes final revised Guidelines on money laundering and terrorist financing risk factors : The revisions take into account changes to the EU Anti Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and address new ML/TF risks, including those identified by the EBA’s implementation reviews. View Article
GRI: Momentum gathering behind public country-by-country tax reporting : GRI’s Tax Standard can address global requirements for transparency.Political momentum to require large companies to publicly provide country-by-country reporting (CBCR) on tax is increasing, on both sides of the Atlantic, with a series of significant developments last week: View Article
Giegold: An earthquake moment in the tax world: breakthrough for tax justice in Europe! : At the meeting of the Ministers for Economic, Industrial and Research Policy (COMPET) this afternoon (Thursday, 25 February), a landmark decision was taken in the fight against tax avoidance. View Article
German Financial Stability Committee: In light of the pandemic, countercyclical capital buffer of 0% until end-2021 appropriate : Given the need for credit in the real economy and the potential for credit losses in the further course of the coronavirus pandemic, BaFin does not intend to raise the countercyclical capital buffer before the end of 2021. The G-FSC considers this appropriate. View Article
Capital Markets Union
EuropeanIssuers welcomes the Capital Markets Union New Action Plan but emphasises its lack of ambition for issuers : EuropeanIssuers argues that the CMU is ultimately about financing projects undertaken by companies whose needs should be at the core of any initiative and believes that the European Commission’s prime concern shall be to focus more on the company’s perspective. View Article
EFAMA responds to IOSCO Consultation on Market Data in Secondary Equity Market : EFAMA supports the initiatives launched by IOSCO and other regulators (e.g. ESMA, FCA, SEC) to analyse and address the significant issues concerning market data in the secondary equity market. View Article
ICMA responds to IOSCO survey on bond ETF in the context of March/April 2020 market meltdown : The recent crisis shows that overall the ETF ecosystem functioned well despite extreme circumstances but that there is a need to continue improving the resilience and liquidity of corporate bond markets via its further electronification and appropriately calibrated regulation. View Article
IOSCO publishes work program for 2021-2022 : The 2021-2022 work program encompasses work with respect to two new priorities, namely: Financial stability and systemic risks of non-bank financial intermediation activities (NBFI); and risks exacerbated by the COVID-19 pandemic – misconduct risks, fraud, and operational resilience. View Article
Environmental, Social, Governance (ESG)
ESMA proposes rules for Taxonomy-alignment of non-financial undertakings and asset managers : ESMA has today published its Final Report on advice under Article 8 of the Taxonomy Regulation, which covers the information to be provided by non-financial undertakings and asset managers to comply with their disclosure obligations under the Non-Financial Reporting Directive (NFRD). View Article
EBA launches public consultation on draft technical standards on Pillar 3 disclosures of ESG risks : The draft ITS put forward comparable disclosures that show how climate change may exacerbate other risks within institutions’ balance sheets, how institutions are mitigating those risks, and their green asset ratio on exposures financing taxonomy-aligned activities, consistent with `Paris' goals. View Article
ESMA supports increasing corporate transparency through the creation of ESAP : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has submitted its response to the European Commission’s (EC) targeted consultation on the European Single Access Point (ESAP). View Article
Bruegel: Carbon price floors: an addition to the European Green Deal arsenal : As the European Union sets out a more ambitious climate policy, carbon price floors provide an opportunity to place greater emphasis on altering expectations, so that market agents anticipate today higher future pay-offs from low-carbon investment. View Article
CDSB: In response to IOSCO : IOSCO sees an urgent need for globally consistent, comparable, and reliable sustainability disclosure standards and announces its priorities and vision for a Sustainability Standards Board under the IFRS Foundation. View Article
SASB Advances Structured ESG Disclosure Via Issuing SASB XBRL Taxonomy for Public Comment : SASB engaged PwC to support in the development of an XBRL taxonomy encompassing SASB’s 77 industry Standards. By integrating into the common language for business reporting, the SASB XBRL taxonomy can further enhance the quality and usefulness of SASB disclosures. View Article
SSE: Exchange in Focus: Nasdaq Sustainable Bond Network Builds a Framework for a Sustainable Future : The network was a natural expansion of Nasdaq’s existing Sustainable Bonds Market launched in 2015, which lists more than 200 green bonds. View Article
Insurance Europe: EIOPA proposal for regular reviews of parameters to ensure climate change is appropriately captured in Solvency II welcome : Insurance Europe has today published its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on its discussion paper on a potential methodology for the inclusion of climate change in the Solvency II natural catastrophe standard formula. View Article
Insurance Europe: Action on adaptation to climate change must be ambitious and reflect diverse circumstances across member states : We welcome the EC’s strategy to enhance adaptation to climate change: in particular, the EC’s ambitions to tackle the climate protection gap and to increase efforts to boost prevention and resilience at all levels. View Article
ESMA proposes improvements to Transparency Directive after Wirecard case : ESMA has written to the European Commission (EC) with its proposals to improve the Transparency Directive (TD) following the Wirecard case. The letter addresses provisions related to enforcement of financial information. View Article
Protecting Customers
Insurance Europe: EDPB should improve draft data breach guidelines to better reflect the risk-based nature of the GDPR : Insurance Europe has published its response to a consultation by the European Data Protection Board (EDPB) on draft guidelines on examples regarding data breach notifications. View Article
Fin Tech Regulation
Vox Danielsson: What happens if bitcoin succeeds? : Fortunately, the internal contradictions and perverse consequences of cryptocurrencies' success mean that they are destined for failure. Until then, it might make sense for speculators to ride the cryptocurrency bubble, so long as they get out in time. View Article
Brexit
EY Brexit Tracker: Dublin remains most popular EU relocation city for UK FS firms : 43% (95 of 222) of financial services firms* have moved or plan to move some UK operations and/or staff to Europe, taking the total number of Brexit-related job moves to almost 7,600; 36 financial services firms are considering or have confirmed relocating some UK operations and/or staff to Dublin View Article
UK Treasury: Independent review recommends reforms to UK Listing rules to boost growth and markets : Reforms to the rules that govern how companies raise finance on public markets will ensure the UK remains one of the most attractive places to grow and list successful innovative companies, according to a new review published today View Article
City Corporation responds to Lord Hill review of UK listings regime : "The UK is a great place to list businesses, with its deep and liquid pools of capital ..cluster of specialist expertise. But we need to do more to attract IPOs, especially from entrepreneurial and fast-growing sectors such as tech – while..maintaining high standards of governance and transparency." View Article
Investment week: Lord Hill review: FCA urged to approach listings shake-up with caution : Hill aims to 'close gap' on London's rivals View Article
IA comments on the outcome of the UK Listing Review : "The proposed reforms are an important first step to help re-energise capital markets and attract high-growth, innovative companies to set up, list, and grow their business operations in the UK, providing high value jobs that will benefit the economy." View Article
EURACTIV: New Brexit row after UK extends exemption to Irish border checks : The European Union has accused the UK government of breaking international law after it moved to unilaterally extend grace periods for Irish Sea border checks View Article
ECB's Panetta: Central clearing and the changing landscape : The end of the transition period following the United Kingdom’s departure from the European Union is of course another crucial change, and I will discuss its implications for financial stability in the EU in relation to central clearing. View Article
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