Paulson outlines consequences from ‘fundamental changes in the financial system’

27 March 2008

The “latest episode has highlighted that the world has changed as has the role of other non-bank financial institutions, and the interconnectedness among all financial institutions”, Paulson said speaking at Capital Markets Competitiveness Conference in Washington. “These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability.”  View

IASB discussion paper for post employment benefits

27 March 2008

The IASB has published for comment a Discussion Paper “Preliminary Views on Amendments to IAS 19 Employee Benefits”. The IASB intends to issue a revised IAS 19 by 2011. The paper is a first step in a comprehensive project on the accounting for post-employment benefit promises. View

IOSCO report on Credit Rating Agencies for public consultation

27 March 2008

IOSCO published for consultation its report on the role of credit rating agencies in structured finance markets. The report discusses the role of CRAs in the recent credit crisis and proposes ways to strengthen processes and procedures at CRAs.  In particular, the report proposes expanding upon the Code of Conduct provisions relating to the quality and integrity of the rating process. View

JURI meeting 26-27 March

27 March 2008

JURI Committee adopted the "simplified business environment for companies" with a number of compromise amendments. The discussions on the reports on "transparency of institutional investors" of Mr Lehne and the presentation of working paper Hedge funds and private equity of Mrs Kauppi were postponed to 8 April. View

BIS White: The need for a new Macrofinancial Stability Framework

26 March 2008

“The current financial turmoil, and the period preceding it, share many of the characteristics of previous historical cycles”, William White from the BIS said and suggested that the natural "procyclicality" of the financial system could be contained through the introduction of a "New Macrofinancial Stability Framework".  View

Speech Kroes: Competition policy objectives

26 March 2008

Neelie Kroes focused on state aid, anti-trust and merger issues and announced a “Anti-trust Damages White Paper” to be launched in the coming weeks, and the final version of the “General Block Exemption Regulation on state aid”, which is due to be adopted before end June 2008.  View

Trichet calls for further significant change of culture

26 March 2008

“Financial institutions will need to step up their efforts to effectively manage the risks that may lie ahead”, ECB President Jean-Claude Trichet said speaking before the EP ECON Committee. “With the global financial system undergoing a process of de-leveraging, the euro area financial stability outlook continues to be clouded by considerable uncertainty.” View

3L3 joint consultation on information of payer accompanying a funds transfer

26 March 2008

CESR, CEBS, and CEIOPS issued a joint consultation paper that aims to reflect a common understanding to deal with payments that lack the required information in respect of EU Regulation 1781/2006 on the information on the payer accompanying funds transfers to payment service providers of payees.  The document aims to take into account the current level of compliance with the FATF Special Recommendation VII outside the EU, and the fact that funds transfers is a mass business. View

Bank of Japan issues report on financial turmoil

26 March 2008

The BoJ issued its second financial market report summarizing among others the factors behind the financial turmoil during the second half of 2007. The significant deterioration in market liquidity has made it difficult for investors to re-evaluate financial assets adequately, the report states. Adjustments in securitization markets and credit markets overall have intensified further. View

FSA moves to enhance supervision in wake of Northern Rock

26 March 2008

"It is clear that our supervision of Northern Rock was not carried out to a standard that is acceptable”, Hector Sants, Chief Executive of the FSA, said presenting the review into the Northern Rock supervision. Overall, the supervision of Northern Rock did not reflect the general practice of supervision of high-impact firms at the FSA. View

Commission opens formal proceedings against Visa Europe

26 March 2008

The Commission decided to open formal anti-trust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions within the EEA using Visa branded consumer payment cards, and the "Honour-All-Cards-Rule" as it applies to these transactions. View

EFRAG requests comments on initial assessments of Amendments to IAS 32 and IAS 1

26 March 2008

EFRAG is consulting both on its assessment of the amendments against the EU endorsement criteria and on its initial assessment of the costs and benefits that would arise from the Amendments’ application in the EU.   EFRAG recommends their endorsement for use in the EU. View

Commission quarterly report on the euro area: headwinds gather strength

26 March 2008

GDP growth decelerated from 2.6% year-on-year in the third quarter of last year to 2.2% year-on-year in the fourth quarter. The Quarterly Report on the Euro Area (QREA) highlights the fact that despite the sound economic fundamentals of the euro area, persistent uncertainties about the duration and the ultimate cost of the financial turmoil and a weakening US economy have begun to take a toll on euro-area GDP growth.  View

Telegraph: Financial crisis finger of blame points at City rules

26 March 2008

Finding a more reliable system of regulation will take years, writes Edmund Conway. For beyond all the hubris in financial markets, beneath the burning embers of the sub-prime market, the forensic analysts are slowly discovering compelling evidence that, along with Alan Greenspan's unnecessarily low interest rates, it was regulations wot dunnit. View

ECON meeting 25-26 March

26 March 2008

ECON held an exchange of views with ECB President Trichet on the consequences of the financial turmoil and the ongoing market corrections, and with Competition Commissioner Neelie Kroes. The Commissee also discussed the working paper on hedge funds and private equity. However, there seem to be diverging views if the document should also reflect on the recent financial market developments. View

Watanabe: Financial turmoil does not have serious impact on Japanese financial system

25 March 2008

Yoshimi Watanabe, Minister of State for Financial Services, does not expect that the sub-prime crises will directly produce a serious impact on the Japanese financial system, although major Japanese banks reported sharp declines in their profits in the third and fourth quarters of the current fiscal year ending in March 2008. View

