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06 December 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
European Council/Parliament Graham Bishop’s Articles and Speeches Financial Services Month in Brussels - Report
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Articles from 29 November 2012 - 06 December 2012

Banking

ECOFIN Council results: Bank capital requirements / Bank supervision
The Council confirmed its commitment to reach an agreement with the EP on the CRD IV package before the end of the year. No agreement was reached on a single eurozone banking supervisor so an extra meeting will be held before the December European Council. (Includes link to latest ESA/EBA draft.) 
ECON Committee: EU bank supervision system must be strong, accountable and inclusive
Banking supervision powers transferred to the EU level must be matched by measures that subject them to democratic scrutiny, said ECON MEPs. They voted on plans to confer banking supervision powers on the ECB, and ways better to integrate non-eurozone countries into the new supervision system. 
Reuters: Franco-German rift threatens plan for banking union
Germany and France clashed publicly on Tuesday over plans to put the ECB in charge of supervising banks, deepening a dispute over the scope of ECB powers that threatens to derail one of Europe's boldest reforms. 
Lords EU Committee warns banking union could marginalise the UK
The House of Lords EU Committee has warned that a European banking union risks UK marginalisation and fragmentation of the single market. 
CER/Whyte: What a banking union means for Europe
A full banking union is needed to stabilise the eurozone. However, even an embryonic union could drive a wedge between the eurozone and the EU27, comments Whyte in this latest CER essay. 
CEPS/Ruding: The contents and timing of a European banking union - Reflections on the differing views
In this CEPS Essay, CEPS chairman Ruding offers his personal views on the progress achieved to date, the outstanding issues that will prove the most difficult to resolve, and recommendations on the way forward. (Includes Graham Bishop quote.) 
Open Europe: Banking union and the EBA - Where do we stand?
Ahead of the ECOFIN Council meeting, the Cypriot Presidency put forward a new compromise proposal aimed at concluding a deal before the next EU summit on 13-14 December. Open Europe looks at some of the proposed changes.  
Paul N Goldschmidt: Designing a credible European Deposit Guarantee Scheme
The Deposit Guarantee Scheme creates a series of specific problems that makes agreement among the EU 27 or 17 particularly difficult, comments Goldschmidt. 
Bloomberg: Barnier says EU may broker deal on Basel III bank law next week
The law, held up amid clashes on banker bonuses, leverage limits and liquidity ratios, should take effect "as soon as possible in 2013", Barnier said in prepared remarks for a meeting of finance ministers in Brussels. 
FSA consults on changes to the regulation and supervision of benchmarks
The Financial Services Authority (FSA) has proposed new rules and regulations for financial benchmarks. This follows the recommendations of the Wheatley Review of the London Interbank Offered Rate (Libor). Deadline for comments is 16 January, 2013. 
EBF response to the Commission consultation on indices and benchmarks
The European Banking Federation submitted general comments on selected sections of the consultation paper on the regulation of indices dated 5 September, 2012. 
Finance Watch responds to EC benchmarks consultation
Finance Watch's response recommends that the Commission propose making all financial benchmarks and indices subject to strict supervision.  
ECB: Oversight expectations for links between retail payment systems
These oversight expectations lay down Eurosystem oversight requirements with regard to links established by retail payment systems operating in the euro area. They focus on ensuring the safety and efficiency of the operation of links. 
EPC: New versions of SEPA rulebooks published
The European Payments Council released updated versions of the SEPA Credit Transfer Rulebook Version 7.0; the SEPA Direct Debit (SDD) Core Rulebook Version 7.0; the SDD Business to Business Rulebook Version 5.0; and the Associated Implementation Guidelines. 
Policy Exchange: Reform of the Bank of England - A new Bank for a new Governor
This report argues that without major reform to the Bank, the new financial regulatory regime currently going through Parliament risks being as flawed as its predecessor. 
EBA publishes Credit Institutions Register
To increase transparency within the European Single Market, the European Banking Authority publishes on a regular basis a list of credit institutions to which authorisation has been granted to operate within the EU and European Economic Area countries (EEA). 
WSBI: Turning post offices into efficient retail banks
Post offices could become key players in extending financial services to the masses because they typically have the largest distribution network in any given country. All they need is some help from national regulators and international policymakers. 

