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02 September 2010

This week in "Brussels"
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Articles from 29 July 2010 - 02 September 2010

Financial Services Policy

FT: High hopes for EU financial regulation deal
The Financial Times reports that MEPs are now thought willing to drop demands for the watchdogs all to be based in Frankfurt, to instead have them split between Paris, London and the German city.  View Article
IMF enhances the crisis prevention toolkit
The reform come as the G20 has made the strengthening of the global financial safety net an agenda item for its next meeting in Seoul, Korea in November 2010. The government of Korea has taken a leading role in advancing this issue.  View Article
Commission considers Greece meets the conditions to receive the second instalment of loans by euro area Member States
The EC has revealed that the Greek state budgetary developments over the first half of 2010 have been positive, with the deficit declining by some 46%, faster than planned. Moreover, progress with pension and public administration reform has been made ahead of schedule.   View Article
FSA outlines a fundamental review of trading activity regulation
The FSA believes that the delivery of a new, robust, long-term approach to prudential requirements for trading activities is one of the key areas of regulatory reform that must be delivered to build a stronger financial system.  View Article
FMLC publishes report on legal risk of EU Financial Supervisions
The report highlights fundamental issues that could create a significant legal uncertainty and provide grounds for a challenge to future Commission or European Supervisory Authority decisions.   View Article
Commission approves Dutch recapitalisation of AEGON
Until full repayment of the aid, AEGON will be subject to a price leadership ban in specific segments of the Dutch market and to a rating withdrawal of its main life subsidiary in the Netherlands, in order to limit competitive.  View Article

Banking

FSB and BCBS reports on economic impact of stronger capital and liquidity requirements
The Financial Stability Board and the Basel Committee on Banking Supervision publish two reports on the net economic impact of stronger capital and liquidity requirements, both during the transition phase and post implementation. They suggest only minor economic impacts.  View Article
FT: Diluting Basel III is a huge mistake
The new leverage ratio, proposed at a mere 3 per cent, should be increased. More demanding stress scenarios should be required to assess short-term liquidity needs. A rule to better match the maturity of assets and liabilities should be reinstated.   View Article
CRD III: ECB Opinion on Trading Book, Re-Securitization and Remuneration
The opinion expressed a concern about the extension of the waiver for exposures in the form of covered bonds, collateralized by loans secured by residential and commercial real estate.  View Article
The new joint BCBS - FSB Group evaluates the macroeconomic effects of transition to stronger capital and liquidity regulations
The Basel Committee on Banking Supervision and the Financial Stability Board have set up the Macroeconomic Assessment Group (MAG) to assess the macroeconomic impact of strengthened capital and liquidity regulations. MAG released interim report on findings  View Article
CEBS publishes revised guidelines on stress testing
The Committee of European Banking Supervisors (CEBS) has published the final text of its revised Guidelines on stress testing which takes into the account the results of the earlier public consultation run from December 2009 to March 2010 and to be applied by 31st December 2010.  View Article
Bruegel: The test was well worth the stress
Bruegel director Jean Pisani-Ferry takes stock of the results from the bank stress tests were made public in July. While having reservations about the technique to assess the banks, he explains why the tests are crucial in preventing Europe from going the Japanese way.  View Article
AGB issues statement on bank levy and Restructuring Law by German Cabinet
The Association of German Banks have issued a statement following a draft bill by the German Cabinet that outlines a procedure for restructuring financial institutions and a corresponding restructuring fund.  View Article
FT: Ireland seeks to wean banks off state guarantee
The existing guarantee, which covered all liabilities, has already been replaced by a more limited scheme that was agreed with the European Commission in June and runs until the end of December.  View Article

