Welcome to our Gold Friends weekly e-mail.
My highlights of the week: The Commission is having another go at enhancing the Single Rule Book – consulting on greater convergence of the ESAs. ECOFIN has agreed the Retail Payment Strategy that will deliver instant, safe payments for all citizens - just as ESMA warned on the risks of cryptocurrencies when Bitcoin hit $55,000. What is the point of it if citizens can make instant, cheap payments? When will sanity be restored as in 1637 Amsterdam when “tulip mania” crashed? More supportive comments on ESAP (Euro Single Access Point for corporate data) – undoubtedly a key building block of CMU. The UK has started consulting on “sweeping changes” to financial regulations – surely making any discussions on “equivalence” utterly pointless!
(Register for my London 4 Europe webinar - 7PM 25 March Brexit: Ending the City’s Dominance of European Finance?)
The Zoom video of my 171st Brussels for Breakfast yesterday is at www.grahambishop.com
Graham Bishop
Articles from 12 -18 March, 2021
General Financial Policy
ECOFIN: Informal video conference of economic and finance ministers, 16 March 2021 : Main topics: Tax challenges from digitalisation - OECD reforms of corporate tax; Retail payments; Economic recovery and RRF; View Article
Eurogroup:Remarks by Paschal Donohoe following the Eurogroup of 15 March 2021 : Topics included: Covid response, fiscal policy guidance, euro exchange rate, international role of the euro View Article
Targeted consultation on the supervisory convergence and the single rulebook : There has been considerable progress on both supervisory convergence and the single rulebook since the three European Supervisory Authorities (ESAs) were created in 2011. Nevertheless, both require continued and appropriately targeted efforts to make further progress. View Article
SSM's Enria: European banks in the post-COVID-19 world : Based on the data available at present, we expect to see only a slight fall in the Common Equity Tier 1 capital ratio in the last quarter of 2020 (compared with the third quarter of the same year) to levels still above those prevailing at the start of the year. View Article
EPC The Conference on the Future of Europe: Mind the gaps! : The Conference is an experiment of inclusive reflection and renewal that could help our European democracies innovate, adapt and prosper. But to be successful, the Conference leadership must be mindful of 6 treacherous gaps in the Joint Declaration. View Article
BDB Strengthening Europe’s sovereignty : The European Union faces the once-in-a-century task of asserting itself – as a community – politically, economically and socially in a world of global competition. Europe’s economy will remain dependent in this process on open and secure world markets to unfold its strength. View Article
SUERF: Debt cancellation by the ECB: Does it make a difference? : In February this year, several major newspapers published a letter from more than a hundred economists calling for the ECB to cancel the government debt it holds. Paul De Grauwe argues that even if the ECB did cancel this debt, nothing of substance would change economically for national governments. View Article
Banking Union
EBA consults on changes to its Guidelines on Risk-based AML/CFT supervision : The European Banking Authority (EBA) launched today a public consultation on changes to its Guidelines on Risk-Based Supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. View Article
EBA consults on its draft Guidelines for institutions and resolution authorities on improving resolvability : The European Banking Authority (EBA) published today a consultation on Guidelines for institutions and resolution authorities on improving resolvability. These Guidelines represent a significant step in complementing the EU legal framework in the field of resolution. View Article
Capital Markets Union
ESMA Report on Trends, Risks and Vulnerabilities : EU financial markets recovered from the significant COVID-19 related market stress in 2H20, in the light of notable public policy interventions, the announcement of new vaccines available in the short term and the reduction of Brexit-related uncertainty at the end of the reporting period in the EU. View Article
AFME: Securitisation can be a key driver for a post-pandemic sustainable recovery : AFME published a new paper outlining the role securitisation can play in developing sustainable finance, in particular in a post-pandemic economic recovery. View Article
Insurance Europe: Solvency II review will only have a positive impact on EU economy if EC proposals deviate from EIOPA advice : Insurance Europe has today published a position paper outlining its views on the advice provided by the European Insurance and Occupational Pensions Authority (EIOPA) to the European Commission on the review of the Solvency II regulatory framework. View Article
