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02 February 2012

This week in "Brussels"
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Articles from 26 January 2012 - 02 February 2012

Banking

Commissioner Barnier: The framework for remuneration plays an important role in restoring public confidence in European banks
Barnier stressed that the Commission will not hesitate to strengthen the existing legislative framework if banks continue to pay excessive bonuses, and if major problems of CRD III enforcement are identified. 
EBA: Financial Innovation and Consumer Protection - an overview of the objectives and work of the EBA’s http://eba.europa.eu/cebs/media/aboutus/organisation/boardofsupervisors/2nd-meeting-5-July-2011.pdf?ext=.pdf#search="scfi"',WIDTH, 300, SHADOW, true, FADEIN, 300, FADEOUT, 300, STICKY, 1,DURATION,3500)" onmouseout="UnTip()");">SCFI in 2011-2012
The European Banking Authority published an overview of the objectives and work of the EBA's Standing Committee on Financial Innovation (SCFI) in 2011-2012, in the areas of consumer protection and financial innovation.  
CEPS: The Commission’s CRD IV requires a deeper reading
This Commentary by Karel Lannoo urges the European Parliament and EU Council to undertake a more thorough review of the draft Capital Requirements Directive IV (CRD IV), which implements Basel III in EU law.  
WSJ: EU red-flags 'Volcker'
The Commission will complain to US Treasury Secretary, Timothy Geithner, that proposed US regulations could discourage banks from trading European sovereign bonds, potentially increasing funding costs for the Continent's governments and worsening its credit crunch.  
VoxEU: Foreign banks and the global financial crisis - Investment and lending behaviour
This column uses a comprehensive database to show that the crisis dramatically halted foreign direct investment in banking and that foreign banks often cut back on lending more than their domestic competitors. While exits have so far been limited, this is likely to change in the coming years. 
VoxEU: Foreign banks - Trends and impact on financial development
This column presents a newly-collected, comprehensive database on bank ownership for 137 countries over the period 1995–2009. It shows that current market shares of foreign banks average 20 per cent in OECD countries and 50 per cent elsewhere. 
HM Treasury: Government publishes Financial Services Bill
The UK Government has published legislation which will fundamentally transform and strengthen financial regulation in the United Kingdom. The new regime sets out a clear, coherent and comprehensive regulatory framework, which will help to mitigate against future risks to stability.  
A new era for banking - BBA welcomes Financial Services Bill
The British Bankers' Association reported that the Financial Services Bill was an important step forward, and that rigorous ground work by parliament and the industry had contributed to proposals which focused on effective, proportionate banking supervision. 
EPC Newsletter - January 2012
The January 2012 edition of the European Payments Council's Newsletter focuses on the impact of upcoming regulatory interventions, at European level, on the Single Euro Payments Area (SEPA). 
BIS: Property price statistics
The Bank for International Settlements' property price statistics currently include data from 44 countries, and are available at different frequencies.  
BIS: Consolidated banking statistics
The Bank for International Settlements' consolidated banking statistics report banks' on-balance sheet financial claims on the rest of the world, and thereby provide a measure of the risk exposures of lenders' national banking systems.  
BIS: Locational banking statistics
The Bank for International Settlements' locational banking statistics gather quarterly data on international financial claims and liabilities of bank offices in the reporting countries.  
Commissioner Almunia plans to modernise EU state aid rules
Joaquín Almunia, the European commissioner for competition, will announce proposals to modernise the European Union's state aid rules, aimed at making them more efficient and effective.  
Bloomberg: Spain to overhaul banks, clean up real estate
Spain is set to announce today its plan to shepherd struggling banks into mergers and make the industry set aside €50 billion ($66 billion) for real- estate assets left over from the bubble that burst in 2008.  

