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28 January 2010

This week in "Brussels" + Podcast
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  Articles from 21 January 2010 - 28 January 2010

  Financial Services Policy

 
 
 
Obama urges banks to limit size and investment
‘Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit unrelated to serving their customers’, said US President Barak Obama.   View Article
 
FSB backs Obama proposals on banks’ size cut
The proposals announced by the US yesterday are amongst the range of options and approaches under consideration, said the Financial Stability Board, welcoming the US initiative. The FSB's final recommendations are expected later this year.  View Article
 
FT: Brown foresees global accord on bank levy
According to the Financial Times, the Prime Minister is claiming that the backward-looking levy imposed on banks by Barack Obama earlier this month was “not dissimilar” to the kind of proposals he made at last year’s G20 meeting in St Andrews.  View Article
 
World Economic Forum: Sarkozy calls for “new Bretton Woods”
In his opening address, the French President called for a re-examination of the fairness of globalization and capitalism. He said France would place the reform of the international monetary system on the agenda when it chairs the G8 and G20 next year.  View Article
 
Trichet interview with Wall Street Journal: full support for Ben Bernanke renewal as Fed Chairman
If things are progressively back to normal functioning, it is not thanks to the spontaneous behaviour of the financial system itself, but very largely due to the engagement and commitment of public authorities.   View Article
 
IIF William Rhodes at World Economic Forum: warning to regulators time is running out
He believes, among other things, that the Financial Stability Board should exercise leadership in collaboration with the two accounting standards boards to secure a renewed commitment to convergence. Consistency on a global basis is needed.  View Article
 
FDIC and Bank of England announce enhanced cooperation in resolving troubled cross-border financial institutions
The memorandum of understanding signed by both authorities will help in resolving troubled deposit-taking financial institutions with activities in the US and UK. The MOU is a step forward in implementing the recommendations of the Basel Committee’s Cross-border Resolution Group  View Article
 
ECB González-Páramo: speech on regulatory and supervisory reform in Europe
Although much has been achieved to improve the European regulatory and supervisory framework, a lot still remains to be done. Europe should play a leading role in these developments and needs to make further progress to create a supervisory and regulatory framework.  View Article
 

 
  Banking

 
 
 
Alistair Darling warns Obama about banking reforms
In an interview with The Sunday Times, the Chancellor said he saw serious shortcomings in the American approach. Darling believes Obama’s proposals would not have prevented the crisis and risk undermining the international consensus on reforming the financial system.   View Article
 
International Centre for Financial Regulation comments on BIS principles and standards for financial services compensation
Richard Reid believes this BIS publication highlights the tension between the often protracted responses of the agencies charged with developing a strategy for tackling the causes of the financial crisis versus the political requirement of being seen to be doing something.  View Article
 
Basel Committee publishes assessment methodology for compensation practices
The report aims to guide supervisors in reviewing individual firms’ compensation practices and assessing their compliance with the FSB Principles for Sound Compensation Practices and their implementation standards.   View Article
 
NVB reaction to Commission consultation on EU framework for cross-border crisis management in the banking sector
The Netherlands Bankers’ Association believes that contingency planning can be a useful tool for both the institution and the supervisor in the early intervention phase. However, NVB does not support the idea of drawing up a ‘living will”.   View Article
 
Bank of England: Paul Tucker speech on shadow banking - capital markets and financial stability
Mr Tucker described the role of shadow banking. Often considered a product of ‘regulatory arbitrage’, it can be problematic if the resulting non-bank forms of financial intermediation replicate the systemic risks posed by banking itself.  View Article
 
CEBS publishes revised guidelines on CRD supervisory disclosure
CEBS’s framework for supervisory disclosure makes it easier to compare national texts, as amended from time to time, which implement CRD. It also makes it easier to contrast the ways in which member states exercise the options and national discretions available to them in CRD.   View Article
 
ECON Committee exchanges views on CRD III – need for a clear timeline for CRD II, III and IV
CRD III rapporteur Arlene McCarthy (S&D/UK) said that the key objective is to avoid future crises in the financial sector and to ensure that banks are better capitalized so that tax payers will not need to bail them out.   View Article
 
ECON Committee exchanges views with CEBS Chairman – need to ensure EBA works efficiently
Mr Carosio believes that the ESAs should be given a central role in developing binding technical standards, and that the Commission endorsement should be consistent with EU law. Cross-sector regulation and the future role of a joint committee of the ESAs needs to be considered.  View Article
 

 
  Securities

 
 
