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09 December 2010

This week in "Brussels"
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Financial Services Policy Banking Securities
Insurance Asset Management Corporate Governance/Accounting
Financial Services Month in Brussels - Report Edited Minutes of Key Legislative Bodies Brief Opinions/Commentaries
Financial Stability - Policy Analysis Best of Media About this email

Articles from 02 December 2010 - 09 December 2010

Financial Services Policy

Commission consults on sanctioning regimes in the EU's financial services sector
The Communication is based on a cross-sectoral stocktaking exercise of the coherence, equivalence and actual use of sanctioning powers in the Member States carried out by the three Committees of Supervisors (CEBS, CEIOPS and CESR).  View Article
ECOFIN Council: Financial assistance to Ireland adopted
On crisis prevention, the Council aims at introducing levies and taxes in the context of crisis resolution and to contain systemic risk in all Member States by 2012.  View Article
European Economic and Social Committee recommends new powers to ESMA
According to the EESC, the ESMA would have the authority to impose financial penalties, request temporary suspension of issue of new ratings, request that the infringement stop, or withdraw the registration on rating agencies that committed a breach of the regulation.  View Article
Financial News: 'Secret' EC report clears hedge funds over Greek default
A previously unpublished report prepared by European Commission staff has found that financial speculation did not push Greece towards default, despite fears expressed by the heads of state in Germany, France, Greece and Luxembourg, and calls for legislation to curb trading in credit default swaps.  View Article
EP briefing paper on financial services and consumer rights
The aim of this paper is to explore potential overlaps and inconsistencies between the proposed Consumer Rights Directive and sector-specific law in the area of financial services.  View Article
AFME conference: "Securing Financial Stability – the next steps”
The event held in Brussels delivered the latest insight on the future of financial regulation at a global and European level. Commissioner Rehn said that the EU is planning a new round of more rigorous stress tests, to be conducted through the European Banking Authority.  View Article

Banking

Commissioner Rehn: EU banks will face further stress tests
The European Union will begin a fresh round of stress tests on its major banks in February, including an increased focus on the immediate access that lenders have to liquid assets, according to media reports.  View Article
FSA closed supervisory investigation of RBS
The review confirmed that RBS made a series of bad decisions in the years immediately before the financial crisis, most significantly the acquisition of ABN AMRO and the decision to expand its investment banking business aggressively.  View Article
AFME publishes a Briefing Note on Basel III and CRD 4
The note covers two reforms – Basel III, aimed at reforming the banking sector, and CRD 4 that deals with the application of Basel in Europe.  View Article

Securities

Commission consults on the review of the Markets in Financial Instruments Directive
Since MiFID came into force, financial markets have changed substantially. New actors and products which have come onto the scene, such as high frequency trading, have altered the landscape dramatically.   View Article
IMA says changes to MiFID could benefit investors
Guy Sears, Director of Wholesale at the IMA, said: “Despite this only being a review of MiFID, it is refreshing that the Commission is willing to challenge prevailing orthodoxies of the capital markets where it means investors may be better served.”  View Article
European Conservatives and Reformists Group: MiFID review needs industry input
MEP Kay Swinburne highlighted that the EC has come forward with a very comprehensive consultation document but it needs industry to respond with as much practical evidence as possible.  View Article
ECON committee own initiative report on the future perspectives of Credit Rating Agencies
Rapporteur Wolf Klinz (DE, ALDE) is of the opinion that in order to reduce the reliance on external credit ratings, it is necessary to increase the disclosure of information to investors in order to enable them to fulfil due diligence and fiduciary duties.  View Article
ECON committee draft report on short selling and CDS
Rapporteur Pascal Canfin (FR, Greens) supports the proposal to restrict the possibility of buying a sovereign CDS to those owning that sovereign debt. CDS transactions need to be based on the insurable interest principle.  View Article
CESR updates list of short selling measures
The update covers the changes made by Austria’s Financial Market Authority (FMA).  View Article
FSA issues proposed guidance on survey report of derivative risk management practices
FSA carried out a survey of twelve asset managers to consider their derivative risk management practices. Associated risks were highlighted as issues in the 2009 Financial Risk Outlook.  View Article
CESR publishes annual report on credit rating agencies
In light of the still ongoing work concerning most registration processes, the report focuses mainly on the major issues faced by competent authorities in their assessments of the applications received.  View Article
CEBS publishes revised guidelines on the recognition of external credit assessment institutions
The guidelines make clear that for CRAs that are registered under the Regulation on CRAs, the only criteria that should be assessed in the ECAI initial recognition process and on-going review are the technical criteria on ‘Credibility and Market Acceptance’ and ‘Transparency and Disclosure’.  View Article
SEC proposes joint rules with CFTC to define swap related terms
SEC Chairman, Mary Schapiro, said that “today’s proposals lay out objective criteria, but they are just a first step, as we seek public comment to help us appropriately address the market impacts and potential risks posed by these entities.”  View Article
Canadian Securities Regulators release results of Corporate Governance Disclosure review
The review sets out results of the review and provides further guidance on complying with existing requirements.  View Article
CFTC releases history of “Traders in Financial Futures”
The reports disclose, on a weekly basis, the futures and options positions in financial futures markets held by the following categories of large traders: Dealer/Intermediary, Asset Manager/Institutional, Leveraged Funds and Other Reportables.  View Article
ISDA releases two transparency studies
ISDA published two studies on transparency in the OTC derivatives industry with respect to credit default swaps (CDS) and interest rates swaps (IRS). The studies highlight the spectrum of methods that can be used to increase transparency while analysing the benefits and costs of doing so.  View Article
Submission to CFTC and SEC on comment periods and implementation of new derivatives regulations
Adoption of new regulatory rules for derivatives pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act will provide the much-needed certainty that providers and users of derivatives products require.  View Article