Securities

FESE position on the MiFID II proposal
FESE members have been proactive in identifying solutions to the lessons learned and observed in the application of MiFID I to strengthen the frameworks in place independently of the review of legislation. 
FSA: MiFID II - A regulator's viewpoint
In his speech, David Lawton, acting director of markets at the FSA, mentioned three aspects of the overall framework the FSA wants to see for: fostering market integrity; delivering market stability; and enhancing market transparency while promoting market liquidity. 
FN: EMIR completion in sight
Europe's key piece of derivatives reform could be completed as early as next week following a breakthrough during negotiations on the text held in Brussels. 
Commission blocks proposed merger between Deutsche Börse and NYSE Euronext
The Commission has prohibited the proposed merger, as it would have resulted in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges.  
FT: NYSE chief sees little chance of Deutsche Börse deal
Duncan Niederauer, chief executive of NYSE Euronext, has admitted he misjudged European antitrust authorities' approach to his exchange's attempted tie-up with Deutsche Börse, saying there was only "a glimmer of hope" the deal would succeed. 
Reuters: EU set to overhaul regulation of derivatives
The European Union is expected to announce an overhaul of regulations governing the $700 trillion derivatives market on Tuesday, introducing rules to make one of the most opaque areas of finance easier to monitor and less risky. (Features quote from Graham Bishop.) 
FN: OCC's Walsh warns of 'vast overreaction' in derivatives regulation
A US banking regulator warned against a "vast overreaction" in regulation of derivatives markets, offering a contrast to other regulators who have called for an aggressive approach to that corner of the financial system. 
FN: Synthetic debate weighs on ETF market
Data shows the global exchange-traded fund market grew just 3.2 per cent last year, as falling asset prices and the ongoing debate about the safety of swap-based products weighed on growth. 
Charles A E Goodhart: Sovereign ratings when default can come explicitly or via inflation
This column argues that government credit ratings should be aided by a second rating measuring the potential loss of real value, whether by inflation or default. 
FSA Amendments to the Listing Rules, Prospectus Rules, Disclosure Rules and Transparency Rules
This consultation paper sets out proposals for changes to the Listing Rules to ensure that they reflect recent changes in market practices properly, and so allow the UK Listing Authority (UKLA) to meet its objectives. 
Czech central bank and other EU members concerned over extended ESMA powers
The Czech National Bank (CNB) has expressed concern over the balance of power between national supervisors and the European Securities and Markets Authority (ESMA). (Includes comment from Graham Bishop.) 

Insurance

EIOPA's vision - taking the lead for enhancing consumer protection
Ian Williams takes a look at the implications for consumer protection from the establishment of EIOPA in January 2011. EIOPA's first Consumer Strategy Day in Frankfurt in December 2011 signposted a political determination to embed and channel consumer/user interests fully at the EIOPA level.  
ABI: The City, insurance and society - why 2012 could redefine the industry
Otto Thoresen, ABI director general, stressed that the UK cannot pretend that the recent European veto made lives any easier. The UK now faces a situation where its European colleagues are more aware of anything the UK wants to negotiate which could look like special treatment for the UK. 

Asset Management

ESMA outlines future regulatory framework for ETFs and other UCITS issues
ESMA published a consultation paper setting out future guidelines on UCITS exchange-traded funds and other UCITS-related issues. The proposals cover both synthetic and physical UCITS ETFs, and detail the obligations to come for UCITS ETFs. 
IMA: ESMA's UCITS proposals should apply to all exchange-traded products
The European Securities and Markets Authority's (ESMA) proposed guidelines on ETFs and other UCITS issues take on board a number of points made by the IMA (Investment Management Association) to improve the clarity and consistent implementation of UCITS rules across the EU. 
EDHEC-Risk Institute welcomes conclusions of ESMA consultation paper on ETFs and UCITS issues
EDHEC-Risk welcomes the broadened focus of the new ESMA consultation, which approaches important issues in a horizontal way across all UCITS, rather than in a vertical way limited to UCITS ETFs. 
IPE: UK financial watchdog offers 'little clarity' on AIFM Directive
A discussion paper on the Alternative Investment Fund Managers Directive (AIFMD) published this week by the UK regulator leaves significant questions unanswered, critics have warned. 
FT: Bruising year for commodities hedge funds
The commodities hedge fund industry has suffered its worst year in more than a decade, as the sector's top managers recorded heavy losses amid volatile markets. 
IPE: Hedge fund transparency can hurt returns, increase fees, study shows
A new empirical study, presented at the 4th Lyxor/NYSE Liffe Hedge Fund Research Conference in Paris, shows that greater regulatory transparency from individual hedge funds can lead to significant costs in terms of lower returns, higher fees and greater correlation with other funds. 
IPE: Pension funds at risk from onerous reporting, overregulation
Christian Böhm, chairman at Austrian pension fund APK, has warned that overregulation and increasingly onerous reporting demands could lead to lower pension fund returns and reduce their ability to invest effectively. 
IPE: Czech pension reform to usher in new second pillar system
Experts say that new pension funds established under the Czech Republic's pension reform could come into effect as early as 2013. 
IPE: UK local government pension funds should join forces
Local government pension funds in the UK should save money by joining forces to become the country's largest pension fund, an expert from the Centre for Policy Studies says. 