Harald Tribune: OECD sees no need for sovereign wealth fund rules

25 March 2008

New laws or regulations to govern sovereign wealth funds are not needed as long as the funds are transparent and invest on commercial rather than political grounds, the head of the OECD said on Tuesday. Angel Gurria, OECD secretary-general, said that "we believe that there should not be any legislation or any regulation or any code applied that unduly restricts the freedom of investment".  View

SECs next steps towards mutual recognition

24 March 2008

The SEC announced a series of actions it intends to take to further the implementation of the concept of mutual recognition for high-quality regulatory regimes in other countries. "The steps are designed to better coordinate SEC regulation of the U.S. capital markets with our counterparts' regulation in the larger global marketplace," said SEC Chairman Christopher Cox. View

Japan Times: Japan, China agree on shielding Asian economy

24 March 2008

The finance ministers of Japan and China agreed Sunday to protect Asia's economy from the slowdown in the United States economy and the global turmoil being caused by the subprime-mortgage crisis, Finance Minister Fukushiro Nukaga said. "We agreed to share information and to co-operate to prevent the Asian economy from being negatively affected," Nukaga said. View

SIFMA calls SEC for immediate reforms on mutual recognition

24 March 2008

The SEC should immediately start with necessary regulatory reforms, SIFMA says in a statement on the SEC announcement on mutual recognition, and calls for modifications to a 19-year old rule, known as 15a-6. “We are concerned that the opportunity to deliver tangible results is slipping away” said Ira Hammerman, senior managing director and general counsel of SIFMA. View

FT: Beware a regulatory backlash against banks

23 March 2008

Banks are focused on the current crisis but they should keep their eyes on another looming problem: a regulatory backlash that is already under way in some countries, the FT reports. It will be costly and will have unintended consequences. The political dimension is broadening as the banking crisis feeds into the real economy. View

EDHEC research paper on Sovereign Wealth Funds

21 March 2008

EDHEC released a research paper on Sovereign Wealth Funds that finds that it probably makes more sense for governments to respond only in serious situations, rather than to issue generalised guidelines now, with unnecessary bureaucratic force. View

SEC Chairman Cox supports BIS to update guidance on liquidity management

21 March 2008

SEC Chairman Cox supports the Banking Committee’s plans to updated guidance on liquidity management for banking organizations in light of the recent market turmoil. In a letter to the BIS Cox underlined “that the events earlier this month highlight the importance of liquidity management in meeting obligations during stressful market conditions.” View

US Treasury agrees on principles for Sovereign Wealth Funds

21 March 2008

The US Treasury agreed on a set of principles for investment by sovereign wealth funds with with Abu Dhabi and Singapore. The agreement should also serve as a stepping stone on basic principles currently discussed within the IMF and the OECD. View

IMF endorses work agenda on SWF

21 March 2008

The IMF gave the green light for further analysis on the role of SWFs and endorsed a proposal to work with SWFs and other relevant parties to prepare a set of best practices for the state investment institutions. The set of best practices would cover issues of public governance, transparency, and accountability principles. An international Working Group of SWFs will begin technical discussions and drafting work from April onwards. View

AMF simplified procedure for prospectuses for listed companies

21 March 2008

The AMF published a new procedure for examining and authorising issue prospectuses for listed companies approved by its Board. The procedure has been written into Article 5 of Instruction 2005-11 of 13 December 2005 on disclosure requirements for public offerings, pursuant to Title I of Book II of the AMF General Regulation. View

US Congressmen call for significant changes in financial services regulation

20 March 2008

Financial Services Committee chairman Barney Frank called to consider establishing a “Financial Services Risk Regulator” that has the capacity and power to assess risk across financial markets regardless of corporate form and to intervene when appropriate. Vito Fosella, chair of the 'Capital Markets, Economic and Information Security' Tast Force said that the system of financial regulation is outdated and no longer adequate in effectively overseeing a modernized and increasingly complex industry. View

IPE: Pension funds called to review investment uncertainty

20 March 2008

Pension fund officials are being encouraged to “explore their sustainable investment beliefs” in a bid to prevent uncertainty about the potential performance of their portfolios. View

OECD interim report states need for policy stimulus stronger in US than in Europe

20 March 2008

Inflation in US and Europe is at uncomfortable levels as economies slow, the OECD says in its latest interim assessment. But in contrast to the US, the near-term outlook for the euro area does not point to the need for policy stimulus. The US economy is now essentially moving sideways, if not contracting outright, the report states. View

Eurosystem and Bank of Russia launch co-operation programme in banking supervision and internal audit

20 March 2008

The Eurosystem and the Central Bank of the Russian Federation launched a three-year co-operation programme in the areas of banking supervision and internal audit. The banking supervision component of the programme will aim at enhancing the institutional capacity of the Bank of Russia to maintain the stability of the Russian banking system. View

FASB to improve financial reporting by enhanced disclosures

20 March 2008

The FASB responds to the sharp increase in the use and complexity of derivatives instruments by issuing a Statement on 'Disclosures about Derivative Instruments and Hedging Activities'. SFAS No. 161 asks entities to provide qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of and gains and losses on derivative contracts, and details of credit-risk-related contingent features in their hedged positions. View

ECON draft report on Solvency II

20 March 2008

 ECON Committee published the draft report on Solvency II. With regard to the MCR calculation rapporteur Peter Skinner proposes to adopt the compact approach as this is the most appropriate method to ensure that MCR values that are sensible, which provide a proper safety net and a proper relationship with the SCR. View