ISDA: Joint Trade Associations Letter on the Implementation of the CSDR Settlement Discipline Regime : ISDA and 14 other trade associations sent a letter to the European Commission and the European Securities and Markets Authority highlighting the industry’s concern with respect to implementation of the settlement discipline regime under the Central Securities Depositories Regulation (CSDR) and the mandatory buy-in requirements. View Article
ICMA responds to ESMA consultation paper on algo trading : The ICMA algo taskforce (Taskforce) member response is based on consensus view and relates solely to bonds. The Taskforce represents buy-side and sell-side investment firms, trading venues and software and technology providers. View Article
Environmental, Social, Governance (ESG)
ACCA: Wirecard lessons for watchdogs : The resignation of Germany’s top regulator demonstrates the need for clear demarcation from companies View Article
ESBG: Single European Access Point for Financial and Non Financial Information : ESBG welcomes the opportunity to comment on the European Commission's proposal to establish a European Single Access Point (ESAP). This tool was already listed as one of the sixteen actions to carry out in the framework of the Capital Markets Union. View Article
EuropeanIssuers welcomes the establishment of the European single access point whilst fears it does introduce additional burdens for issuers : While EuropeanIssuers welcomes the establishment of the ESAP, its introduction is not a priority. The main focus should be kept on the initiatives helping European companies to recapitalise in the context of the COVID-19 crisis. View Article
EFAMA: European single access point for data? EFAMA’s 6 key recommendations : "EFAMA sees the establishment of the ESAP as a unique opportunity for advancing the Capital Markets Union, centralising all publicly available ESG and financial information in one place. The information to be included on the platform has to reflect investor's needs ...” View Article
FeBAF on the European Single Access Point for companies’ information : A single standardized European platform that collects financial and non-financial information of EU companies has been recently presented by the European Commission as an ambitious overall proposal named the European Single Access Point (ESAP). View Article
ECB's de Guindos: Shining a light on climate risks: the ECB’s economy-wide climate stress test : Climate change has the potential to cause substantial disruption to our economies, businesses and livelihoods in the coming decades. Yet the associated risks remain poorly understood, as climate shocks differ from the financial shocks observed during previous crises. View Article
CDP: The EU takes a big step to further global sustainability standards : Last year, the European Commission tasked EFRAG – Europe’s financial reporting body – to start preparatory work on the world’s first public standards for sustainability reporting. These standards will be vital for delivering the EU’s ambitious environmental and sustainable finance agenda. View Article
IFAC Convenes Leadership of Global Accountancy Profession to Progress Sustainability Agenda : The International Federation of Accountants (IFAC) last week convened over 150 chief executives and senior leaders of professional accountancy organizations around the world, together with its Board of Directors, to discuss critical issues relevant to the future of the accountancy profession. View Article
Accountancy Europe: Building a credible Green Bond market : With the European Green Deal, the European Commission sets Europe on a path to become climate neutral by 2050. Achieving this objective will require massive investments. View Article
IOSCO's Servais sees coherence between IFRS Foundation and EU approach on non-financial reporting : IOSCO’s coordination role at international level; the initiatives taken by the IFRS Foundation and the relevance of audit and assurance when it comes to sustainability-related disclosure. View Article
ESMA: Joint Consultation on Taxonomy-related sustainability disclosures : The European Supervisory Authorities (ESAs) welcome comments on this consultation paper setting out the proposed Regulatory Technical Standards (hereinafter “RTS”) on content and presentation of disclosures pursuant to Article 8(4), 9(6) and 11(5) of Regulation (EU) 2019/2088 (hereinafter Sustainable Finance Disclosure Regulation “SFDR”). View Article
ESAs consult on Taxonomy–related product disclosures : The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have today issued a Consultation Paper seeking input on draft Regulatory Technical Standards (RTS) regarding disclosures of financial products investing in economic activities that contribute to an environmental investment objective. View Article