Insurance

FT: Insurers challenge watchdog over Sifis
Two of Europe’s biggest insurers have taken the industry’s fears at being roped into stringent bank regulations by the Financial Stability Board, which is overseeing international regulatory reforms.  View Article
FT: European insurers expect to meet Solvency II rules
In a survey conducted by Accenture, 82% of European insurers said that they expected to meet the deadline by 2012, while 53% of respondents said they definitely would.  View Article
AMICE comments on the EC White Paper on Insurance Guarantee Schemes
AMICE members do not believe that there is a need for additional systems for policy-holder protection – their philosophy, business model and governance are already focused on this objective.  View Article

Asset Management

NAPF: EU plans risk undermining UK pensions
Pension experts warn that plans by the European Union to introduce new rules on pensions funding aimed at securing members’ benefits run the risk of undermining pensions provision, rather than strengthening it.  View Article

Corporate Governance/Accounting

ACCA study about small businesses
A worrying number of small businesses believe they do not have enough cash reserves to survive another economic downturn, a study by Forbes Insights in association with ACCA, CGA-Canada and CNDCEC, the professional body for certified accountants in Italy, has found.  View Article
IASB: IFRS Practice Statement on Management Commentary
The IASB published an International Financial Reporting Standard (IFRS) Practice Statement Management Commentary, a broad, non-binding framework for the presentation of narrative reporting to accompany financial statements prepared in accordance with IFRSs.  View Article
EFRAG commented on the IFRS Foundation Consultation Document on Criteria for Annual Improvements to IFRSs
The EFRAG Supervisory Board issued its final comment letter on the IFRS Foundation Consultation Document on Criteria for Annual Improvements to IFRSs, Proposed Amendments to the Due Process Handbook for the IASB.  View Article
EFRAG issued final comment letter on the IASB's ED 2010/12 Severe Hyperinflation
EFRAG appreciates the IASB's responsiveness to the needs of its constituents, but has some concerns about the scope and application of the proposals.  View Article
ACCA: Audit not broken, but it needs to evolve
Independent audit remains a key contributor to business confidence and plays an active part in minimising companies' cost of capital, says ACCA. Moreover, there should be no presumption that audit generally speaking has failed.   View Article

Financial Services Month in Brussels - Report

November 2010 Financial Services Month in Brussels
Graham Bishop's article: 'Some Implications of the Irish crisis'. Ireland’s economic misfortunes have now precipitated far-reaching changes that must cause a major re-think of many core elements of the EU’s regulatory framework for eurozone members.   View Article

Brief Opinions/Commentaries

Martin Wolf: Why the Irish crisis is such a huge test for the eurozone
In his FT column, Martin Wolf warns that credit crises could replace currency crises - and these are likely to be even worse.  View Article
Paul Goldschmidt: How can calm be restored to Sovereign Debt Markets of EMU Member States?
The ECOFIN communiqué raised more questions than it provided answers, adding to uncertainty and contributing towards fuelling a self-fulfilling negative scenario. It is now urgent to “stop the rot” and engineer an appropriate framework to trigger a virtuous rather than vicious circle of events.  View Article
Bruegel: A growing crisis puts the euro in danger
Jean Pisani-Ferry writes that there are several reasons why markets have reacted poorly to Europe’s recent crisis management efforts. Europe’s response to date has been more innovative and effective than many of its critics realise.   View Article

Financial Stability - Policy Analysis

IIF: Market Monitoring Group stressed the need for continued progress on fiscal consolidation
It is critical that EU governments continue to support the adjustment efforts of the Euro Area economies with high levels of debt. More efforts are needed, including forcefully advancing privatisation and implementing necessary structural reforms to improve growth prospects.   View Article

Best of Media

Financial News: EU bonds - something must be done
The idea of a single European bond issuer to pool the credit quality of European governments would be good news for periphery sovereigns that have seen their funding costs rise recently, but it is strange that this has become viable when the governments themselves are under pressure.  View Article
Financial News: Europe prepares to unleash the watchdogs
According to the article, the need for strong international supervision is the message emanating from the EC, under its Commissioner for Internal Market and Services, Michel Barnier, as Europe begins the final countdown to the introduction of a new financial regulatory regime on January 1.  View Article
FT: Super-fast traders pose risk to clearers
Industry experts say that high-frequency trading poses new risks for clearing houses, the central counterparties that stand between two parties to a trade and rely on funds contributed by members to pay out in the event of a default.  View Article




© Graham Bishop

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