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20 May 2010

This week in "Brussels"
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Financial Services Policy Banking Securities
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Competition: Financial Services Edited Minutes of key legislative Bodies Brief Opinions/Commentaries
Financial stability - policy analysis About this email

Articles from 14 May 2010 - 20 May 2010

Financial Services Policy

BaFin prohibits uncovered short-selling transactions and uncovered CDS in government bonds of euro zone
French finance Minister Christine Lagarde, ruled out a similar move by France and called for an urgent meeting of European securities regulators to discuss the implications of Germany’s unilateral ban.  View Article
Commissioner Barnier called for co-ordinated European action after Germany banned short sales of euro zone government bonds
EU Commissioner Barnier started to engage in serious talks with CESR which have intensified the ongoing coordination of European security regulators in the last few hours. Barnier also revealed that the EC plans "within a few weeks" to outline proposals on "naked-shorting" restrictions.   View Article
Barnier calls for quick implementation of all financial services legislation
Commissioner Barnier calls to implement financial services regulation by 2012 to fulfil G20 commitments. This includes applying the MiFID and Market Abuse directives to over-the-counter derivatives. He also revealed that by June there will be amendments to the CRA regulation.   View Article
President Barroso presented EU priorities for G20 Summit in Toronto
In his letter President Barroso presents five key G20 deliverables. It includes timely and consistent implementation of the commitments to reform financial markets, inter alia on rules to improve bank capital, implementation of the FSB remuneration principles and accounting standards.  View Article
ECOFIN Council conclusions on crisis prevention, management and resolution
The Council agreed that better mechanisms are needed to ensure the mitigation of systemic risk and that the financial sector bears the cost of resolution measures in a way that equitably reflects its responsibility and with a view to eliminating the need for the use of public funds.  View Article
Commissioner Rehn: Reinforce both the preventive and the corrective arms of the SGP
Rehn underlined that stronger fiscal surveillance should be accompanied with broader macroeconomic surveillance. The essential cornerstone of reinforcing economic governance is to coordinate fiscal policy in advance, he said. The Commission will propose a more permanent mechanism in due course.  View Article
ECOFIN Council conclusions on domestic fiscal frameworks
The Council called for a regular assessment and peer review of Member States' fiscal frameworks which will include a check list of desirable features of domestic fiscal frameworks, building on best practices and acknowledging differences in political, institutional and cultural contexts.  View Article
ECON committee raised concerns on Eurozone governance and Greece
Members voiced concerns about relying on a system dominated by national interests, which, they said, had acted too slowly. Some MEPs argued that Parliament, given its role under the Treaty, should have been more closely involved in the setting up of the support mechanism.  View Article
IMF: Financial watchdogs need to be more knowledgeable about the markets they supervise
How well a country fared in the recent global financial crisis was influenced by the skills and effectiveness of its financial watchdog, according to the IMF paper. The paper emphasizes that the importance of supervision to ensure that the new rules are properly implemented should not be forgotten.  View Article
ACCA: New EU presidency must not let opportunities slip by
ACCA’s recommendations for the upcoming Belgian Presidency include among other issues: implementing the Lisbon Treaty and Europe 2020 framework, accounting standards, corporate governance and EU crisis resolution mechanisms.   View Article
SEC proposes stock-by-stock circuit breaker rule
The SEC proposed a trial of a system intended to prevent the disruptions experienced on May 6. Trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes.   View Article
NYT: US Senate fails to advance Financial Reform Bill
The US Senate on Wednesday rejected an effort by Democratic leaders to complete work on a sweeping financial regulatory bill as two key Democratic holdouts said it still did not tighten rules on Wall Street enough.   View Article
WSJ New York Fed pushes Wall Street on Repo overhaul
Officials at the Federal Reserve Bank of New York are pushing Wall Street firms to ramp up efforts to stabilize an important corner of the financial system called the repo market, where securities dealers attain trillions of dollars of short-term financing every day.   View Article
Washington Post: Obama's terms for financial overhaul remain mostly intact
The Senate is expected this week to adopt the 1400 pages bill to overhaul the nation's financial regulations. The bill largely reflects the administration's initial blueprint, despite the fervent efforts of lobbyists and lawmakers of all stripes to alter it.  View Article
Japans Finance Ministry announces new policy goals for 2010
The Finance Ministry issued its policy goals for 2010, calling among others for an appropriate financial safety net able to respond promptly and accurately to financial crises to guarantee the stability of the financial system.   View Article
IMF Asia and Pacific department called for coordinated approach to global financial reforms
At a seminar organized by the Fund in Tokyo, IMF John Lipsky, said that as Asia is leading the world recovery, its voice in these debates will be vital. Perhaps more than at any time in modern history, the region as a whole has the ability to influence global policymaking.   View Article
G20 Summit: Meeting of global business leaders in advance of Toronto summit
The G20 Business Summit is expected to discuss the issues most relevant to the private sector, including strengthening the economic recovery, financial sector reform, trade, development and innovation.  View Article
Canada sends worldwide message in opposition to a global bank tax
Senior Canadian ministers expressed their staunch opposition to the imposition of a global bank tax on financial institutions. “Our banks acted responsibly to avoid trouble throughout the recession, and it makes no sense to impose a punitive tax on them now.”   View Article

