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14 March 2013

This week in "Brussels"
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Articles from 07 March 2013 - 14 March 2013

Banking

EBF Key Information Document - The Liikanen Report
The EBF summarised analyses on mandatory separation of high-risk trading activities (covered via the High-level Expert Group) and submitted its key recommendations. 
PCBS publishes second report on banking reform
The Parliamentary Commission on Banking Standards has published its Second Report – "Banking Reform: towards the right structure" – on the Financial Services (Banking Reform) Bill. (Includes BBA statement.) 
ECB/Cœuré: The way back to financial integration
Cœuré said that the banking union, together with the new regulatory standards, would help to mitigate the financial stability risks which arise when markets become more integrated, and which the previous regulatory and supervisory framework had failed to avert in the period leading up to the crisis. 
ECB/Constâncio: The nature and significance of Banking Union
Speaking at the conference, "Financial Regulation: Towards a global regulatory framework?" in London, Constâncio reflected on the nature and significance of establishing a Banking Union in Europe.  
VP Almunia: Banking crisis, financial stability and State aid - The experience so far
Almunia said that experience had helped clarify the necessary features for an effective single resolution mechanism, and that in parallel with the creation of the SRM, the State aid control rules for banks would also be updated. 
Bruegel/Darvas & Wolff: Should non-euro area countries join the single supervisory mechanism?
Once the SSM comes into being, non-euro countries will have to decide whether or not to participate in it, without knowing the design of the other elements of banking union. 
CEPS/Lannoo: Bank bonus compromise bodes ill for the Single Supervisory Mechanism
The European Parliament has probably won a Pyrrhic victory with its position on bank bonuses, argues CEPS CEO Karel Lannoo in this new Commentary. 
EBF welcomes IASB approach on loan-loss provisioning
The EBF is supportive of the impairment approach that would allow for earlier recognition of loan-loss provisions. 
EBF Key Information Document on Bank Accounts
The EBF summarised analyses on transparency and comparability of bank account fees, on switching of bank accounts, and on access to a basic payment account. It listed three top recommendations. 
EPC: The long road to harmonisation - Transitional arrangements in EU Member States permissible under SEPA Regulation
EU Member States have discretion as to whether they will use any or all of the options to derogate from the 1 February 2014 deadline with regard to the use of the IBAN, the BIC and the ISO 20022 XML message standards. 
EBA publishes Good Practices for ETF Risk Management
The report is designed to outline a high level description of Good Practices with respect to the management of key risks that credit institutions encounter through their ETF business units, or when dealing with ETFs. 
EBA consults on technical standards for recovery plans
The EBA launched a consultation on draft RTS on the content of recovery plans. In doing so, the EBA starts the preparatory work for the implementation of the Recovery and Resolution Directive (RRD) currently discussed by the EU legislators. Deadline for comments is 11 June, 2013. 
EBA consults on conditions for assessing materiality of extensions and changes of internal approaches for credit, market & operational risk
The EBA launched a consultation on draft RTS aimed at specifying the conditions for assessing the materiality of extensions and changes to internal approaches when calculating own funds requirements for credit, market and operational risk. Deadline for comments is 11 June, 2013. 
Call for papers for the 2nd EBA policy research workshop
The EBA launched a call for research papers in view of its second policy research workshop taking place on 14-15 November in London on the topic: "How to regulate and resolve systemically important banks". Submission deadline is 21 June, 2013. 
HM Treasury: Simple financial products a step closer
A set of simple financial products designed to help consumers navigate the financial services market more easily is a step closer today, following publication of final recommendations by an independent steering group set up by the Government to look at this issue. (Includes link to BBA statement.) 

