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28 November 2013

This week in "Brussels"
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Articles from 21 November 2013 - 28 November 2013

Banking

ECON Committee: Candidate for boss of EU bank supervisor quizzed by MEPs
Danièle Nouy, the ECB's nominee for the new post of EU bank supervisor, was quizzed about her views on banks' exposure to sovereign debt, the accountability of the future supervisor, and the need to develop all the pillars of Banking Union. 
EP President Schulz: Europe's path out of the crisis
Schulz addressed i.a. the need for an effective SRM under the authority of the Commission, and criticised those who have been calling for national resolution funds. 
ECB/Draghi: Opening speech at the European Banking Congress "The future of Europe"
"Once the SSM is established, it offers a real possibility to take a new, European approach towards governance of the financial sector – and hence to reverse the harmful financial fragmentation we have seen during the crisis." 
Bundesbank/Lautenschläger: The stress tests will be strict
In an interview with Handelsblatt, Lautenschläger highlighted the importance of rigorous stress tests and warned that she expected some banks to lie below the required core capital ratio.  
Bruegel/Wolff: Europe rightly pursues the road to a Single Resolution Mechanism
A purely national solution would severely undermine financial stability and lower growth, writes Wolff. 
CEPS: The new European framework for managing bank crises
This Policy Brief describes and discusses the proposals for a European SRM for banks and for a Directive on Bank Recovery and Resolution. It makes a number of key recommendations. 
EBA consults on draft RTS on own funds (part IV - multiple dividends and preferential distributions)
These RTS are aimed at setting harmonised criteria for instruments with multiple distributions that would create a disproportionate drag on capital, as well as clarifying the meaning of preferential distributions. Comments are requested by 24 January, 2014. 
Bloomberg: EU risks violating bank capital pact, Basel member says
The EU risks violating international bank capital standards and its implementing law should face a rigorous review by global regulators, warned Uldis Cerps, executive director for banking at the Swedish Financial Supervisory Authority. 
FT: EU banks likely to increase CoCo issuance in 2014
European banks are expected to issue more convertible bonds to meet regulators' capital requirements intended to protect against losses.  
ECB opinion on proposed Directive on basic bank accounts
The ECB submitted its opinion on the proposed Directive on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features. 
The Economist: Global banking - You break it, you own it
The US should give the FSB's global banking rules — and Europe's dilatory regulators — one last chance, argues this Economist article. 

Securities

Reuters: EU watchdog pushes for clearing house resolution plans
ESMA has urged swift action on plans to wind down central derivatives clearing houses (CCPs) that run into trouble, to help limit potential damage to the global financial system. 
Bloomberg: EU says Gensler swaps rule clashes with transatlantic pact
EU regulators have accused the US CFTC of reneging on a transatlantic pact on swaps regulation, saying new curbs on EU-based units of US banks clash with efforts to align rules. 
Risk.net: OTFs and SEFs - Equivalence in doubt
European legislators are close to finalising their derivatives execution rules, but trading platforms are concerned that the OTF framework may be sufficiently different from US SEF rules to scupper any chance of equivalence determinations. 
IFR: CFTC opens door to agency swaps model
Newly issued guidance from the CFTC has given the nod to an agency-style business model for dealers in OTC derivatives that will dramatically alter the way banks interact with clients and profit from swaps trading. 
CFTC staff issues time-limited no-action letter on the applicability of transaction-level requirements in certain cross-border situations
The letter provides relief to swap dealers registered with the CFTC that are established under the laws of jurisdictions other than the US (non-US SDs) from certain transaction-level requirements under the Commodity Exchange Act. 
Fed/Powell: OTC market infrastructure reform - Opportunities and challenges
Powell said that new rules to improve the functioning of markets, such as those that require greater transparency of OTC derivatives markets through trade repositories and swap execution facilities, would strengthen financial institutions and infrastructures alike. 
ESMA: Technical Advice to European Commission on network of small and medium CRAs
ESMA has finalised its Technical Advice to the European Commission on the feasibility of a network of small and medium-sized credit rating agencies, in order to increase competition in the market. 
Reuters: EU reaches outline deal to cap dark pool share trading
The EU has reached an outline deal to try to shine a light on shadowy areas of the financial markets by capping off-exchange share-trading, known as dark pools, a senior EU lawmaker said. The parties also agreed not to introduce a separate category of trading venue for equities. 
FN: Australian regulator to report on dark pool curbs
The Australian Securities and Investments Commission is to commence an analysis of its anonymous trading restrictions and expects to publish its findings in the new year. European and US regulators will be watching closely. 
Bloomberg: Europe market structure debate needs more consensus
FESE chairman Christian Katz has said that European bourses should focus on how to implement new rules, after a wave of global regulation. 
Fed/Tarullo: Shadow banking and systemic risk regulation
Tarullo spoke about short-term wholesale funding, especially the pre-crisis explosion in the creation of assets that were thought to be "cash equivalents". 

