Welcome to our Friends weekly e-mail.
Highlights of my week: The Spanish Presidency continues to tick off legislative progress – financial contracts at a distance and the green bond standard this week. The European Parliament is engaging in earnest in its struggle with Council to `take back control’ of the Commission presidency process and reflections deepen on the meaning of Tusk’s success in Poland. But a small black cloud appeared on the horizon as the European Court of Auditors warned that Next Generation’s performance could not be adequately measured. The ESAs Board of Appeal suspended an ESMA decision – for the first time (I think!). ESMA reported that the EU’s gas market functioned properly last year even in the face of sudden and gigantic demands for gas. The world’s Stock Exchanges adopted a baseline of sustainability disclosures for listed companies – doubtless of great interest to the members of the Net-Zero Asset Owner Alliance – now with combined assets of €9.5 trillion. ACCA added to the warnings to accountants to sharpen their ethics and beware of greenwashing. The UK’s FCA warned firms to behave properly about crypto marketing claims while the US Treasury sought to end the anonymity of crypto transactions and EU bank regulators prepare for its landmark crypto law – MiCA. The much-vaunted EU-UK financial services MoU had its first outing and - only to the surprise of Brexiteers – talked, but without any decisions. The cohort of young people who only came onto the electoral rolls after the Brexit vote are beginning to show their colours: only 11% of them would have voted to Leave.
(Graham Bishop: The European Union in 2033 - comments at Federal Trust/James Madison Charitable Trust seminar : My comments are structured to show the potential size of the EU in 2033 and the role that the euro may well play: internationally, domestically by way of membership, the necessity of a single market in money/ financial services and, finally, as a driver of greening the EU’s economy. View Article)
Graham Bishop
Articles from 20-26 October 2023
Policy impacting Finance
Council adopts legislation that makes it safer to contract financial services online or by phone : The Council has today adopted a directive concerning financial services contracts concluded at a distance. This is the last step in the decision-making procedure. View Article
Eurogroup President Paschal Donohoe's report to the Euro Summit President ahead of the Euro Summit meeting of 27 October 2023 : Eurogroup has been undertaking measures necessary for the Capital Markets Union so EU capital markets can renew and enhance private sector investment, unlock funding for common challenges, and allow the EU to demonstrate leadership on green and digital transitions. View Article
European elections 2024: MEPs’ proposals for the lead candidate system : Call for an interinstitutional agreement on the procedure to elect the Commission President; Proposals to increase turnout, ensure citizens can exercise their right to vote and accessible participation View Article
AFCO: EPs submit proposals to strengthen EU capacity to act EU Treaties reform: MEPs submit proposals to strengthen EU capacity to act : Towards a more bicameral, better developed, and more efficient legislative system for EU; enhance the EU’s capacity to act and strengthen citizens’ voice; Proposals for all policy areas with increased competences for the EU and realigned goals; Introduction of EU-wide referendum mechanism View Article
EPC's Lavrelashvili, Bielecki: Donald Tusk is back: Finally a new era in Polish-EU relations? : All eyes are now on opposition leader Donald Tusk, who is poised to assume the role of Poland’s next prime minister. There are hopes that Tusk will bring Poland back on the EU track. View Article
LSE's Guerra/Bertoa: What we learned from the 2023 Polish election : Law and Justice lost its majority in the Polish election on 15 October. Simona Guerra and Fernando Casal Bértoa take stock of the campaign and outline six lessons we learned from the result. View Article
POLITICO: Swiss election results: Far right dominates after anti-immigration campaign : Final results show sizeble gains for the far-right Swiss People’s Party, and important losses for the Greens. View Article
Bruegel: To unblock fiscal rule reform, the EU should reinstate its excessive deficit procedure : Although not directly related to the fiscal rules reform, reinstating the EDP could help break the current deadlock. The European Commission has said it will open EDPs in spring 2024 for all EU countries in breach of the 3% deficit limit. View Article
AccountancyEurope's Boutellis-Taft: From size to risk: rethinking regulation to prioritise impact : Policymakers currently rely on simple metrics (quantitative criteria) such as turnover, balance sheets, number of employees to categorise and define enterprises. This determines how EU law applies to them... Size matters, but impact and risks matter more.. View Article
European Court of Auditors: EU recovery fund’s overall performance cannot be adequately measured : The EU provides over €700 billion to member states in response to the COVID-19 pandemic; The Commission tracks countries’ progress on pre-agreed reforms and investments; Paradoxically, it is difficult to say how well the fund’s goals are being achieved View Article