Securities

Presidency publishes new MiFID compromises
The Presidency has tabled new compromise texts of the revised Markets in Financial Instruments Directive (MiFID 2) and Regulation (MiFIR). 
Commission publishes summary of replies to consultation on non-bank financial institutions
The Commission published the summary of responses as well as individual replies to the consultation on a possible framework for the recovery and resolution of financial institutions other than banks. 
ESAs: Joint Letter to Commissioner Barnier on the possible regulatory framework for benchmark activities
The ESAs submitted to Commissioner Barnier a number of key features, on which they believe a future regulatory framework for benchmarks should be based. 
IOSCO publishes responses to Financial Benchmark Consultation
The International Organisation of Securities Commissions (IOSCO) has published the comment letters on the Consultation Report on Financial Benchmarks issued on 11 January, 2013.  
Benchmarks: EDHEC-Risk Institute warns against the false promises of governance
EDHEC-Risk Institute wishes to underline that transparency is both crucial to allowing users to assess the risks, relevance and suitability of indices, and the most powerful tool to mitigate conflicts of interests existing across the indexing industry. 
ESMA/Maijoor: Regulation of SIFIs and of the shadow banking system
Speaking at the panel, 'Shadow banking: How can we assess and limit risks effectively?', Maijoor said that shadow banking should continue to be a central concern for policymakers and supervisors of the financial system. 
ESMA publishes practical guidance for the recognition of Third Country CCPs by ESMA
The purpose of the note is to provide information on the recognition by ESMA of Third Country CCPs (TC-CCPs) under EMIR. 
ESMA publishes responses to its consultation on Fees for Trade Repositories
ESMA will now provide by 31 March 2013 its advice on technical aspects of the delegated act which needs to be adopted by the Commission. 
ICMA: LTRO continues to weigh on European repo market
Continued weakness in the market is thought to reflect the effect of the ECB's Long-Term Refinancing Operations (LTRO) liquidity, which has meant that banks have been able to decrease their reliance on funding from repo operations in the market. 
ISDA publishes EMIR non-financial counterparty representation protocol and timely confirmation amendment agreement
ISDA announced the launch of the March 2013 EMIR Non-Financial Counterparty (NFC) Representation Protocol and a Timely Confirmation Amendment Agreement. 
Reuters: Phase-in of EU derivatives rules may drag on into 2014
Implementing new European Union rules to reduce risks in the $640 trillion derivatives business could stretch into next year because the regulation needs to be phased in gradually.  
FT: US and Europe launch derivatives reform
Large users of swaps in the US, such as banks, will be required to process trades through clearing houses as the industry is forced to comply with a mandate agreed by the G20. 
IMF Working Paper: Rating through-the-cycle - What does the concept imply for rating stability and accuracy?
Rating agencies generally assign ratings on a through-the-cycle basis, whereas banks' internal valuations are often based on a point-in-time performance, that is they are related to the current value of the rated entity's or instrument's underlying assets. 

Insurance

Insurance Europe: Views on Solvency II interim measures sent to EIOPA
Insurance Europe has written to the EU's insurance supervisor to set out the industry's views on the proposal to introduce interim measures in advance of the implementation of Solvency II. 
Euromoney: Solvency II - Mission impossible
Regulatory capture, a pro-cyclical hike in capital costs and the intrusive micro-management of liabilities – the volley of criticism over European insurance reform (Solvency II) echoes the dissent that has blighted new banking regulation. It's not clear whether even the 2016 deadline will be met.  
Risk.net: De Larosière slams US protectionism and EU Solvency II rules
The adoption of new financial services regulation in Europe threatens to place a significant drag on economic growth, despite the continent's high pool of savings, according to Jacques de Larosière, a former managing director of the IMF and former governor of the Banque de France. 
Risk.net: European financial regulators challenge EIOPA on harmonised response to low interest rates
Europe's national financial regulators are insisting that measures to combat the threat to insurers of low interest rates are best designed and implemented at the state level, despite calls from EIOPA for a harmonised policy response. 
Risk.net: Designation of systemically important insurers hit by delay
The Financial Stability Board (FSB), in consultation with the International Association of Insurance Supervisors (IAIS), was expected to publish a list of insurers deemed to be systemically important in April this year. The list will now be released later in the second quarter of the year. 
Risk.net: Insurers struggle with 'ambiguous' technical specifications for long-term guarantees exercise
Problems interpreting the technical specifications for the long-term guarantees impact assessment (LTGA) are frustrating insurers' ability to complete the exercise, according to experts. 
Risk.net: OTC reforms present technology challenges for insurers
Wide-ranging changes to the OTC derivatives market are leading insurers to upgrade their collateral management systems, often quite substantially. But the complex requirements and computational power needed are providing a challenge - not just for insurers but also for software vendors. 
IAIS: Ireland joins international information exchange agreement
There are now 34 jurisdictions admitted as signatories to the IAIS Multilateral Memorandum of Understanding (MMoU), representing more than 52 per cent of worldwide premium volume. 

