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03 October 2013

This week in "Brussels"
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Asset ManagementCorporate Governance/AccountingFinancial Services Policy
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Articles from 26 September 2013 - 03 October 2013

Banking

Richard Barley: ECB, BoE are poles apart
Just 21 miles separate Europe and the UK at the English Channel's narrowest point, writes Barley for the WSJ. But in monetary policy terms, a gulf is becoming apparent. (Includes link to ECB/Draghi remarks.) 
BoE/Tucker: The reform of international banking – Some remaining challenges
Tucker sketched a few of the issues in banking regulation that he thinks will confront policymakers. 
FT: Europe's banks undervalued, says ECB deputy Vítor Constâncio
Constâncio, the man in charge of setting up the safety-testing of the eurozone's banking system, said that Europe's banks were just as strong as US rivals and were being unjustly undervalued by investors. 
BoE: A framework for stress-testing the UK banking system – Discussion paper
This discussion paper sets out proposals for annual, concurrent stress tests of the UK banking system. Its aim is to elicit feedback from interested parties to help inform FPC and PRA Board decisions over the ultimate design of the stress tests. Comments are requested by 10 January, 2014. 
ECB/Cœuré: Implications of bail-in rules for bank activity and stability
Cœuré's speech focused on the BRRD and in particular the introduction of creditor-funded recapitalisation - otherwise known as bail-in. He looked at how this is likely to affect bank funding and lending, and therefore the financing of the recovery. 
Jens Weidmann: Stop encouraging banks to buy government debt
The current regulatory treatment is incompatible with the principle of individual responsibility, writes the Bundesbank president in an article for the FT. 
CER/Whyte: Banking Union – Or Potemkin village?
The structure which is emerging may be that which best reflects political realities in the eurozone, but it does not look like a particularly stable one. 
Speech by ECB/Mersch at the ESE conference: A regime change in supervision and resolution
Mersch discussed how to ensure that Banking Union was 'not just a label', and that it was able to initiate a genuine regime change in the way banks are supervised and resolved. 
Bundesbank/Nagel: How market segments changed over the crisis - Challenges for future banking
Nagel looked at changing market conditions and their impact on banking, as well as different regulatory aspects. "The interconnectedness between banks and their home country has to be monitored closely as it holds a strong contagion risk", he said.  
Speech by Bundesbank/Lautenschläger at ESE conference: Supervisors without borders
"The Banking Union can succeed only if every single one of us, supervisors and supervised alike, is ready to take action and welcome the new." 
EPC publishes clarification letter on electronic mandates
The letter addresses the current uncertainty among SDD scheme participants and other interested parties around the question of acceptance of electronic mandate solutions under the SDD Rulebooks. 
EBA issues Work Programme for 2014
The Work Programme describes the main objectives and deliverables of the EBA in the forthcoming year. Activities will focus on three core areas: regulation, oversight and consumer protection. 
EBA publishes final draft RTS on close correspondence for own-issued covered bonds
EBA published its final draft RTS on close correspondence between the fair value of an institution's covered bonds and the fair value of its assets. These RTS will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the EU. 
Speech by EBA/Enria at ESE Conference: The new role of the EBA in the Banking Union
The tasks of the EBA remain fundamentally the same, but the Banking Union represents a major shift in the institutional set-up, which is triggering an important adjustment for the EBA. 