European Supervisory Authorities publish joint criteria on the independence of supervisory authorities : Supervisory independence is key to ensure that fair, effective and transparent decisions are taken by appropriately resourced supervisory authorities. These authorities can provide effective and adequate protection for customers and consumers of financial services ensuring confidence in the system. View Article
Banking Union
Finextra: Sepa payment schemes ISO 20022 migration delayed : The European Payments Council has postponed the migration of Sepa payment schemes to the 2019 version of ISO 20022 by four months, to March, after concluding that "at least two large Sepa countries" couldn't be guaranteed to make the original November deadline. View Article
SSM's McCaul: The art and science of good supervision : I will focus less on the legal framework and more on the evolution of our supervisory approach, especially in the current complex environment...Some would say that supervision is not a science but an art. View Article
Capital Markets Union
ESA’s Board of Appeal suspends the decision by ESMA to withdraw the recognition decision of Dubai Commodities Clearing Corporation as Tier 1 : DCCC challenged ESMA’s Decision, asking the Board to extend the adaptation period and to suspend the withdrawal Decision until the outcome of the appeal is concluded. View Article
EIOPA: Introductory statement of Petra Hielkema at hearing of the ECON Committee : Ms Hielkema focused on the importance of closing the insurance protection gaps, cyber insurance gap and pensions savings gap. View Article
ESMA finds natural gas futures markets functioned appropriately during the August 2022 price surge : CCP margins rose and fell with prices and volatility in line with expectations, with margin calls met on time. There were no signs of reductions found in derivative positions during this period. View Article
PCS: October 2023 Newsletter : 2 The Edinburgh Reforms/ Financial Services and Market Act/ Near-Final Statutory Instrument/ The PRA and FCA Consultations/ Conclusion; 3 Market data; 4 Basel Endgame; 5 News you may have missed: "Let a thousand reports bloom...."/More Green from Brussels/ Retention draft RTS published View Article
BETTER FINANCE Urges a Genuine Reform of the Dysfunctional European Retail Investment Market in Support of EC's Strategy : The RIS constitutes a once-in-a-lifetime opportunity to reshape the highly dysfunctional European retail investment market: widespread conflicts of interest, inconsistent rules, and inadequate key product information are endemic. As a result, just one-third of EU citizens trust distributors. View Article
Environmental, Social, Governance (ESG)
European Green Bonds: Council adopts new regulation to promote sustainable finance : The Council adopted a regulation creating a European green bond standard. The regulation lays down uniform requirements for issuers of bonds that wish to use the designation ‘European green bond’ or ‘EuGB’ for their environmentally sustainable bonds. View Article
Net-Zero Asset Owner Alliance demonstrates tangible climate action in the latest Progress Report : Total membership has grown by 12 to 86 over the past year (12 months to August), now with over US$ 9.5 trillion[1] AuM. View Article
Stock Exchanges preparing markets for new climate disclosure standards : Stock exchanges are uniquely positioned to enable adoption of a global baseline of sustainability-related financial disclosures through market education and guidance and are working with the UN SSE and its partners to provide globally consistent, high-quality training and guidance ... View Article
Banken Verband: The role of banks in conserving biodiversity – a key issues paper : Banks are concerned with the topic of biodiversity for a number of reasons. Firstly, they play an important role in the sustainable transformation because they will be providing the investment and financing capital for sustainable economic activities. View Article
GRI: Joining the dots between tax and the SDGs : Under the ESG umbrella, all tax matters of a company relate to ‘governance.’ However, defining good governance can be challenging due to a number of existing differences in approaches among jurisdictions. View Article
City of London: UK-EU are uniquely placed to drive global climate action ahead of COP28 : The report emphasises that the EU and UK are already closely aligned on net-zero ambitions with both having set some of the strongest national targets in the world and both being home to private sectors that are closely integrated and very ambitious. View Article
Delors Centre's Woll: Avoiding the Road Bumps of the Green Transition : Woll proposes three pathways to a net-zero economy by 2050 that ideally should be combined: (i) correcting market signals through taxonomies and taxation; (ii) developing a European industrial policy that supports green innovation but also rewards successful transition plans;... View Article
BEUC: Putting order in the Wild West of misleading green claims : The proliferation of unreliable claims makes it difficult for consumers to navigate the market and evidence shows that consumers have been increasingly misled by fake green claims. View Article
Protecting Customers