Asset Management

Barnier welcomes proposals to create European funds for venture capital and social businesses
"I warmly welcome the European Parliament's vote on our proposals to create Europe-wide funds for venture capital and for social businesses. These new EU initiatives will increase opportunities for innovative start-ups or social businesses to find capital." 
EPP/Hübner: Parliament gives green light to venture capital label
The Regulation on a Venture Capital Label voted today in plenary lays down uniform requirements for the mangers of collective investment undertakings who want to use the designation "European Venture Capital Fund" when it comes to marketing qualifying venture capital funds in the EU. 
EIOPA/Bernardino: How to ensure sustainability, strong governance and full transparency in occupational pensions
In his speech, the EIOPA chairman gave an update on the action and initiatives of EIOPA related to the pensions area, and shared his thoughts on future opportunities. 
IPE: EIOPA notes inconsistencies in QIS as it pushes for next exercise
EIOPA has once again called for further quantitative impact studies (QIS) as part of the IORP Directive review, arguing that the first exercise revealed "inconsistencies". 
IPE: EU Court of Justice rejects pension funds' claim over VAT payments
The National Association of Pension Funds (NAPF) and the Wheels Common Investment Fund (WCIF) have lost their case against UK HM Revenue & Customs (HMRC), in which they argue that pension funds should be exempt from paying VAT. 
IPE: End of contracting out will not have 'seismic' effect on DB funds
UK pensions minister Steve Webb has sought to allay fears that the end of contracting-out among the UK's defined benefit (DB) schemes will have a "seismic effect" on the country's pension industry. 
IPE: The UMR's failed cross-border plans
This article argues that the case of the French pension fund UMR's failed cross-border pension plans may not be about French protectionism after all. 
ALFI Guidelines for UCITS Liquidity Risk Management
The purpose of these guidelines is to provide guidance to the Luxembourg fund industry with regard to liquidity risk management for UCITS. The guidelines aim to explore the different aspects of liquidity risk and should provide ideas and suggestions on how to capture and manage it. 
Bruegel/De Sousa & Papadia: Has the ECB transformed itself into a hedge fund?
Some observers have accused the European Central Bank of having transformed itself into a hedge fund because of the purchases of government securities from stressed countries under the Securities Market Program (SMP). 

