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Highlights of my week: The Swedish Presidency piled on the pressure to complete files on banking union and CSDR reform before Spain takes the Council chair next week. But AIFMD reform seems to have fallen by the wayside. The Commission also sought to get proposals on the digital euro and PSD3 into the legislative pipeline ahead of the 2024 EP elections. ECON backed the new rules on instant payments and heard good news from the EBA’s Enria about the current strength of EU banks, but he warned about vigilance for new risks and the SRB called for more “firepower” to deal with collapsed banks. EFAMA led a joint effort to persuade legislators not to accept a `suboptimal’ MiFIR review as retail investors are so vital to the success of CMU in providing a pool of investment liquidity that can drive equity valuations to rival those of the US. The International Sustainability Standards Board (ISSB) launched its first two standards - to widespread acclaim. The second asset recovery report on the failed FTX Exchange produced more evidence of the scale of a “brazen conspiracy” – underling the need for the crypto industry to have its house well and truly “put in order”. In Brexit-land, the much-heralded UK-EU MoU on financial services was published. As expected by anyone who had bothered to read the Trade and Cooperation Agreement (TCA), the parties agreed to talk regularly BUT it will not restrict the freedom of regulatory action by either party. The UK tail will not wag the EU dog!
Graham Bishop
Articles from 23-29 June 2023
Policy impacting Finance
Statement by the Eurogroup President, Paschal Donohoe, on the publication of the European Commission’s Single Currency Package : Within the Eurogroup, there is broad support for the ongoing work on the project to ensure our currency keeps pace with an increasingly more digital world. View Article ( MORE below in Fin Tech)
EBF shares views on the digital euro, payment services and financial data access proposals : "It is crucial to ensure that the European Commission’s vision on digital finance helps enable a competitive ecosystem with a level playing field for all, unlocking new opportunities for users while upholding their safety in complex digital environments,” - Wim Mijs View Article
Better Finance: Digital euro: EU Commission's proposal a first step in the right direction,.. : but more is needed for a safer alternative to bank deposits View Article
POLITICO: How to navigate Spain's EU presidency policy agenda like a pro : A peek at Spain’s bulging inbox at it takes on Sweden’s unfinished business. View Article
BIS Annual Report 2023: A tale of three journeys : ...an exploration of not one but three interwoven journeys: the journey that has taken the global economy to the current juncture; the journey that may lie ahead; and, in the background, the journey that the financial system could make as digitalisation opens up new vistas. View Article
Banking Union
Swedish Presidency: Council and Parliament agree on new banking rules : Following lengthy negotiations, the Council and the European Parliament have reached a provisional agreement on new capital requirements for EU banks. As holder of the Presidency of the Council of the EU, Sweden led the negotiations. View Article
Committee MEPs backed more accessible instant payments in euros : Focus on speed and consumer safety; Instant transfers that are affordable and available across the EU; Further integration of the Union payments market View Article
Finextra: EC publishes PSD3 proposals : The proposals have been welcomed by industry groups. The chair of the Open Finance Association, Nilixa Devlukia, said: “We are very encouraged to read the Commission’s proposal for PSD3/PSR, which recognises the need to strengthen the free open banking baseline and to allow the industry to collaborate on value-added services which generate a return on investment for all parties. View Article
EBA's Enria: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament : ..this resilience should not be cause for complacency. Rather, it should remind us of the need to continue our efforts to adapt our framework to an ever-changing risk landscape.... View Article
EBF: European industry associations call for payments in the Digital Identity Regulation to be non-mandatory : We caution that Recital 31 and Art. 12b.2 as adopted by the European Parliament and corresponding Art. 6db.2 of the Council’s General Approach are currently open to interpretation. The current wording seems to imply that the full payment sphere is included in eIDAS 2.0 on a mandatory basis. View Article
AFME comments on EU Financial Data Access and Payment Services Policy Proposals : “For financial services, both the EU’s proposed FIDA framework and the proposals on PSD/PSR could enable access to new, broader data sets to enhance the way banks operate, encourage innovation across sectors, and support a more effective and efficient payments system... View Article
SRB - FT interview: Europe's bank resolution authority seeks "firepower" to deal with collapsed lenders : Europe’s bank resolution authority is pushing policymakers to provide more “firepower” to protect depositors and rethink how lenders are wound down after recent failures underscored the need for swift and decisive action in a crisis. View Article