 
FT: Paris plans to launch electronic corporate bonds market
The project is aimed at trading the bonds of French companies, but it could expand to take in other euro-denominated issuers. However, there are some doubts as to whether the plan will succeed since the majority of deals are still conducted by telephone.  View Article
 
EACH publishes CCP risk management recommendations
A report by the European Association of Central Counterparty Clearing Houses is the result of work undertaken by EACH risk experts following the finalisation of the ESCB-CESR recommendations. It aims to manage systemic risk and to enhance the safety, soundness and efficiency of CCP operations.  View Article
 
ECON Committee first exchange of views on derivatives – commodities speculation will be tackled
Patrick Pearson for the Commission: one of the main problems in tackling derivatives is that the corporate end users utilize underpriced contracts which do not reflect the real risk. It is important to identify which end users are systemically risky and control them.   View Article
 
IOSCO completes global framework to fight against cross-border market abuse
From IOSCO's eligible membership of 115 securities regulators, 96% now meet the requirements for becoming signatories to the Multilateral Memorandum of Understanding (MMoU), or have made the necessary commitment to seeking national legislative changes to allow them to do so in the near future.  View Article
 

 
  Insurance

 
 
 
CEIOPS sets up Task Force to deliver the final Quantitative Impact Study under Solvency II
CEIOPS will provide a complete draft of the QIS 5 technical specification by end of March 2010 to enable the Commission to publish final technical specifications by end of July 2010. Results will then be submitted to national supervisors by end of October 2010.  View Article
 
CEIOPS consults on Solvency II Level 3 guidance
This first Level 3 guidance represents clear evidence of CEIOPS’ commitment to ensure increased convergence across EEA supervisory practices within the new solvency framework. The paper also provides guidance on the operation of the College of Supervisors in the pre-application process.  View Article
 

 
  Asset Management

 
 
 
AIFMD hearing on JURI Committee – AIFMD still a polemic directive
Two experts presented their opposed views on the same issue. Anthony Byrne from Deutsche Bank said the AIFMD as drafted will create systemic risk. Sony Kapoor, from Re-define Think Tank, said there is a social cost to the AIFM industry when businesses engage in asset stripping.   View Article
 
IPE: Jean-Paul Gauzès, AIFMD rapporteur, swamped by over 1000 amendments
Gauzès has made 135 amendments to the AIFM Directive first draft. The JURI Committee has the right to table amendments as it is the opinion Committee on this dossier. Polemic issues on AIFMD include depositories and the European passport.  View Article
 

 
  Corporate Governance/Accounting

 
 
 
Commission report on corporate governance monitoring and enforcement practices
The Commission has published a study conducted by RiskMetrics, providing an overview of the various monitoring and enforcement mechanisms in member states regarding corporate governance rules. The Study evaluates the effectiveness of the different approaches and suggests improvements.  View Article
 
ASB amendment to FRS 25 - classification of rights issues
The Accounting Standards Board amendment on FRS 25 requires a rights issue involving the exchange of a fixed number of an entity’s own equity instruments for a fixed amount of cash denominated in a foreign currency to be classified as an equity instrument.  View Article
 

 
  Competition: Financial Services

 
 
 
Commission approves UK Government measures for Bradford and Bingley liquidation
The plan submitted by the UK foresees a prolongation of the rescue measures previously authorised and a potential capital injection. The decision in the case of Bradford & Bingley, together with the one taken on Dunfermline, closes the chapter of UK bank restructuring prompted by state aid.  View Article
 

 
  Financial Services Month in Brussels - Report

 
 
 
January 2010 - with Podcast
OVERVIEW: The Spanish Presidency has set out its stall for the next six months, while prospective Commissioners have been grilled on their plans for the next five years.  View Article
 

 
  Financial stability - policy analysis

 
 
 
World Economic Forum report: the future of the global financial system
The report presents the financial services sector in the near term and provides stakeholders with tools to approach two of the challenges of the post-crisis world: managing governments’ newly acquired equity interests in financial institutions and restoring trust in financial institutions.  View Article
 
BIS paper: assessing the systemic risk of a heterogeneous portfolio of banks during the recent financial crisis
This paper uses the same methodology to examine the systemic risk in a heterogeneous banking system consisting of twenty-two banks from eight economies in Asia and the Pacific. The increase in the perceived systemic risk was mainly driven by the heightened risk aversion and the squeezed liquidity.  View Article
 
Swedish financial supervisory authority publishes report on risks in the financial system
Finansinspektionen (FI) believes that mortgage credit losses do not constitute a threat to the stability of banks. However, heavily borrowed households may suffer when interest rates rise if the banks do not carry out comprehensive credit checks.  View Article
 

 

 

 



© Graham Bishop

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