Corporate Governance/Accounting

FEE: The public sector needs a single set of public sector accounting standards
FEE welcomes the EC's report on the suitability of IPSAS for the Member States, and commends the suggested way forward. 
IFAC welcomes G20 focus on IPSAS and EC report on accrual-based accounting
The IFAC praised the G20 Finance Ministers and Central Bank Governors for addressing government borrowing and public debt sustainability at their recent meeting. It also applauded the EC report, which called for "harmonised public sector accruals-based accounting standards". 
ACCA: "We need a single set of accounting standards for the public sector to restore public trust"
ACCA welcomes the European Commission's recent report and staff working document on the suitability of International Public Sector Accounting Standards (IPSASs) for the Member States, but calls on further governance steps to be undertaken. 
IASB: Revised proposals for loan-loss provisioning
The IASB published for public comment a revised set of proposals for the impairment of financial instruments. The proposals build upon previous work to develop a more forward-looking provisioning model. The comment period ends on 5 July, 2013. 
IFAC: IES 5, Initial Professional Development–Practical Experience (Revised)
The IAESB issued the revised IES 5, Initial Professional Development—Practical Experience. IES 5 aims to assist educational organisations, employers, regulators, government authorities, and any other stakeholders who support the practical experience of professional accountants. 
FRC published FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland
FRS 102 provides succinct accounting and reporting requirements for unlisted entities. The standard completes a fundamental modernisation of UK and Irish accounting standards. 
EFRAG, ANC, ASCG, FRC and OIC: The second Conceptual Framework newsletter
EFRAG, ANC, ASCG, FRC and OIC have released the second issue of their Conceptual Framework newsletter. The newsletter summarises some of the tentative decisions reached at the February 2013 IASB meeting regarding the content of the forthcoming Discussion Paper. 
EFRAG: Draft Comment Letter on novation of derivatives and continuation of hedge accounting
EFRAG published its draft comment letter on the IASB's ED/2013/2 Novation of Derivatives and Continuation of Hedge Accounting, Proposed amendments to IAS 39 and IFRS 9. Comments on the letter are invited by 25 March, 2013. 
FT: KPMG at risk of losing HSBC audit
KPMG could lose the biggest audit contract in corporate Britain after HSBC decided to consider bringing in a fresh pair of eyes to vet its accounts. HSBC paid KPMG for audit and audit-related services, the tax and other consultancy work. 
FASB and ASBJ biannual meeting
Representatives of the FASB and the ASBJ met on March 4 and 5 in Connecticut. The FASB and the ASBJ have been holding biannual meetings as part of both Boards' efforts to facilitate the development of global accounting standards.  

Financial Services Policy

Commission updates action plan
The latest action plan from the Commission lists i.a. a proposal for a European framework for money market funds on 10 April 2013, and a review of the European supervisory architecture in the fourth quarter of 2013. 
Commissioner Šemeta welcomes EP vote on the revision of the European System of Accounts (ESA 2010)
This will allow a revised methodological framework for national accounts data, adapted to today's economies, to be used in compiling data for economic policy and other administrative purposes in the EU. 
Bowles claims victory for transparency in European statistics
The ECON chair today welcomed the successful adoption of her report on European statistics. The ESA 2010 Regulation will improve transparency in the transmission of data from EU countries to EUROSTAT, and will be essential for the excessive deficit procedure, the calculation of structural funds, and shaping EU economic policy as a whole. 
FTAdviser: PRIPs amendment calls for fund cost calculator
ECON chair Sharon Bowles has tabled three amendments to the PRIPs legislation, which propose creating an online calculator to enable investors to view the value of their funds after fees and costs. 
BaFin President on consumer protection: "We need even more transparency"
BaFin President Dr Elke König explains in an interview what BaFin does for consumers, but also where the limits are. 
IFAonline: RDR named 'most significant' global advice change
The Retail Distribution Review (RDR) and a similar regulatory upheaval in Australia represent the most significant changes to the global financial advice industry in 2013, according to an influential US report. 

European Council/Parliament

ECON Committee: Green light for economic governance "Two-Pack"
The next round of EU economic governance legislation will do more to deliver growth, and the European Commission's new powers to vet eurozone countries' budgets will be better democratically controlled, thanks to the "two pack" economic governance legislation voted by Parliament on Tuesday. 
Plenary Session: Long-term EU budget negotiations - EP sets out its stance
Parliament's mandate to negotiate the EU budget for 2014-2020 with the EU Member States' Irish Presidency was approved in a resolution today. Parliament rejects the 8 February European Council conclusions in their current form. (Includes link to comments from Schulz/EP Groups.) 

International/G20

IIF: Global economic recovery is too reliant on central bank liquidity
In its March edition of the Capital Markets Monitor (CMM), the IIF warns that "political and policy uncertainties have intensified" in the last month, strengthening the headwinds against the nascent global economic recovery.  





© Graham Bishop

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