Securities

Credit rating agencies: Council confirms agreement with EP
The Permanent Representatives Committee today approved a compromise text, agreed with the European Parliament on 27 November, on proposals amending the EU's rules on credit rating agencies.  
European Council: Stricter EU rules on credit rating agencies agreed
Credit rating agencies in the EU will soon be operating according to an amended set of rules recently agreed by the Council and the EP. Part of the amendments concern sovereign debt ratings. Approval and adoption of the two texts can be expected in the first quarter of 2013. 
DG ECFIN: Non-bank financial institutions - Assessment of their impact on the stability of the financial system
This study paper examines how non-bank financial institutions (in particular money market funds, private equity firms, hedge funds, pension funds/insurance undertakings, central counterparties, UCITS/ETFs) have performed over the last decade and during the financial crisis. 
ESMA finalises guidelines on repo arrangements for UCITS funds
The ESMA has today published its final guidelines on repurchase and reverse repurchase agreements for UCITS funds. The guidelines state that UCITS should only enter into such agreements if they are able to recall at any time any assets or the full amount of cash. 
ECB announces re-scheduling of loan-level data reporting requirements
On 6 July 2012, the ECB announced the future timeline for the start of the loan-level data reporting requirements for asset-backed securities as part of the Eurosystem's collateral framework. The Governing Council of the ECB has now decided to adjust this timeline. 
SIFMA submits comments to multiple federal regulators on margin and capital requirements for covered swap entities
The Securities Industry and Financial Markets Association (SIFMA) provided its comments to "the Agencies" on proposed margin and capital requirements for covered swap entities. 
ESMA: Operating principles and areas of exploration in the regulation of the cross-border derivatives market
Leaders of authorities with responsibility for the regulation of the over-the-counter (OTC) derivatives markets in Australia, Brazil, the EU, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the US met to discuss reform of the OTC derivatives market. 
FT: Regulators wrestle with swaps reform risk
Regulators' demands mean that CCPs are taking on a vastly expanded, some believe dangerous, workload clearing much of the $640 trillion off-exchange market in financial derivatives that was at the heart of the global banking crisis. 
ISDA Response to the Fourth Financial Stability Board Progress Report on Implementation of OTC Derivatives Market Reforms
This letter sets out the views of the International Swaps and Derivatives Association (ISDA) on the Financial Stability Board's 'Fourth Progress report on implementation of OTC derivatives market reforms' ("the Progress Report"). 
ISDA: IM getting serious
A key recommendation of the G20 2009 Pittsburgh Communiqué was to enhance systemic resiliency by reducing bilateral counterparty risk and mandating central clearing of "standardised" OTC derivatives. ISDA and market participants are fully supportive of the G20's clearing initiatives.  
IIF MMG welcomes euro area agreement on Greece; urges further euro area integration; warns on OTC derivatives reforms
Members of the IIF's Market Monitoring Group welcomed the Greek financing agreement. They urged further euro area integration and US 'fiscal cliff' resolution. For end-users of OTC derivatives, MMG members said reforms could impair market liquidity, increase the cost of derivatives, and negatively impact cash flow planning. 
ISDA's response to the European Commission's public consultation on the regulation of indices
In its response, the International Swaps and Derivatives Association (ISDA) has limited itself to commenting on those issues that are directly relevant to ISDA and OTC derivatives markets.  
IMA proposes alternative risk disclosure approach to the FSA
The Investment Management Association (IMA) is concerned about the effectiveness of the FSA's proposals to deal with fund descriptions that may imply a level of capital protection or guarantee on positive returns when no guarantee exists. 
SIFMA commends Congressman Price legislation protecting US from foreign FTTs
The Securities Industry and Financial Markets Association (SIFMA) released a statement after Representative Tom Price introduced legislation that would make it clear that foreign governments have no ability or right to tax private securities transactions within the US. 