ISDA, AFME Respond to EBA on FRTB Reporting Requirements : Reporting standards provide supervisors with insight into banks’ trading books, while also keeping in mind the proportionality of the requirements and the costs and benefits of additional requirements above those mandated by the Basel Committee’s standards and what is required under the CRR. View Article
Capital Markets Union
Central Securities Depositories: Council and Parliament reach agreement : The new law will reduce the financial and regulatory burden on CSDs and improve their ability to operate across borders, while also strengthening financial stability. View Article
ECON: Agreement on changes to financial instruments settlement regime : Deterrent and proportionate cash penalties to prevent settlement fails, The principle of “same activity, same risk, same rules” , Minimising cross-border obstacles and administrative burden for authorised CSDs across the EU View Article
ICMA: European Council and Parliament reach agreement on CSDR Refit : A critical element of the Refit is the revised settlement efficiency regime, in particular the highly controversial application of the mandatory buy-ins in the event of settlement fails. ICMA has long opposed the introduction of a mandatory buy-in (MBI) regime in the EU bond markets... View Article
Simmons and Simmons: AIFMD II update: latest trilogue postponed (perhaps to September) : The Swedish Presidency of the Council of the EU cancels the 26 June AIFMD trilogue - this may now not take place until September. View Article
EFAMA: Joint trade associations urge policymakers not to concede to suboptimal outcomes in MiFIR review : EU asset managers, banks and brokers are today urging policy makers not to concede to pressure which will lead to suboptimal outcomes in the review of the Markets in Financial Instruments Directive (MiFID/R). View Article
IAIS launches final consultation in preparation for adoption of the Insurance Capital Standard in 2024 : The IAIS is launching today a public consultation on the candidate Insurance Capital Standard (ICS) as a prescribed capital requirement (PCR) for Internationally Active Insurance Groups (IAIGs). View Article
ECON study: Retail Investment Strategy : How to boost retail investors’ participation in financial markets View Article
CEPS' Nagtegaal: The Retail Investment Strategy: Lacking a ban, packing alternatives : Through the recently proposed Retail Investment Strategy, the European Commission aims to change this. And while those expecting a sea change – particularly in the form of an inducements ban – might be disappointed, a closer look reveals a proposal with potential. View Article
Bruegel's Lehmann: The Listing Act: no more than a minor boost to EU equity markets : Streamlining of the company listing process is welcome, but more fundamental reform is needed to revive the European Union’s flagging equity markets. View Article
Bloomberg: Why Europe Is Trying to Create a ‘Consolidated Tape’ for Traders : The European Union wants to establish up-to-the-minute price feeds for various asset classes traded across the region, including stocks and bonds. View Article
Environmental, Social, Governance (ESG)
IFRS Foundation Monitoring Board welcomes finalization of the first two sets of standards by the International Sustainability Standards Board : The finalization of the standards marks an important milestone in the development of a global framework for sustainability disclosure that aims to support transparency and comparability in global capital markets in response to investor needs. View Article
IFRS: Ten things to know about the first ISSB Standards : This week marks the issuance of the inaugural IFRS Sustainability Disclosure Standards, designed to provide a global baseline of sustainability-related disclosures for the capital markets. View Article
FSB welcomes publication of ISSB disclosures standards : FSB Knot “The publication of the ISSB standards marks an important milestone in the FSB’s Roadmap for Addressing Financial Risks from Climate Change. The ISSB standards aim to establish a common global baseline that is intended to be interoperable with jurisdictions’ frameworks for disclosures." View Article
Stock exchanges welcome new ISSB Standards; UN SSE announces related capacity building activities : Stock exchanges are holding launch events around the world to introduce their markets to these new standards. View Article
GRI: Progress towards a strengthened sustainability reporting system : The launch by the International Sustainability Standards Board (ISSB) of its first standards (S1 General and S2 Climate-related Disclosures) is a “significant milestone” in the realization of a strengthened global corporate reporting system, in which disclosure on impacts and sustainability-related risks and opportunities are on an equal footing. View Article
ACCA: ISSB standards to provide consistent global baseline : Corporate reporting of sustainability-related information takes a significant step forward with the publication of two ground-breaking global standards. View Article
AFME/Weyman: A Common Path to Improve European Climate Risk Stress Testing and Scenarios Analysis : The report outlines the key challenges EU banks are experiencing surrounding climate risk stress testing and provides recommendations to improve future stress tests. View Article
ECIIA: The role of Internal Audit in ESG in the Banking Sector : ... where national and international standards are still in flux, both assurance and advisory services can add real value.... development of Internal Audit skills and capabilities is a critical lever for the Entity to respond adequately to these big changes View Article