Banking

Steven I. Davis - Effective Bank Regulation and Supervision: Lessons from the Financial Crisis
(New book) A unique insider view of what actually works, what ought to work, what prevents it from working, and what needs to be done about it – industry experts who have to implement and work within regulatory systems give the real best practice picture  View Article
ECB published TARGET Annual Report 2009: the system has functioned smoothly with high availability levels
The report shows that the availability of the system reached 99.99%, which was the highest availability figure since the launch of TARGET in 1999. It also reveals that in 2009, payments processed by the TARGET2 system decreased by 6.5% in volume due to the economic slowdown.  View Article

Securities

EFMA/EHYA European high yield and leveraged loan report – First Quarter 2010
The report reveals that credit markets appear to be healing, with default rates slowing down. However, sovereign debt concerns and fears of contagion appear to have reignited in Europe in end-March.   View Article
CESR publishes two sets of consultations in the field of Credit Rating Agencies
The first consultation focuses on assessing compliance of credit rating methodologies with the requirements set out in Article 8.3, the second deals with the enforcement of practices and activities conducted under Article 21.3(a) of the CRA regulation.  View Article

Insurance

ECB opinion on compensation systems at institutions and insurance companies
The ECB emphasises the importance of fully aligning requirements relating to compensation practices and policies with the international standards on compensation, and with the envisaged revision of Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions.  View Article

Asset Management

ECON committee vote on AIFMD: MEPs call for less speculation and more transparency
Under the legislation as amended by the committee, alternative investment fund managers in third countries would have to comply with the directive in order to market funds around the EU. Funds such as private equity and investment trusts would be more lightly regulated than hedge funds.   View Article
Council to negotiate with Parliament on stronger rules for hedge funds and private equity
EU finance ministers agreed on a general approach backing the adoption of the AIFM directive in first reading with the European Parliament. The decision was made by qualified majority. The presidency took note of remaining concerns expressed by delegations such as third country rules.  View Article
AIMA raised concerns on the outcome of the ECON and ECOFIN votes on AIFMD
AIMA warned that the Directive singles out the AIF industry for special treatment and imposes controls and burdens that it does not place on other financial market participants. AIMA believes that the text approved by the Council is much more practical and realistic than the Parliament’s one.  View Article
NAPF, IMA and AIMA joint letter to ECON MEPs on AIFM Directive
The letter warns MEPs against a compromise amendment which is unworkable in practice. The amendment will prohibit access for non-EU funds and fund managers, but will instead ban European investors from investing overseas. It will reduce choice and drive down returns for investors.   View Article
Hedgeweek: Cayman Islands defends itself in note to AIFMD rapporteur
Cayman Finance chairman Travers laid out ways in which Cayman is likely to meet any equivalency criteria stipulated by the directive. He said Cayman had full membership of IOSCO and expected "all Cayman Islands regulated funds to operate on the basis of full transparency".  View Article
CESR sets out harmonised definition of European money market funds
CESR’s guidelines set out two categories of money market fund: Short-Term Money Market Funds and Money Market Funds. For both categories of fund, CESR expects that there should be specific disclosure to explain clearly the implications of investing in the type of money market fund involved.  View Article