Securities

OTC derivatives regulation: ECB believes that exemptions for non-financial firms should be conservative
The ECB recognises the hedging needs of corporate end-users, but it points out that any loopholes that may undermine the effective implementation of a general clearing obligation should be avoided.  View Article
IMF: Mandatory central clearing for OTC derivatives should be phased in gradually
The IMF warns that moving OTC derivatives contracts to CCPs will bring high transition costs. However, if approved, mandatory central clearing for OTC derivatives should be phased in gradually.   View Article
AIMA urges EU policymakers to push ahead with reforms of OTC derivatives
AIMA welcomed the fact that the EC is likely to mandate central clearing of eligible contracts, and is set to propose harmonised requirements for the establishment and operation of CCPs and trade repositories.  View Article
FESE response to CESR Consultation on standardisation and exchange trading of OTC Derivatives
FESE believes that OTC derivatives should benefit from legal, process and product standardisation to the maximum extent possible, in order to significantly reduce operational risk.  View Article
IMA supports EU OTC derivatives reforms but warns that end users may be disadvantaged
IMA warns that further work is needed to ensure that costs and operational burdens were not unduly placed on the client side of the market. Director of Markets at IMA said that „central clearing could produce perverse results if the impact on the client side of the market is not fully addressed.  View Article
Commission acts to equip financial supervisors with new tools to better oversee financial conglomerates
Drawing lessons from the financial crisis, the EC proposes to equip national financial supervisors with new powers to better oversee the conglomerates' parent entities, such as holding companies.  View Article
European Issuers’ comments on the Commission’s Consultation Paper on the Review of the Transparency Directive
EuropeanIssuers stresses that both issuers and investors should have the choice between different markets with differing regulatory intensity.  View Article
ISDA streamlines credit derivative novation process
Executive Vice Chairman of ISDA said that "the result of the Consent Equals Confirmation" initiative will be an enhanced automated process that will improve accuracy and facilitate same-day processing, thereby reducing risk and the necessary degree of resourcing.“  View Article
FESE response to CESR Consultation on transaction reporting
FESE welcomes CESR’s suggestion concerning the possibility for investment firms to comply with MiFID provisions.  View Article
IOSCO publishes principles for direct electronic access to markets
The report contains principles designed to guide intermediaries, markets and regulators in relation to the areas of pre-conditions for direct electronic access (DEA), information flow and adequate systems and controls.  View Article
CESR publishes a Guidance on common standards for assessment of compliance of credit rating methodologies
This Guidance sets out the typical information that competent authorities would expect to receive for ongoing supervision of the registered CRAs in order to assess its compliance with the provisions concerning credit rating methodologies.  View Article
CESR publishes a Guidance on the enforcement practices and activities to be conducted under Article 21.3(a) of the Regulation
The Guidance sets out the typical information and data that competent authorities would expect to receive as part of their ongoing supervision of CRAs. It also outlines the level of interaction competent authorities expect to have with CRAs in the form of regular and ad-hoc meetings.  View Article
Consultation on CESR's advice in the context of the MiFID Review – client categorisation
The purpose of this consultation is to gather stakeholders’ views on client categorisation issues to assist CESR in its responses to the Commission’s questions on these issues.  View Article
CESR publishes a consultation paper on development of pan-European access to financial information disclosed by listed companies
The consultation paper discusses issues relating to the development of the network of officially appointed mechanisms for the central storage of regulated information (OAMs) in terms of search facilities and integration of the network.  View Article
BaFin produces a brochure on the prospectus examination procedure
The brochure gives a first general overview for companies that are planning to issue securities in the Federal Republic of Germany or any other EEA state.  View Article

Insurance

Solvency II: CEIOPS final advice on equivalence assessments to be undertaken in relation to Articles 172, 227 and 260
CEIOPS advocates that the Commission consider the need for a suitable transitional period in order to integrate the international operations of groups into the Solvency II regime and to allow for a harmonised approach across Europe.  View Article
CEA urges insurance industry to participate in QIS 5
CEA had voiced concerns over the advice for the implementing measures drawn up by CEIOPS which it felt was excessively prudent in relation to capital requirements and did not always respect the basic principles of an economic risk-based regulatory regime.   View Article
Solvency II milestone: CEIOPS publishes QIS5 spreadsheet
QIS5 exercise is a milestone for the EU Commission, supervisors and industry as its results will provide the essential input for the implementation of Solvency II, including the final calibration of the new solvency capital requirements.  View Article

Asset Management

Belgian Presidency produces a compromise text on AIFMD
The Belgian text leaves unanswered the question of how to treat a third country manager. The talks will start this week, with a goal of reaching a deal in September.   View Article

Corporate Governance/Accounting

CEA responds to EC Green Paper on corporate governance and remuneration
CEA stresses that Solvency II will reform governance requirements when it comes into force in 2012 and argues that any new requirements resulting from the Green Paper should not duplicate or contradict the Solvency II requirements.  View Article
The Commission gives a green light to the exchange of audit working papers with Australia and the US
The Commission decided that these countries fulfil the European requirements on reciprocal access to audit working papers, including the need to respect the confidential nature of the transferred documents.   View Article

Financial Services Month in Brussels - Report

July - Financial Services Month in Brussels
Bank stress tests and the clash over future supervisory powers were the major themes of July. But both are different aspects of the fallout from the financial crisis and the ensuing economic downturn. Consumer protection and OTC derivatives also featured.  View Article

Brief Opinions/Commentaries

Bruegel policy paper: Not all financial regulation is global
Bruegel Senior Fellow Nicolas Véron and Stéphane Rottier from the National Bank of Belgium, explain why it is time to focus on building stronger global public institutions, ensuring globally consistent financial information and creating globally integrated capital-markets infrastructure.  View Article
Paul Goldschmidt: The Financial Crisis - International cooperation appears stuck in its contradictions
Goldschmidt argues that is very difficult to find a rational explanation for the current confused behaviour of financial markets. He presents the lack of consensus among Europe, the United States and China.   View Article

Financial stability - policy analysis

Bruegel: An assessment of the G20's initial action items
The paper reveals that the implementation of the action point depending on action by an international body that is independent in terms of administration and resources increases its efficiency.   View Article

Best of Media

El País: S&P report reveals that the European recovery will be at two different speeds
The credit rating agency Standard & Poor 's published a report with bleak forecasts for Europe in general and Spain in particular. The agency predicts that economic recovery in Europe will be at "two speeds" and among the slower progress we could find Spain, Italy, Greece, Portugal and Ireland.   View Article
Il Sole: Banca Intesa waits for Basel III to fix dividend targets
The CEO of Banca Intesa Corrado Passera declared that the new business plan of the bank will be presented when the capital ratio requirements will be announced. He expects that „before the end of the year, many of the requirements will be indicated.”  View Article




© Graham Bishop

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