Beware ethical dilemmas and greenwashing in sustainability reporting, warns ACCA : We need to ensure that poor quality application of the professional accountant’s code of ethics doesn’t undermine positive progress in implementing sustainability reporting by businesses – Global Ethics Day warning View Article
Fin Tech Regulation
finextra: US Treasury proposes crypto mixer-crackdown to end anonymous transactions : The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed a new rule that will increase transparency around crypto mixer transactions. View Article
FCA warns about common issues with crypto marketing : We expect authorised firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously. Where this is not happening, we will take action... View Article
EBA and ESMA consult on two sets of joint guidelines under MiCA : The Consultation Paper on two draft Joint Guidelines covered suitability assessment of members of the management body, and suitability of shareholders and members with qualifying holdings of issuers of asset referenced tokens (ARTs) and of crypto-asset service provider (CASPs). View Article
Coindesk: Crypto Shareholder Requirements Set Out by EU Banking Regulators : Controls on staff bonuses at crypto exchanges and wallet providers are also planned as the bloc prepares for its landmark crypto law, MiCA. View Article
ECB podcast: The digital euro, demystified : Will we soon pay with a digital euro? Would it replace cash? And who is it for? Although no decision has been made on issuance, we are preparing for a possible digital euro. This is fuelling a lot of interest - and quite a few misconceptions. View Article
EPIF welcomes the ECB Governing Council’s announcement to proceed to the preparation phase of the digital euro. : This new phase will focus on the testing and experimentation to develop a digital euro, as well as the finalization of the important digital euro Rulebook. View Article
FESE: Response to the IOSCO Consultation Report on Policy Recommendations for Decentralised Finance (DeFi) : FESE welcomes the IOSCO progress on policy recommendations to address market integrity and investor protection issues in decentralised finance (De-Fi). View Article
Friends' Services
Graham Bishop: The European Union in 2033 - comments at Federal Trust/James Madison Charitable Trust seminar : My comments are structured to show the potential size of the EU in 2033 and the role that the euro may well play: internationally, domestically by way of membership, the necessity of a single market in money/ financial services and, finally, as a driver of greening the EU’s economy. View Article
Economic Policies Impacting EU Finance
MEPs adopt recommendations on using tax policy to address current difficulties : MEPs of the economic and monetary affairs committee argue that inequalities and the strain on European businesses, both exacerbated in these times of crisis, can be in part addressed by changes to the EU’s tax rules. View Article
Brexit and the City
Reuters' Jones/Withers: Britain, EU discuss risks, reforms, in inaugural financial services meeting : Officials from Britain's finance ministry and the European Commission have discussed geopolitical risks and the vulnerabilities of non-bank financial firms, in the first official forum between the two sides on finance since Brexit. View Article
Bloomberg's Hughes: There’s a Reason Why UK Stocks Need UK Owners : Local shareholders used to support London cash calls, bringing global investors with them. Their retreat means hedgies filled the gap — to companies’ detriment. View Article
Reuters' Jones: Britain tells pension funds change needed to improve returns : Britain will not force pension funds to consolidate or invest in high-growth companies, but there must be change in the sector to give pension holders better long-term returns, finance minister Jeremy Hunt said on Wednesday. View Article
City AM: Cap, scrapped: Banker bonus limit to go in bid to boost City competitiveness : Regulators have confirmed plans to scrap the cap on bankers’ bonuses with the new policy going live at the end of this month.... In a joint statement, the UK’s financial watchdogs confirmed that they will “remove the current limits on the ratio between fixed and variable pay”. View Article
Brexit
UK-EU regulatory divergence tracker Q3 2023 : There are six cases of active divergence (where the UK, or some part of it, changes its rules); nine of passive divergence (where the EU changes its rules and the UK, or some part of it, does not follow); two of delayed divergence (where active divergence is delayed); and five of active alignment. View Article
EU-UK Forum's Henig: Future UK-EU trade deals are inevitable, the real focus should be on their impact : Travelling between London and Brussels, the mismatch in trade policy conversation is not about developing the UK-EU relationship, but how much the subject is raised. In Brussels the UK will almost never be mentioned, whereas in London the conversation will almost always go to matters EU. View Article
EU-UK forum's Pringle:The plight of the Left Out: Young people and Bregret : Limited data and research exists on the preferences and opinions of young voters (18-24) who were all too young to cast a vote in 2016, which this article will call the ‘Left Outs’. View Article
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