Corporate Governance/Accounting

Corporate reports still hold value, says ACCA study
According to a new survey from ACCA (the Association of Chartered Certified Accountants), annual reports are important to stakeholders but are undermined by length and complexity. 
EFRAG requests comments on its draft endorsement advice and effects study report on amendments to IAS 32 and IFRS 7
EFRAG issued an Invitation to Comment relating to the endorsement for use in the EU of the Amendments to IAS 32, 'Offsetting Financial Assets and Financial Liabilities', and IFRS 7, 'Disclosures–Offsetting Financial Assets and Financial Liabilities'.  
FT: ASB steps back from tough new accountancy rules
The Accounting Standards Board has reneged on plans to impose new disclosure standards on building societies and other lenders, after feedback to the proposals suggested it would prove too costly. 
IASB: 'Performance Reporting: Back to the Future' by Patrick Finnegan
A new Investor Perspective by Patrick Finnegan, entitled 'Performance Reporting: Back to the Future', deals with the IASB's agenda and with areas of accounting need to be improved, including the project of other comprehensive income. 
FRC: ASB's revised proposals for the future of financial reporting standards in the UK & Republic of Ireland
The ASB of the FRC published financial reporting exposure drafts (FREDs) 46 to 48, setting out revised proposals for the future of financial reporting in the UK and the Republic of Ireland. 
FT: Accountants at odds with Brussels
Accounting rulemakers are on a potential collision course with the European Commission over changes to the way companies report partially-owned activities and off-balance sheet relationships. 

Financial Services Policy

ECON Committee: Exchange of views with Danish Minister for Economic Affairs
ECOFIN president, Margrethe Vestager, outlined the four key priorities of the Danish Presidency: the implementation of economic governance reforms; the strengthening of financial regulations; enhanced cooperation on tax matters; and ensuring a coherent European Union position in G20 negotiations.  
CEPS: Regulatory quality in the European Commission and the UK - old questions and new findings
This Working Document examines the quality of impact assessments in the European Commission and the UK between 2005 and 2010. Its conclusions reflect on the implications of the findings for current policy discussions on regulatory quality and the role of regulatory oversight bodies. 
MEP Sharon Bowles: The ECB should not be a man's world
The chair of the ECON Committee has raised concerns that the European Central Bank is dominated by men. She called on all parties to consider the institutional shortcomings that lead to the systematic absence of women in this crucial area of EU policy, and to remedy this situation. 
FSA says RDR commission ban compatible with MiFID II
The Financial Services Authority (FSA) has confirmed it will press ahead with the ban on commission, despite suggestions European Commission proposals could hamper, or even put an end to, its plans. 

European Council/Parliament

Press remarks by European Council President, Herman Van Rompuy, following the informal meeting of members of the European Council
Van Rompuy said that decisions had been made on a number of fronts in order that confidence in the economies be restored. More must be done regarding economic growth and employment and the stability of the eurozone. 

International/G20

Cameron’s speech in Davos: Britain is arguing for a pro-business agenda in Europe
The UK Prime Minister stressed that the Financial Transactions Tax could reduce the GDP of the EU by €200 billion, cost nearly 500 thousand jobs, and force as much as 90 per cent of some markets away from the EU. 




© Graham Bishop

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