EFAMA: ESG investing in the UCITS market: a powerful and inexorable trend : "Our new Market Insights shows that the ESG market has quite possibly reached a turning point in 2020. New regulatory measures, such as the Sustainable Finance Disclosure Regulation that came into force yesterday, intend to enhance comparability and trust for investors in ESG funds ...." View Article
EFAMA: EFRAG sets solid foundations for the establishment of mandatory EU sustainability reporting standards: The European Fund and Asset Management Association (EFAMA) calls on the European Commission to reflect EFRAG´s recommendations for mandatory European Sustainability Reporting Standards in the upcoming NFRD review. View Article
CRE: AM Best signs up to UN’s insurance sustainability principle : Ratings agency AM Best has signed up to the UN’s Principles for Sustainable Insurance (PSI), which were developed in an initiative with the insurance industry and adopted by 140 organisations across the world. AM Best is the first credit ratings agency to adopt the principles. View Article
Fin Tech Regulation
ESMA sees high risk for investors in non-regulated crypto assets : It highlights the increasing credit risks linked to significant corporate and public debt overhang, as well as the risks linked with investments in non-regulated crypto-assets. 2020 EU share trading was 43% on UK venues and 96% on EU venues in January 2021. View Article
SUERF: CBDC: Where is the unique selling proposition? : It is not yet clear from the CBDC prototypes outlined so far what their unique selling proposition over existing systems might be. This suggests that the perspective of potential users is largely ignored and CBDC projects risk the failure to assert themselves in the existing payment ecosystem. View Article
BETTER FINANCE Position on Crypto Assets and Distributed Ledger Technology : BETTER FINANCE welcomes the initiatives and efforts of EU public authorities to accommodate emerging technologies in financial services whilst maintaining a safe and stable environment for consumers and financial services users to benefit of our single market for capital movements and investments. View Article
Project Syndicate: The Struggle for Technology Sovereignty in Europe : From now on, every country or group of countries must ask itself whether it produces the technologies it needs or has guaranteed, unfettered, long-term access to them. A country that answers no is vulnerable to technological coercion that is no less severe than the military coercion of yesteryear. View Article
Friends' Standard Services
171st Brussels 4 Breakfast: video with Graham Bishop, Fiona Wright (Brunswick) and Brian Polk (PWC) : There are the negotiations on a MoU, there's the progress (or lack of it) on longer term relations between the EU and UK (and on which 'third country' model the EU should apply). There's also Fabio Panetta's important intervention in the clearing debate, there's the new focus on AML ... View Article
Graham Bishop: The politics of Brexit: Ending the City’s Dominance of European Finance : The Victorian statesman Lord Palmerston famously said 200 years ago “Nations have no permanent friends or allies, they only have permanent interests”. Today, differing views on “permanent interests” fundamentally divide the United Kingdom from the European Union. View Article
Brexit
Bloomberg: U.K. Plans Sweeping Markets Review to Give London a Brexit Edge : Treasury to consult on changes in the summer, John Glen says; Review aims to be ‘as broad and inclusive as possible’ View Article
Breugel's Veron: Financial services: The Brexit dust begins to settle : The phase of greatest Brexit-related uncertainty for the European financial sector ended on 1 January. Although too early to discern more than the broadest contours of the future landscape, it is increasingly apparent that London will be less dominant than before. View Article
FCA: A forward look at regulation of the UK’s wholesale financial markets : Decisions to tailor securities financing transaction reporting and settlement buy-in rules...; The FCA welcomes recommendations to look at aligning prospectus documentation..; There is scope to simplify and remove costs from some parts of the MiFIDII regime without material loss of benefits. View Article
CRE: UK’s PRA says SII review won’t significantly reduce capital buffers : The Prudential Regulation Authority (PRA) has said the UK’s review of Solvency II will not tear up its principles or particularly lower capital requirements, and cast doubt on the amount of funds the insurance industry has suggested could be freed up. View Article
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