Securities

ECB establishes new framework for assessment of securities settlement systems and links
The ECB has published a new "Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations".  
FT: SEC throws spanner in the works of new derivatives regime
US banks, institutional investors, European regulators and Democratic and Republican commissioners of the Commodity Futures Trading Commission had already pleaded for moderation and delay to the huge shake-up in derivatives markets. 
FT: EU urges US to delay swaps reform
Europe's top financial regulator has demanded the US urgently amend its imminent reforms to the $633 trillion derivatives market, in an intervention aimed at preventing Washington from extending its reach overseas. 
FT: US rules 'endanger' derivatives reforms
Regulators on both sides of the Atlantic did not realise that a footnote in US rules on swap execution facilities would drag other trading platforms into the scope of the new regime, according to MEP Markus Ferber, the rapporteur for Europe's version of the SEF rules. 
Reuters: US securities watchdog proposes new rules for dark pools
A US securities industry watchdog has proposed new rules to monitor transactions in "dark pools" run on alternative trading systems (ATSs), rivals to traditional exchanges whose growth critics blame for less transparency in the stock market. 
Risk.net: Futures reporting delay will not take place
According to Patrick Pearson, head of the financial markets unit within the EC's internal market and services directorate, a one-year delay to Europe's new reporting rules for exchange-traded derivatives will not happen. 
ESMA delivers second set of advice on EMIR equivalence
ESMA has published its second set of advice to the European Commission on the equivalence of the regulatory regimes for OTC derivatives clearing, CCPs and TRs of non-EU countries with EMIR. (Includes link to keynote address by Steven Maijoor.) 
Insurance Europe: Letter to ESMA and EIOPA on central clearing exemption for retirement schemes under EMIR
Insurance Europe urges ESMA to accept notifications of types of entities or arrangements that have been granted exemptions from NCAs. It recommends that ESMA commence with formal implementation of the pension scheme arrangements exemption process shortly after the pilot exercise has been concluded. 
Reuters: EU watchdog wants to charge foreign clearing houses
ESMA wants to charge foreign clearing houses seeking to cash in on new derivatives rules being introduced across the EU. 

Insurance

CRE: Insurers fight back
A panel of high-level multinational insurers fought back against criticism that their industry is slow to innovate and not always willing to pay claims. However they admitted that there were areas where the industry, together with risk managers, could improve. 
Risk.net: Insurer global capital standard must be 'simple and pragmatic' says Ace risk chief
International standard-setters were urged not to rush plans to develop a global capital standard for insurers or risk developing a regime that is detrimental to global groups and their customers. 
Responses to FSB consultation on risk appetite framework: GFIA and Insurance Europe
GFIA and Insurance Europe commented on the Financial Stability Board's consultation, 'Principles for an effective risk appetite framework'. 
Insurance Europe: Challenging timetable set for Solvency II
Insurance Europe appreciates the clarity provided to the insurance industry today by the European Commission's proposal to postpone the date from which the Solvency II regulatory regime will apply.  
Risk.net: Lithuanian presidency proposes increase to volatility adjuster cap
European law-makers are edging closer to an agreement on Solvency II's long-term guarantees package, which could increase the cap on the volatility adjuster to as much as 70 per cent, a major shift from the proposed 20 per cent cap. 
Statement by Commissioner Barnier on the application date of Solvency II
At Barnier's request, the Commission has put forward a draft Directive postponing the application date of the Solvency II Directive to 1 January, 2016. 
Risk.net: Van Hulle urges parties to reach agreement in Omnibus II negotiations
The former head of Solvency II at the European Commission has urged policy-makers to reach an agreement on Omnibus II next month or risk damaging the European insurance industry. 
EIOPA publishes the final Guidelines for the preparation of Solvency II
The Guidelines allow for gradual and proportionate preparation for Solvency II by both national supervisors and industry through the "phasing-in" and threshold provision. (Includes initial response from Insurance Europe.) 

Asset Management

ESMA clarifies reporting requirements for alternative fund managers
ESMA has published final guidelines on the reporting obligations for AIFMs. These Guidelines, which relate to the AIFMD, will require AIFMs to report certain information to national supervisors on a regular basis. 
IPE: Regulator warns Dutch pension funds against dragging feet on new FTK
De Nederlandsche Bank (DNB), the Dutch pensions regulator, has warned pension funds that they must speed up preparations for the introduction of the FTK, the country's new financial assessment framework. 
IPE: EIOPA rolls up sleeves on new HBS proposal for IORP II
EIOPA is working to improve methodologies for assessing the holistic balance sheet approach within the IORP II Directive, with the view to presenting further tested technical proposals to the new European Commission next year.  
IPE: Aba welcomes drop of holistic balance sheet from IORP II Directive
Aba, Germany's occupational pension fund association, has welcomed new proposals for a revised IORP Directive that "will not include any solvency requirements based on the holistic balance sheet (HBS) approach", even though regulators recently stressed that the HBS was not a "dead-end street". 
IPE: Brussels to delay IORP II proposal due to lack of data
The European Commission is likely to postpone the introduction of its legislative proposal for pillars two and three of the revised IORP Directive, due to a lack of data regarding the impact they could have on pension funds across Europe. 