Insurance

EIOPA holds its 2nd consumer strategy day
The purpose of the event was to debate important regulatory developments and consumer trends with stakeholders. (Includes link to EIOPA chair Gabriel Bernardino's opening speech.) 
Insurance Europe: EC retail proposals must demonstrate clear benefit for consumers
Insurance Europe stressed the insurance industry's support for high levels of protection and clear information for consumers buying insurance. 
Insurance Insight: Solvency II principles 'ruined' by implementation
Frustration in the insurance industry over the introduction of Solvency II is at an all-time high, according to new research. 
FT: EU rule to spur share sell-off
Insurance companies will ultimately sell €500 billion of equities as a result of the EU's Solvency II Directive, with the money being pumped into debt markets many already view as over-heated, according to new analysis. 
CRE: Regulation, compliance and network security will drive management liability costs
Management-liability and professional-lines insurance buyers should prepare for rate increases in 2013, sparked by rising concern over the expanded scope of regulation, escalating costs of compliance, and new risks from privacy violations and breaches of network security, according to insurer Torus. 
CRE: New risks, new transfer conundrums for Spanish buyers - Igrea
The need for Spanish companies to understand and get to grips with risks in new markets, whilst at the same time devising ways to reduce transfer costs, dominated debate during the latest Spanish renewals meeting organised by Igrea, Spain's association of large insurance buyers. 

Asset Management

IPE: Brussels planning to 'water down' IORP capital requirements
The European Commission is considering watering down the first pillar of the revised IORP Directive focusing on capital requirements, according to industry experts. 
ABI: Industry publishes joint code on pension charges
A new joint industry Code of Conduct for disclosing information to employers on the charges made on workplace pensions has been published by a group of pensions experts. The Code enables the consistent disclosure of charges and investment costs across the workplace pensions landscape. 
Hedgeweek: EU and Swiss regulators to cooperate on cross-border supervision of alternative investment funds
The European Securities and Markets Authority (ESMA) has approved the cooperation arrangements between the Swiss Financial Market Supervisory Authority and the EU securities regulators for the supervision of alternative investment funds, including hedge funds, private equity and real estate funds. 
Hedgeweek: Execution and payment models for European equities to undergo change in 2013, says Tabb
The impact of regulation on liquidity and reduced order flows remain top priorities for over 75 per cent of the European head traders at buy-side firms currently managing an aggregate €14 trillion in assets.  
Hedgeweek: Luxembourg's regulator will effectively end use of UCITS fund promoters
The Commission de Surveillance du Secteur Financier (CSSF) believes that it is the asset management company itself that needs to prove its solidity, not the promoter. 
Hedgeweek: Hedge fund ODD best practices launched by Rothstein Kass
In an effort to help establish a better framework for the hedge fund operational due diligence (ODD) process, professional services firm Rothstein Kass has launched a set of best practice ODD guidelines. 
SIFMA CEO calls for stronger Financial Stability Oversight Council leadership
In an interview with IFLR, the Securities Industry and Financial Markets Association's (SIFMA) president and CEO, Timothy Ryan, reveals his regulatory frustrations. 

