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Highlights of my week: Ahead of next week’s Informal European Council, more thoughts are appearing around the potential shape of an enlarged EU, its governance and functions. Financial literacy concerns were highlighted by both IOSCO and Commissioner McGuinness while Parliamen’s vote now seems certain to open the way to Claudia Buch succeeding Andrea Enria as Chair of the SSM. Is he now entering a valedictory phase in his reflections with EBF’s Wim Mijs on the supremacy of bank internal controls/governance over capital. Payment systems and PSD3 continue to attract attention while IORPS II is struggling to maintain its relevance as pensions continue to shift away from DB to DC. The ESAs reported on voluntary disclosures about `adverse impacts’ as ESMA sought to tighten up supervisory action on MiFID sustainability requirements. An interesting straw in the wind about corporate ESG disclosures was the decision by the internal auditors to publish factsheets that parallel financial reporting requirements – external auditors will soon have an easy route to monitor compliance! The BIS produced a report to show the economic importance of defi and cryptoassets. The Brexit debate has gone quiet for the moment but those expecting serious fireworks from the UK-EU MoU on financial services should study the joint statement from the UK-US regulatory working group – doubtless the participants enjoyed their cosy chats but neither took any policy decision as a result!
Graham Bishop
Articles from 29 September - 5 October 2023
Policy impacting Finance
CEPR: The European Union at the time of the New Cold War: A Manifesto : The authors set out seven key elements that could form the basis for a new political contract capable of re-establishing trust, strengthening solidarity, boosting the Union’s ability to act in the interests of all its citizens, and enhancing the global role of the EU. View Article
Delors Centre's Nguyen: Sailing on High Seas: Reforming and Enlarging the EU for the 21st Century : The non-governmental expert group on EU institutional reform presented their report on how to prepare the EU for enlargement to Laurence Boone (French Secretary of State for European Affairs) and Anna Lührmann (German State Minister for Europe and Climate), View Article
EURACTIV's Allenbach-Ammann: Former prime ministers, officials call for “gradual” EU federalism : 32 former high-level politicians, EU officials and economists published a manifesto for “the European Union at the Time of the New Cold War”, calling for a central fiscal capacity, completion of Banking Union and Capital Markets Union, a shift to a new EU “business model” and institutional reforms. View Article
BIS: RCAP on timeliness: Basel III implementation dashboard : The RCAP Implementation dashboard uses a combination of numerical grades and colour codes to signal the different stages of adoption of the standards. The aim is to ensure that the internationally agreed timeline remains on track. View Article
IOSCO World Investor Week kicks-off today promoting financial education and investor protection worldwide : Given the increasing participation of retail investors in capital markets in recent years, these investor issues have risen to the top of the WIW agenda. View Article
POLITICO: Parliament votes through Buch as EU banking cop : Approval clears another obstacle to Spain’s Calviño getting unrelated job at the EIB. View Article
ESAs publish Joint Committee Work Programme for 2024 : During the year 2024, the Joint Committee will focus on the following areas: consumer and investor protection, operational resilience, financial conglomerates, and securitisation. View Article
Banking Union
Interview with Andrea Enria, Chair of the Supervisory Board of the ECB, conducted by Wim Mijs, CEO of the European Banking Federation : .. It is clear that when you have governance and internal controls that are not in a proper place, there is no level of capital which is strong enough and good enough to prevent a crash... View Article
SSM's McCaul: Interview with Cinco Días : We have put particular emphasis [on credit risk management] on the mortgage and small and medium-sized enterprise portfolios, as well as commercial real estate. View Article
EBA publishes its work programme for 2024 : In 2024, the EBA will need to address a large number of mandates in a wide range of areas, building on the priorities defined in its programming document for the period 2024-2026. View Article
Payment Services: BEUC’s recommendations on the Payment Services Regulation and the Payment Services Directive 3 : Payment options have multiplied: while coins, banknotes and cards remain important, payments increasingly take place online and via mobile phones. View Article
CER's Meyers: Does Europe's payments strategy add up? : The EU institutions are pushing multiple European payments champions to compete with Visa and Mastercard. But focusing on 'sovereignty' at all costs is no strategy for success. View Article
The EBA publishes 2023 list of third country groups and third country branches operating in the EU/EEA : This publication ensures that market participants have clarity on the direct ownership of the involved institutions. View Article
Capital Markets Union
ESMA Work Programme 2024 focus on digital change and the green transition : ESMA will ensure close market and risk monitoring and support the effective implementation of the European regulatory framework related to the digital and sustainability transitions. View Article
SUERF's Kubitza: Bonds at a premium: the impact of insurers on corporate bond issuers : Using insurance companies’ bond investments, I examine how shifts in investors’ demand for corporate bonds affect non-financial bond issuers.... My findings emphasise the critical role that institutional investors play in shaping non-financial firms’ financing decisions and real economic activity. View Article
