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02 February 2023

Standard Weekly Newsletter




 

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Highlights of my week: A range of different topics this week as the EBA launched its 2023 stress test  covering 75% of EU banking assets and ESMA consulted on stress tests for Money Market Funds. The BDB expressed concern about the risk of false positives in screening payments in a matter of seconds, while Monaco’s anti money laundering system was heavily criticised. ICMA proposed a post-trade transparency framework for EU sovereigns and IOSCO revised it principles for supervising commodity derivatives. DG FISMA provided a useful summary of recent CMU initiatives. ISDA tried to address revealed shortcomings in the crypto legal framework while the UK outlined its plans to regulate the cryptoasset industry. EIB continued its spearheading role by launched a fully digital sterling bond. Four trade bodies suggested that the Commission should provide a robust cost-benefit analysis for its proposals to squeeze non-EU CCPs. Even ardent pro-Brexiteers are now questioning the results of Brexit and academics are asking what a closer relationship might look like.

 Graham Bishop


Articles from 27 Jan- 2 Feb 2023

Policy impacting Finance

Single Market turns 30: Commission's reports confirm the Single Market underpins Europe's ability to tackle key challenges : Both reports will provide input for discussions with Member States on strengthening the Single Market and will inform the Commission's future work to ensure the Single market meets its full potential in supporting the resilience and competitiveness of the European economy. View Article
EBF: New study outlines path to unlocking major bank financing and economic growth : The reference study concludes that a review of current capital requirements and supervisory processes could provide capacity for around EUR 4 trillion additional bank lending to finance the green and digital transitions and strengthen the competitiveness of the EU economy. View Article
CEPR: Assessing debt sustainability in the euro area : In the euro area, the COVID-19 pandemic led to a substantial increase in government debt. This column discusses a new approach to evaluate public debt sustainability in the euro area. Over the past ten years, the ECB has played a key role in stabilising the European sovereign debt market. View Article

Banking Union

EBA launches 2023 EU-wide stress test : The EU-wide stress test will be conducted on a much larger sample compared to previous years, covering 70 EU banks and 75% of total banking assets in the EU. View Article
AFME welcomes start of 2023 EU-wide stress test : Caroline Liesegang, Head of Prudential Regulation at AFME, said: “Region-wide stress tests are an important element of idiosyncratic and systemic risk assessments at banks under common macro scenarios. View Article
EURACTIV: Monaco’s anti-money laundering system inadequate, risks name-and-shame : A Council of Europe report highlights key vulnerabilities in Monaco’s measures against money laundering and the country risks being placed under intense scrutiny by the international Financial Action Task Force (FATF) watchdog. View Article
EFR has published its Paper on PSD2 lessons and implications for Open Finance : Data sharing has the potential to positively impact both consumers and the financial services industry. View Article
BDB: Comments on Article 5d (sanctions screening) of the proposal for a regulation on instant credit transfers : This requirement addresses the particular challenges of sanctions screening that has to be carried out in a matter of seconds and the resulting false positive hits that would doubtless result. In principle, the European Commission’s proposed solution could help to mitigate these challenges. View Article

Capital Markets Union

ICMA publishes a proposal for a post-trade transparency framework for sovereign bonds traded in the EU : ICMA and its members believe that the inclusion of meaningful post-trade data for the sovereign bond market (including bonds issued by supranationals and sovereign agencies) is fundamental to the integrity of the EU consolidated tape. T View Article
ESMA reviews the scope of clearing and derivatives trading obligations : The report is part of the transition away from EONIA and LIBOR and onto alternative benchmarks, primarily Risk-Free Rates such as €STR, SOFR, SONIA and TONA View Article
EIOPA publishes its Supervisory Convergence Plan for 2023 : In line with EIOPA’s mandate to build a common supervisory culture and consistent supervisory practices in the European Union, the Supervisory Convergence Plan identifies EIOPA’s three main priorities to enhance supervisory convergence over the course of 2023 View Article
MEPs backed easier access to information relevant for investors : For EU capital markets to function more efficiently, the committee voted for common data spaces to merge information relevant for capital markets, financial services and sustainable finance. View Article
Capital Markets Union New proposals should facilitate investment and make EU capital markets more attractive : Coming at especially challenging economic times, the proposals should help boost the European economy by making it easier for EU companies to secure financing through capital markets, in addition to what they can borrow from banks. View Article
IOSCO revises its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets to ensure market integrity : IOSCO Board Chair Jean-Paul Servais said: “Various events last year highlighted how continued geopolitical tensions and heightened macroeconomic uncertainty can disrupt global commodity markets and create significant volatility, with potential knock-on effects on the broader financial system. View Article
ESAs consult on draft Guidelines on the system for the exchange of information relevant to fit and proper assessments : These Guidelines aim to increase the efficiency of the information exchange between sectoral supervisors by harmonising practices and clarifying how competent authorities should use the information system developed by the three ESAs. View Article
ESMA consults on the review of the methodology on stress test scenarios for Money Market Funds : The proposed revision of the scenarios relates to the hypothetical changes in the level of liquidity of the assets held in the portfolio of the MMF and the hypothetical macro systemic shocks affecting the economy as a whole. View Article