Corporate Governance/Accounting

ASBJ comments on IASB ED 37 – Measurement of liabilities
The ASBJ disagrees with removing the probability criterion and requiring the measurement using the expected value, and also calls to modify the measurement objective set out in the Exposure Drafts overall requirements.   View Article
IFAC consults on its 2010-2012 Strategy and Work Plan to serve professional accountants in business
The proposed strategic direction focuses on enhancing the profile, influence, and relevance of professional accountants in business. It also increases awareness of the important roles professional accountants play in enabling, preserving, and reporting value for organizations.   View Article
EFRAG consults on IFRS improvements and on the costs and benefits that would arise from its application in the EU
The proposed improvements to the IFRSs as issued in May this year are relatively small, EFRAG notes. However, EFRAG believes that two improvements to IAS 34 and IFRS 1 will have a noticeable effect on the quality of the information provided.  View Article
ASBJ Newsletter May 2010
The Japan Accounting Standards Board issued its newsletter no. 14, covering issues such as the developments of standards and the comments on the documents issued by the IASB and FASB, and the visit of the EFRAG Technical Expert Group to Japan.  View Article
FEE Comment on EFRAG’s Draft Letter - Advice on IFRS for SMEs
FEE Comment Letter on EFRAG’s Draft Letter - Advice on compatibility of the IFRS for SMEs and the EU Accounting Directives. FEE Comment  View Article

Competition: Financial Services

State aid: Commission approves restructuring of Belgian insurance company Ethias
In order to finance the costs of the restructuring by its own means to the furthest extent possible, Ethias will sell or wind down its retail life insurance business and a number of other assets, which was the immediate cause of its difficulties in the past.   View Article

Brief Opinions/Commentaries

Nicolas Veron: EU inaction on banks grows ever costlier
Véron argues that the EU must clean up its financial institutions rapidly to strengthen them against the possibility of sovereign defaults, and also prepare the ground for a credible EU-level supervisory framework without which the aspiration to build an integrated market cannot be fulfilled.  View Article
Paul Goldschmidt: Why are markets tumbling?
Goldschmidt argues that the German short selling ban is a reaction with a political and technical dimension. On the political front, Germany decided without consulting its partners and at the technical level it is not clear these measures will achieve their intended purpose.  View Article

Financial stability - policy analysis

EMU Warfare: The Colin Powell doctrine has come to Europe
Bruegel Director Jean Pisani-Ferry analyses the events leading up to May 9 – a historic week for the European monetary union. In this article, he questions the unprecedented decisions that governments had to take with, regard to the euro area debt crises, and the long-term repercussions of them.   View Article
Bruegel: The role of state aid control in improving bank resolution in Europe
The paper lays out why in the long-term Europe needs a single resolution authority. The authors show how in the short-term the European Commission, through its state aid control discipline, can set the foundation for a new crisis resolution architecture.   View Article
IMF report reveals that high debt and deficits have raised risks
The IMF Fiscal Monitor Report analyzes fiscal developments in advanced, emerging market, and low-income economies. Advanced economies will face the larger challenge in tackling their debt levels, which are expected to reach on average 110 percent of GDP by 2015, according to the report.  View Article




© Graham Bishop

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