Corporate Governance/Accounting

Restoring confidence in financial statements: The European Commission aims at a higher-quality, dynamic and open audit market [Proposals]
Under proposals adopted by the Commission today, the role of auditors is to be clarified and more stringent rules for the audit sector are to be introduced.  
Letter from DG MARKT/Faull to IASB/Hoogervorst: Request for views - Agenda Consultation 2011
The Commission believes the IASB's Agenda Consultation 2011 is an important step in further enhancing the IASB's public accountability and the legitimacy of the standard-setting process. 
FEE commented on the IASB Review Draft of forthcoming IFRS on general hedge accounting
FEE appreciates the overall general hedge proposal and perceives the review draft as superior to the status quo. FEE particularly welcomes the principle requirement for hedge accounting to follow risk management practices applied by the reporting entity. 
ESMA/Maijoor: Audit Quality Symposium – financial reporting and audit
In his speech at the Canadian Public Accountability Board's Second Audit Quality Symposium, Maijoor introduced ESMA and its objectives, and highlighted financial reporting and auditing issues. 
ECIIA/ecoDa: Making the most of the internal audit function - Recommendations for Directors and Board Committees
ECIIA and ecoDa presented a new publication, "Making the most of the internal audit function: recommendations for Directors and Board Committees", which provides useful guidance to make effective use of the internal audit function. 
IFAC: Proposed guidance on project and investment appraisal for sustainable value creation
The PAIB Committee of the IFAC released for comment proposed International Good Practice Guidance (IGPG), Project and Investment Appraisal for Sustainable Value Creation. Comments on the Exposure Draft are requested by February 28, 2013. 
IASB: Proposals for amendments to IAS 16 and IAS 38 with respect to depreciation and amortisation
The IASB published for public comment an Exposure Draft of proposed amendments to IAS 16 Property, Plant and Equipment, and IAS 38 Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation. The IASB requests comments on these proposals by 2 April, 2013. 
EFRAG responds to Post-implementation Review of IFRS 8 Operating Segments
EFRAG published its response to the IASB's Request for Information, part of the Post-implementation Review of IFRS 8 Operating Segments. The response summarises evidence received from constituents, including participants at EFRAG's Autumn 2012 series of outreach events across Europe. 
IASB/Hoogervorst: Current SEC and PCAOB developments
Hans Hoogervorst, Chairman of the IASB, gave a speech on current SEC and PCAOB developments. He said he found it hard to imagine IFRS without a leadership role for the United States and the SEC. 
ACCA: Future of business finance
ACCA was involved in the original project behind the SAMI/L3F scenarios as a result of its work on bank regulation and governance in the aftermath of the financial crisis.  

Financial Services Policy

State Aid: Commission proposes to reform state aid procedures and exempt certain categories of aid from prior notification
In the context of its State Aid Modernisation (SAM) initiative, the European Commission has adopted proposals to amend two Council Regulations governing EU state aid control. 
FSA consults on plans for temporary product intervention rules
The Financial Services Authority is consulting on the approach the future Financial Conduct Authority (FCA) would take if it needed to exercise powers to make temporary rule changes, before consultation, relating to financial services products. Deadline for comments is 4 February, 2013. 
Regulatory complexity threatens flow of credit - Allen & Overy research
The regulatory approach governing the financial system lacks coherent design and is disabling the flow of credit necessary to fuel economic growth, according to research published by multinational law firm Allen & Overy. 
FSA publishes Retail Distribution Review Newsletter, December 2012
In the final few weeks before 'RDR Day' (31.12.12), the FSA answers questions on qualifications, waivers and facilitation of adviser charging. 

European Council/Parliament

ECOFIN Council results: Economic governance - Two-pack
The Presidency informed ministers that it is very close to reaching a political agreement with the EP on the content of the two-pack, within the strict timetable set by the European Council. The Council asked the Perm Reps Committee to finalise agreement once negotiations have been concluded. 
ECOFIN Council results: Financial transaction tax / Taxation
The Council discussed latest developments concerning the introduction of a financial transaction tax (FTT) in a number of Member States through the "enhanced cooperation" procedure. Euro Plus Pact finance ministers endorsed a report on progress on the coordination of tax policies. 

Graham Bishop’s Articles and Speeches

Financial World: Hear and see no evil (Graham Bishop article)
The UK has looked the other way as the euro countries have plodded along the road to an integrated economic framework, writes Graham Bishop. 

Financial Services Month in Brussels - Report

November 2012 Financial Services Month in Brussels
Graham Bishop's personal overview of events throughout the month of November. The self-imposed year-end deadline for agreeing on Banking Union is looming ever-closer but political disagreements remain deep, quite apart from many crucial technical matters to be resolved.  





© Graham Bishop

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