EIOPA: Review of the IORP II Directive: embracing the future while protecting the legacy : ..proposes changes to keep the regulatory framework for IORPs relevant bearing in mind the ongoing shift from defined benefit (DB) to defined contribution (DC) pensions, and in relation to the environmental and socio-economic challenges facing society. View Article
IAIS Newsletter September 2023 : Addressing insurance protection gaps in the face of catastrophic events is a complex societal challenge. Addressing this challenge will require a multi-stakeholder approach, including governments, the insurance industry and consumers. View Article
Environmental, Social, Governance (ESG)
ECB's Lagarde: Towards an orderly energy transition : Opening remarks by Christine Lagarde, President of the ECB, at the joint IEA-ECB-EIB High-Level International Conference on “Ensuring an orderly energy transition: Europe’s competitiveness and financial stability in a period of global energy transformation” View Article
EURACTIV: Parliament power brokers confirm EU’s new Green Deal and climate czars : Following two rounds of tense negotiations, Wopke Hoekstra and Maroš Šefcovic received the European Parliament’s blessing on Wednesday (4 October) to take on the climate and Green Deal portfolios in the European Commission. View Article
ESAs analyse the extent of voluntary disclosure of principal adverse impacts under the SFDR : The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published their second annual Report on the extent of voluntary disclosure of principal adverse impacts under the Article 18 of the Sustainable Finance Disclosure Regulation (SFDR). View Article
ESMA to launch Common Supervisory Action on MiFID II sustainability requirements : The goal of the CSA will be to assess the progress made by intermediaries in the application of the key sustainability requirements, which entered into application in 2022 following the amendments to the MiFID II Delegated Acts. View Article
IPE's Rust: ‘Well below 2°C’ Paris Agreement goal will be met, says forecasting consortium : The Paris Agreement goal of limiting temperature increase to “well below 2°C” above pre-industrial levels is likely to be achieved, according to the Inevitable Policy Response (IPR), a climate transition forecasting consortium focussed on serving institutional investors. View Article
ESMA: ESG names and claims in the EU fund industry : Using a novel dataset with historical information on 36,000 funds managing EUR 16 trillion of assets, we find that funds increasingly use ESG-related language in their names, and that investors consistently prefer funds with ESG words in their name. View Article
AFME: ESG Data for Financial Services in an Operational Environment : AFME & Protiviti have today published a new report entitled: "ESG Data for Financial Services in an Operational Environment." The report looks at the operational consequences from ESG regulatory reporting requirements. View Article
ECIIA: ESRS factsheets : For the first time ever, on an EU-wide level, Environmental, Social and Corporate Governance disclosures will be required to be reported in a standardized, comparable and consistent manner, just like for financial reporting. View Article
Protecting Customers
Speech by Commissioner McGuinness at the launch of the joint EU/OECD-INFE financial competence framework for children and young people : Because knowing about money and understanding it is in my view essential, at every stage in life, and we need to start early. I really want to say how grateful I am that we are at this position where we're launching something so important. And launching it with the OECD. View Article
Fin Tech Regulation
ESAs specify criticality criteria and oversight fees for critical ICT third-party providers under DORA in response to the European Commissio : ...the ESAs propose 11 quantitative and qualitative indicators along with the necessary information to build up and interpret such indicators following a two-step approach. View Article
BIS: Project Atlas explores economic significance of cryptoassets and DeFi : BIS, De Nederlandsche Bank and the Deutsche Bundesbank are creating a data platform that has potential to shed light on the macroeconomic relevance of cryptoasset markets and decentralised finance (DeFi). View Article
Digital Euro: BEUC’s recommendations on the legislative framework for the digital euro : In a digital society consumers need a public alternative to private digital payment methods View Article
Brexit and the City
The PRA consults on reforms to the Matching Adjustment as part of a package of measures on Solvency II : The PRA is consulting today on a significant package of reforms to the Matching Adjustment (MA). This aims to improve the flexibility for life insurers to make more productive, long term investments in the UK economy while supporting safety and soundness and policyholder protection. View Article
Joint statement on the UK-U.S. Financial Regulatory Working Group meeting : HM Treasury and US Treasury joint statement on the eighth official meeting of the UK-US Financial Regulatory Working Group. View Article
City AM's Conchie: Government’s London Stock Exchange boosterism is anti-competitive, claims rival boss : The government’s drive to boost the appeal of the London Stock Exchange (LSE) has been slammed as anti-competitive by rival exchange Aquis, which claimed ministers have been unfairly promoting the LSE in their efforts to breathe life into the City’s IPO market this year. View Article
Prospect magazine's Barber: Grading the governor : From a global pandemic to a cost-of-living crisis, Andrew Bailey couldn’t have become Bank of England chief at a more challenging time. In an exclusive interview, Lionel Barber assesses his performance—and asks whether the worst is finally over View Article
Brexit
Best for Britain: Business leaders back beneficial alignment : 61 business leaders, trade experts and parliamentarians have published a letter in response to recent reports in the media around the UK diverging from the standards and protections of the EU. View Article
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