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My highlights of the week: The top story of the week must be the possible rapprochement between the EU and the UK that could be epitomised by the Windsor Framework to resolve the Northern Ireland Protocol problem. At the time of writing, everyone seems to welcome it - though the DUP extreme Unionists have yet to speak definitively. What could it mean for financial services? The FT reports the hopes of City figures that the “MoU” might now be signed. But they overlook that this is merely an agreement about how to talk to each other – not a dramatic commitment to give broad “equivalence” to UK regulations. The more mundane, everyday financial regulatory matters grind on: harmonisation of cross-border payment rules, holding bank executives accountable for misconduct, legislating for AMLA, changes to CSD rules, access to market data, the consolidated tape and so on. However, the co-legislators did strike a deal on the EU Green Bond Standard – a world first. As the data becomes more available, AFME reported on ESG issuance and EIOPA analysed insurance company holdings of `green assets’. After the `crypto rout’ both the IMF and Oliver Wyman’s Elliott discussed the possibilities of benefits flowing from crypto technology itself.
Graham Bishop
Articles from 24 February - 2 March 2023
Policy impacting Finance
BIS: Prudential policy and financial dominance: exploring the link : Prudential policy tightening – whether ahead of or during monetary policy tightening – helps to reduce the likelihood of financial stress. View Article
Banking Union
BIS: Basel III capital ratios for largest global banks fell to pre-pandemic levels in H1 2022, latest Basel III monitoring exercise shows : Basel III capital ratios for a sample of the largest global banks decreased from their record highs in H2 2021 to pre-pandemic levels in H1 2022, according to the latest Basel III monitoring exercise..The leverage ratio fell on average across all regions... View Article
FSB details actions for the next phase of the G20 Roadmap for Enhancing Cross-border Payments : Payment system interoperability and extension. This focuses on the extension of RTGS operating hours and access policies and improving payment system interoperability. View Article
CPMI: ISO 20022 harmonisation requirements for enhancing cross-border payments : With most of the world's payment systems adopting the ISO 20022 messaging standard by 2025, the coming years will be crucial for converging on its harmonised use to fully leverage its full potential to make cross-border payments faster, cheaper and more transparent. View Article
EBA publishes a no-action letter on the boundary between the banking book and the trading book provisions : The European Banking Authority (EBA) today published a no-action letter stating that competent authorities should not prioritise any supervisory or enforcement action in relation to the new banking book – trading book boundary provisions. View Article
Single Resolution Board publishes MREL dashboard Q3.2022 : For resolution entities, the average MREL final target (including the CBR), to be respected by 1 January 2024, was equal to 26.4% of the Total Risk Exposure Amount (TREA), remaining broadly stable compared to Q2.2022. View Article
SSM's Fernandez-Bollo: Preventing money laundering through European banks : ...we hope for a timely agreement to create a new and strong EU Anti-Money Laundering Authority (AMLA). The European Parliament will soon vote on the draft AMLA Regulation, after which the trilogue phase will begin... View Article
BIS: When the music stops - holding bank executives accountable for misconduct : The Great Financial Crisis and its aftermath exposed a wave of banking scandals, triggering financial instability and eroding public confidence in banks. Amid economic uncertainty, societal frustration mounted at regulators' perceived inability to hold executives accountable for failures within their banks. View Article
Capital Markets Union
MEPs adopted changes to financial instruments settlement regime : Changes adopted by the Economic and Monetary Affairs Committee aim at improving organisation of the central securities depositories (CSDs) in the EU, to promote efficiency and prevent fails. View Article
MEPs back better access to market data and more robust EU market infrastructures : MEPs voted for harmonised rules to enhance market date transparency, optimise the trading obligations and prohibit receiving payments for forwarding client orders. View Article
CFA: Banning Inducements Unlikely to Prevent Mis-selling, Survey of Investment Professionals Finds : CFA Institute survey finds that investors need better cost-disclosure standards and education amid calls for ban on inducements in EU View Article
Environmental, Social, Governance (ESG)
Legislators strike deal on a new standard to fight greenwashing in the bond markets : First standard in the world on green bonds; Companies adopting the standard commit to green transition plans; Clearer and stricter requirements for external reviewers and their supervision; The transparency framework can be also used for sustainable bonds falling short of best in class green bonds View Article
Sustainable Finance: Commission welcomes political agreement on European green bond standard : This Regulation, which is an integral part of the European Green Deal, will establish an EU voluntary high-quality standard for green bonds. View Article
IFRS: G20 focuses on launch of ISSB’s inaugural standards : G20 looks forward to the early finalization of standards by the International Sustainability Standards Board (ISSB) for climate-related financial disclosures, and its work beyond climate. View Article
EPC: Green payments: sustainability by design for a more viable future : Currently, more and more companies talk about sustainability and are starting to take action to change their products to become more environmentally friendly and create a positive impact on society. View Article
IFAC: Momentum Builds for Corporate ESG Disclosure and Assurance, Yet Reporting Inconsistencies Linger, Study Finds : Third Report from IFAC and AICPA & CIMA Identifies Sustainability Trends and Progress over Three-Year Span View Article
ACCA: Investors drive demand for sustainability assurance : This represents a challenge and an opportunity for the global accountancy profession. In response the profession is engaged in determining the framework within which assurance engagements should be carried out and who is best qualified to perform the work. View Article