Insurance

Council confirms deal with EP on rules for the insurance sector
The Permanent Representatives Committee approved, on behalf of the Council, a compromise reached with the EP on rules amending the Solvency II Directive and the Prospectus Directive in respect of the powers of EIOPA and ESMA. 
EIOPA/Bernardino: Sound risk management enhances consumer protection, stability and reputation
Speaking at the CRO Assembly in Zurich, Bernardino outlined his vision for the insurance industry in 2025. 
EU and US insurers support including financial services in TTIP
The American Council of Life Insurers, Insurance Europe and the American Insurance Association have called on US and EU officials to agree to include financial services, and in particular insurance, in the regulatory section of the TTIP. 
Risk.net: Disclosure of Solvency II's long-term measures benefit risks 'misinterpretation'
Insurers have warned that rules mandating public disclosure of the capital benefits of using Solvency II's long-term guarantee measures could undermine the legitimacy of these parts of the Directive and increase reporting costs. 
Risk.net: Insurers boost allocation to private equity
Insurers are increasing their investment in private equity as they look for higher yielding assets to make up for poor returns on their government bond portfolios. 
Reuters: Some German insurers may fail under new capital rules – BaFin
Some German insurers may fail in the wake of tough new European capital rules for the industry which are due to come into force in 2016, Germany's top insurance supervisor said. 
CRE: Insurers warn against rushed global capital standard
Participants at a conference organised by FFSA, France's insurance association, voiced concerns that the possible creation of a global capital standard for insurers could conflict with Solvency II and create extra costs and red tape. 
CRE: Proportionality will be applied to captives, confirms Swedish regulator
Swedish risk managers have been reassured by their national financial supervisor that captives will receive proportional treatment after the introduction of Solvency II. 

Asset Management

Parliament and Council negotiators close deal on keeping pension rights abroad
EP and Member State negotiators reached agreement on rules to allow EU workers who move to a different EU country to safeguard their supplementary pension rights. Negotiations had been deadlocked in Council for six years. 
OECD: Pension reforms on track but the challenges of adequacy and inequality in old age remain
In its report, 'Pensions at a Glance 2013', the OECD says that recent reforms of pension systems have helped to contain the rise in future costs resulting from ageing populations and increasing life expectancy. (Includes Commission statement.) 
IPE: No pressing need for changes to pension fund capital requirements – BaFin
Felix Hufeld, executive director at German supervisory body BaFin, also warned that the holistic balance sheet (HBS) accounting approach must not be introduced "through the back door". 
NAPF: Pension funds drive market for stewardship and raise expectations of their agents
The ninth annual survey of pension funds' engagement with investee companies shows continued growth in the desire from pension funds for good quality stewardship of their investments. However, this does not appear to be mirrored in the pension fund adviser community. 
Responses to FSB's 'Assessment Methodology' consultation: BBA, Deutsche Bank, ISDA et al
On 28 August 2013, the FSB published its consultative document on the Assessment Methodology for the Key Attributes of Effective Resolution Regimes for Financial Institutions. 

Corporate Governance/Accounting

IASB publishes narrow scope amendments to IAS 19 Employee Benefits
The IASB published narrow scope amendments to IAS 19 Employee Benefits, entitled 'Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)'. The amendments are effective from 1 July 2014, with earlier application permitted. 
Deloitte: The conceptual framework should be 'aspirational'
This paper, co-authored by former IASB member Warren McGregor, argues that the conceptual framework is the cornerstone of high quality financial reporting, and claims that the new framework should be 'aspirational'. 

Financial Services Policy

State aid: Commission consults on modernising state aid policy through better evaluation
This guidance paper aims to help Member States better evaluate to what extent public support schemes have achieved their purpose, and what impact they have had on markets and competition. Comments can be submitted until 24 January, 2014. 
Commissioner Šemeta: EU taxation - Taking stock and looking ahead
Šemeta discussed current and future developments in EU tax policy, including i.a. tax evasion, the Savings Directive, the CCCTB and the FTT. 
PwC: FTT – The Impacts and Arguments – A Literature Review
This report, commissioned by the financial industry, offers an impartial view and provides an indication of the expected impact of the FTT across the financial services sector, as well as the spillover effects beyond the EU11 states. 
CISI/BSI: Setting the standard for a safer, more trusted financial services sector
A new report finds that the financial services industry is failing to adopt voluntary standards crucial to rebuilding trust in banking, despite overwhelming support from those working in the sector. 

European Council/Parliament

ECON/EMPL Committees: Commission beset by critics of Annual Growth Survey
Many MEPs disputed VP Rehn's claim that economies were improving, and criticised the Commission for continuing to administer more of the same medicine. German centre-right MEPs chided the Commission for having taken aim at their country in its latest assessment of EU economies. 

Graham Bishop’s Articles and Speeches

Graham Bishop: The Grand Coalition in Germany - Some implications
Finally, the two major German parties signed their coalition agreement – in just short of 200 pages with only 10 pages on Europe. 





© Graham Bishop

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