Insurance Europe publishes response to ECB-EIOPA paper on climate protection gap : The insurance industry welcomes the April 2023 discussion paper of the European Central Bank/European Insurance and Occupational Pensions Authority on policy options to tackle the widening climate insurance protection gap. View Article
Protecting Customers
EIOPA to undertake the first joint mystery shopping exercise across several EU Member States : The exercise will be conducted in 8 Member States and will follow a common methodology and criteria developed by EIOPA and its Members. The results of the exercise will be available in the first half of 2024. View Article
UK Finance - Fritsche: UK Consumer Duty: Setting a global example : The UK Consumer Duty is one of the biggest changes of regulatory reform in the UK retail financial industry. It introduces an intensified degree of consumer protection. The impact of the Consumer Duty is wide-ranging and aims to put measures in place to protect the consumer. View Article
Fin Tech Regulation
Commission: Digital euro package : to ensure that individuals and businesses can continue to access and pay with euro banknotes and coins across the euro area, and to set out a framework for a possible new digital form of the euro that the European Central Bank could choose to issue in the future, as a complement to cash. View Article
ECB welcomes European Commission legislative proposals on digital euro and cash : Proposed legislation establishes framework facilitating the possible introduction of a digital euro that is widely usable and available throughout the euro area View Article
CoinTelegraph - de Galhau: Issuing digital euro, or ‘Cash+,’ is probably a duty, French central banker says : François Villeroy de Galhau tried to soft sell the proposed euro CBDC to commercial bankers, emphasizing collaboration and the CBDC’s advantages. View Article
BdB: Statement on the ESAs discussion paper on DORA : In principle, the quantitative and qualitative criteria/indicators described are suitable as uniform standards for the classification of the "criticality" of ICT service providers by the ESAs. However, it should be made clearer . View Article
European industry associations call for payments in the Digital Identity Regulation to be non-mandatory : We believe that the proposal will incentivise Member States to be more expedient in developing e-ID solutions with a wide scope of usage. Moreover, the European Digital Identity Wallet (EUDIW) will foster quicker onboarding processes and a better user experience. View Article
Coindesk: The Second FTX Asset Recovery Report Is Packed With Bombshells : New claims put Sam Bankman-Fried and his friends even closer to the center of a brazen conspiracy. View Article
Economic Policies Impacting EU Finance
MEPs seek to inject more ambition into reform of rules on exchange of tax information : .. the Council reached a weak agreement on the 8th revision of the Directive on administrative cooperation in the field of taxation (DAC8). In it member states omitted important aspects such as the minimum penalties proposed by the European Commission and a definition of high net worth individuals. View Article
Brexit and the City
UK-EU Memorandum of Understanding on Financial Services Cooperation : The regulatory cooperation should not restrict the ability of either jurisdiction to implement regulatory, supervisory or other legal measures that it considers appropriate. View Article
City Corporation response to signing of UK-EU MoU on Financial services : “The signing of the MoU sets the stage for a new era of cooperation with our EU partners. This resolution will support UK financial services to once again engage productively with the EU for the benefit of both our economies." View Article
City AM: Is Brexit the real reason for London’s stock market malaise? : The City has been plunged into something of an existential panic in recent months. Fears of international decline have crystallised in the form of a listings drought and a crack squad of City grandees are scrambling to try and steady the ship. View Article
FT's Plender: Shed no tears over the travails of London’s equity market : Rishi Sunak’s promotion of financial services misses the point that an oversized sector can harm the rest of the economy View Article
FT: Pension schemes argue London listing reforms would damage City : Investors complain fundamental rights of shareholders would be threatened by FCA’s plans to attract more companies to list in the UK View Article
FCA welcomes launch of ISSB standards : The FCA welcomes the International Sustainability Standards Board (ISSB) launch of its first sustainability-related reporting standards: the General Requirements for Disclosure of Sustainability-related financial information (IFRS S1), and the requirements for Climate-related Disclosures (IFRS S2). View Article
Brexit
IFG's Rutter: Brexit is likely to stay “done” for some time yet : The Brexit reality is not quite as simple as Boris Johnson had claimed. He may have left parliament, but his Brexit legacy will long outlive him. His successors will have to get used to managing it – and its consequences, says Jill Rutter. View Article
Federal Trust video - Martin: CAN NORTHERN IRELAND SURVIVE BREXIT? In this new Federal Trust video, the former European Commission Representative in Belfast and London, Geoff Martin, predicts that the DUP will soon rejoin the Northern Ireland Executive. View Article
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