Project Syndicate's Frankel: The Crusade to Ban ESG Makes No Sense : Efforts to prohibit financial institutions from considering ESG criteria reflect a fundamental misunderstanding of free-market capitalism on the part of its self-proclaimed defenders. If private investors and companies want to pursue ESG goals, it is not politicians' place to interfere. View Article
EIOPA: Insurers green investments : As long-term investors with an overall balance sheet of around €8 trillion, insurers in the European Economic Area (EEA) can play a significant role in putting our economies on a more sustainable track. View Article
AFME ESG Finance Report Q4 2022 and Full Year 2022 : This Report contains up to date trends for the European Sustainable Finance market as at 31 December 2022, as well as a high-level regulatory and supervisory snapshot View Article
BETTER FINANCE response to the ESMA Consultation on Guidelines for the use of ESG or sustainability-related terms in funds’ names : BETTER FINANCE is of the view that a fund’s name is often the first, and too often the only, piece of information retail investors see. View Article
Finance Watch's Symon: Banks do best for society when they have more capital, not less : The European Parliament’s economics committee has decided not to require banks to hold one euro in capital reserves for every euro of fossil fuel financing. This is a missed opportunity. View Article
Fin Tech Regulation
Coin Desk: ECB's Rollout approach for the digital euro - Euro Retail Payments Board : The ability to make purchases online and send money to friends should be the priorities with a digital euro, the European Central Bank said in documents published on its website. View Article
IMF: Technology Behind Crypto Can Also Improve Payments, Providing a Public Good : A new kind of multilateral platform could improve cross-border payments, leveraging technological innovations for public policy objectives View Article
Oliver Wyman's Elliott: The Path Forward For Digital Assets And Crypto In 2023 : Crypto winter hasn’t slowed innovation in many areas, but others need reform and regulation View Article
ISDA: Continuing Our Digital Journey : With mounting pressure on costs, using technology to create efficiencies can have a positive impact on the bottom line. That’s why ISDA is currently developing a plan that will set a clear course for our digital strategy over the next three years. View Article
UK Finance: Complying with DORA – steps for financial institutions to take : The Digital Operational Resilience Act (DORA) is an EU regulation that aims to strengthen the operational resilience of the financial sector and ensure continuity of critical services. View Article
European Commission: Call for proposals: A new Data Hub on the EU Digital Finance Platform : We want to promote data sharing to foster innovation in Europe’s financial sector. Are you a financial company seeking to access non-public data and use it to test innovative products and applications? View Article
Insurance Europe: Industry groups call on MEPs to ensure AI Act is risk-based and facilitates innovation in Europe : The signatories are concerned that negotiations in the Parliament will deviate from the AI Act’s original proposal and goals to establish a risk-based approach to AI. View Article
Brexit and the City
FT: Windsor deal opens door for progress on post-Brexit financial regulation : Attention turns to memorandum of understanding between UK and EU that has been stalled for two years View Article
Brexit
HM Government: The Windsor Framework: a new Way Forward : Fundamentally rewriting the Treaty with new ‘Stormont Brake’ means UK can veto new EU goods laws if they are not supported by both communities in Northern Ireland View Article
Commission President von der Leyen: Statement on Windsor Framework : The Windsor Framework lays down new arrangements for the Protocol on Ireland and Northern Ireland. This new Framework will allow us to begin a new chapter. It provides for long-lasting solutions that both of us are confident will work for all people and businesses in Northern Ireland. View Article
Questions and Answers: political agreement in principle on the Windsor Framework, a new way forward for the Protocol on Ireland / Northern I : What does this mean for cooperation in other areas? The EU seeks to have a strategic, enduring and mutually beneficial partnership with the United Kingdom. This Windsor Framework will help turn a page in EU-UK relations and reinforce our partnership in the face of shared geostrategic challenges... View Article
Brexit: leading MEPs welcome EU-UK political agreement on Northern Ireland : This new framework shows that joint efforts to find bilateral solutions to mitigate the consequences of Brexit can ensure stability and predictability for people and businesses in Northern Ireland while maintaining the integrity of the EU’s Single Market. View Article
Five UK think tanks on the Windsor Framework : A broad welcome from the think tanks. View Article
Federal Trust's Donnelly/Stevens: Brexit and Northern Ireland: Who Got What They Wanted? : They are uncertain whether the resolution of the Protocol controversy will be the precursor of general normalisation for EU/UK relations. View Article
Bloomberg: UK’s Sunak Suggests He’ll Seek Brexit Treaty Change From EU : British premier says he hears DUP concerns ‘loud and clear’; UK Parliament will have a say on any new Brexit deal: Sunak View Article
Federal Trust: "Brexit: Bad for the UK, bad for Ireland" - Brendan Donnelly discusses the Northern Ireland Protocol : The problems Brexit would cause for Ireland were foreseeable and foreseen. View Article
EU-UK Forum's Leffler: Brexit and the Swiss Model : So what is this model which, we are told, holds such promise? To understand it we need to look at both context and contents. It is a complex and fragile construct, currently under considerable stress and difficult, if indeed at all possible, to replicate elsewhere. View Article
UK and Changing EU's Usherwood: Five reasons why rejoining the EU is a difficult path to follow : Simon Usherwood sets out five reasons why going down the road of rejoining the EU would prove difficult for any UK political party. View Article
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