Environmental, Social, Governance (ESG)

ESMA issues its first opinion on the draft European Sustainability Reporting Standards : ESMA finds that ESRS Set 1 broadly meets the objective of being conducive to investor protection and of not undermining financial stability. View Article
ALFI provides a targeted response to the ESAs Call for evidence on better understanding greenwashing : ALFI focused on proposing a definition of greenwashing whose main characteristic should be intent. Based on the definition, complementary examples on what should not be considered as greenwashing were provided. View Article
EURACTIV: EU due diligence rules should include finance, Commissioner says : Commissioner for Justice Didier Reynders said the EU executive’s goal is to include the financial sector under the EU rules on corporate accountability after it was carved out from mandatory due diligence by member states in their common negotiating position. View Article
Statement by President von der Leyen on the Green Deal Industrial Plan : We know that in the next years the shape of the net-zero economy and where it is located will be decided, and we want to be an important part of this net-zero industry that we need globally. View Article
UN EP FI: Net-Zero Asset Owner Alliance raises expectations for members’ real economy impact with updated Protocol : Updated methodology now covers private assets target-setting including Commercial Real Estate Lending, and reporting on Sovereign Bonds, View Article

Fin Tech Regulation

Commission: Why do we need a global approach to regulating crypto-assets? : The rapid development of crypto-assets within the financial system over the last few years is a tale about how authorities can encourage innovation whilst ensuring proper risk management for the sake of investors View Article
Finextra: UK Government outlines plans to regulate cryptoasset industry : Consultation proposals include strengthening rules for crypto trading platforms and a "robust world-first" regime for crypto lending by tightening the rules around financial intermediaries and custodians.  View Article
City AM: UK crypto hub ambitions at risk if it does not pass new rules quickly, experts warn : Whilst there is still a way to go before new rules come into force, we’re encouraged by the scale of the government’s ambition…  View Article
EIB issues its first ever digital bond in pound sterling : The EIB is continuing to spearhead market developments in the digitalisation of capital markets with a fully digitally native bond issuance in pound sterling. View Article
ISDA: Bringing Legal Certainty to Digital Asset Derivatives : The shocking collapse of crypto exchange FTX with the apparent loss of billions of dollars of customer assets, and the subsequent failures of several other high-profile crypto firms, have raised some fundamental legal questions. View Article
BIS: Digital payments make gains but cash remains : The strong growth in digital payments over the past decade continued in 2021. The volume and value of fast payments reached record levels. View Article
Finance Watch: Kicking and screaming – the Euro arrives in the Digital Age : As development of the digital Euro project begins, policymakers must remember democratic legitimacy and trust are the key ingredients to the process.  View Article

Brexit and the City

ISDA, AIMA, EFAMA, FIA Statement on European Commission’s Proposed Amendments to EMIR : We believe the EC should substantiate the risk of clearing through tier-two CCPs based outside the EU and provide a robust cost-benefit analysis of the proposed active account requirements. View Article
ICMA: Response to the FCA’s consultation on Sustainability Disclosure Requirements (SDR) and investment labels : ICMA welcomes the FCA’s consultation paper (CP) on its proposed sustainability disclosure requirements and investment labels. We agree that the financial services sector has an important role to play in helping the UK economy adapt to the transition to net zero and a more sustainable future. View Article

Brexit

Th Guardian: Brexit is a ‘complete disaster’ and ‘total lies’, says former Tory donor : Private equity veteran Guy Hands says Boris Johnson ‘threw the country and the NHS under the bus’ View Article
EU-UK Forum's Jones: What's so bad about the Retained EU Law (Revocation and Reform) Bill? Here are four things : It’s difficult to think of anything good to say about the Retained EU Law (Revocation and Reform) Bill.  View Article
UK and EU: What could a closer EU relationship realistically look like? : Joël Reland sets out what a closer relationship between the UK and the EU might realistically look like should the two sides decide to pursue one, suggesting that it is most likely to take the form of deepening the existing trading agreement rather than a full renegotiation.  View Article
Federal Trust's Donnelly video: Ethics died with Brexit : In this Federal Trust video, our Director Brendan Donnelly argues that Brexit has been instrumental in lowering standards in British public life. View Article
Carnegie's Kellner: Who Will Repair Broken Britain? : Britain’s woes did not start—and do not end—with Brexit. The country needs a leadership with ideas that rise to the challenges the UK faces today. View Article
POLITICO: UK’s economic growth plan ‘made possible’ by Brexit, says Jeremy Hunt : UK chancellor says ‘declinism about Britain is just wrong.’ View Article

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