Corporate Governance/Accounting

FRC consults on the amendment of the UK Corporate Governance Code
The FRC has published a consultation on whether to amend the UK Corporate Governance Code to address a number of issues relating to executive remuneration. If changes to the Code are ultimately proposed, they will be subject to consultation in the first quarter of 2014. Deadline: 6 December, 2013. 
IFAC: International donor initiative releases report assessing accountancy's global landscape
The Professional Accountancy Organisation Global Development Report has been published, as part of the continuing effort to strengthen the accountancy profession globally. 
EFRAG: Draft comment letter to the IASB on the conceptual framework for financial reporting
EFRAG has issued its draft comment letter on the IASB Discussion Paper, A Review of the Conceptual Framework for Financial Reporting. Comments are requested by 31 December, 2013. 
IIA: Auditing for compliance
The Compliance function plays a second line of defence role within corporate governance, but it also has a place in the first line of defence for its own activities with ownership, responsibility and accountability for directly assessing, controlling and mitigating risks. 
EuropeanIssuers: Investor disclosure of interests in financial instruments other than shares
Susannah Haan, Secretary General of EuropeanIssuers, attended a roundtable meeting at ESMA to discuss the new disclosure of interests in financial instruments (e.g. derivatives as well as shares) under the Transparency Directive. 
FEE: Final responses to IASB's ED "Insurance Contracts" and to EFRAG's draft response to IASB
FEE issued its comment letter to the IASB on its ED Insurance Contracts, as well as its comment letter to EFRAG on EFRAG's draft comment letter on IASB's ED Insurance Contracts. 

Financial Services Policy

2014 Work Programme of the Joint Committee of the ESAs
The Joint Committee of the European Supervisory Authorities (EBA, ESMA, EIOPA) has published its Work Programme for next year. Throughout 2014, the Joint Committee will give high priority to the areas of Consumer Protection and Cross-Sectoral Risk Analysis, as in the current year.  
Regulatory issues top the agenda of second round of EU-US trade deal negotiations
The focus of the upcoming second round of negotiations for a TTIP on 7-11 October is for the EU and the US negotiators to make progress on regulatory issues and standards. (Includes links to statements from Commissioner De Gucht and US Ambassador Froman.) 
European Commission and Member States to assess barriers restricting access to regulated professions
The Commission has adopted a communication announcing the start of an evaluation of national regulations on access to professions. In line with the PQD, it foresees first a transparency exercise and then a mutual evaluation. (Includes link to EPP statement.) 

International/G20

IMF: Global Financial Stability Report - Transition challenges to stability
Chapter 2 of this update looks at efforts by policymakers to revive weak credit growth. Chapter 3 examines how banking funding structures matter for financial stability and the potential impact of various regulatory reforms. 
IMF's 2013 Annual Report: Promoting a More Secure and Stable Global Economy
"The global economy is in better shape, but the road to a robust and comprehensive recovery remains bumpy", says IMF Managing Director Christine Lagarde in an introduction to the institution's Annual Report. 

Graham Bishop’s Articles and Speeches

Financial World: Keeping the funds flowing (Graham Bishop article)
Graham Bishop recommends support for the shadow banking sector rather than too draconian a regulation that strangles the good parts. 

European Council/Parliament

ECON Committee: Still much room to improve the European semester, say MEPs
European Semester economic policy coordination needs many fixes, not least to take proper account of growth, employment, investment and social concerns, warned the ECON Committee in a resolution. 
Statements by ESA chairs at annual ECON Committee hearing
The ECON Committee held an exchange of views with the chairpersons of the three European Supervisory Authorities. Statements are included from ESMA/Maijoor, EBA/Enria and EIOPA/Bernardino. 





© Graham Bishop

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