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16 December 2010

This week in "Brussels"
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Financial Services Policy Banking Securities
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Financial Stability - Policy Analysis About this email

Articles from 09 December 2010 - 16 December 2010

Financial Services Policy

Commission President Barroso: “Do not kill the euro bonds idea for the future”
Barroso stressed that it is important that EU leaders concentrate now on what can be done quickly and decisively. On the euro bond issue he thinks that it is a good idea but that at this stage there is no consensus.  
Commissioner Barnier at the Treasury Select Committee House of Commons
Barnier stressed that a strong City of London is good not only for the UK, but for the rest of Europe too. Moreover he wants a strong, vibrant and sustainable financial sector in the UK.  
Stricter financial regulation can help contain future asset bubbles and reduce macroeconomic imbalances
As part of the effort to broaden macroeconomic surveillance, the Quarterly Report on the Euro Area investigates the extent to which financial supervisory and regulatory reform can help avoid future harmful credit and asset price booms, for instance in housing markets.  
ECON Committee: Bailout mechanism plans need more clarity and legitimacy
No time can be lost in establishing a permanent "bailout" mechanism for Member States in difficulty, said the Economic Affairs Committee. But the plans should say clearly how the private sector would be brought in to help. 
FSA Chief Executive outlines progress in reforming supervisory practices
Hector Sants, FSA CEO, outlined the progress made on the design of the supervisory approach and internal preparation for the transition, in 2012, to the new regulatory structure and how the regulator is mitigating the risks a change programme of this scale undoubtedly creates. 

Banking

Basel III: A global regulatory framework for more resilient banks and banking systems
The Basel Committee issued the Basel III rules text, which presents the details of global regulatory standards on bank capital adequacy and liquidity endorsed by the G20 Leaders at their November Seoul summit. 
CEBS published its guidelines on remuneration policies and practices
Under the revised CRD III, as agreed upon by the European institutions, CEBS was required to elaborate and issue guidelines on sound remuneration policies in the financial sector in order to facilitate the compliance of the remuneration principles. 
Sharon Bowles MEP: EU's tough new rules on bankers' bonuses are right
The new rules, which come into effect on 1st January 2011, will mean that senior bankers will have to defer at least half their bonus for a minimum of three years, while the cash element will be limited to 30% of the total and 20% for 'particularly large' bonuses. 
BBA reacts to CEBS remuneration announcement
The British Banking Association says that the new CEBS rules on remuneration which state that whatever is paid in bonus is half in shares, mostly locked away for several years, represents a huge change away from the bonus arrangements of the past.  
AFME comments on CEBS guidelines on remuneration policies and practices
Simon Lewis, CEO of AFME, said: “These requirements will mean that banks operating in Europe, and European banks operating elsewhere in the world, will be at a competitive disadvantage unless there is recognition of the need for a global agreement on compensation practices.” 
FT: Barnier accused bankers of ‘blackmail’
Bankers are indulging in “blackmail” by threatening to flee the City of London for more business-friendly locations in Asia over tough new caps on pay and bonuses, European Commissioner Michel Barnier has told UK MPs. 
UK Government published final legislation on bank levy
Financial Secretary to the Treasury, Mark Hoban, announced the publication of final legislation to implement the bank levy announced in the June budget.  
BCBS releases document on backtesting credit risk models
The Basel Committee on Banking Supervision has released a document detailing sound practices for backtesting counterparty credit risk models. 
BCBS issues consultative papers on operational risk
The Basel Committee on Banking Supervision has issued for consultation two papers on operational risk - 'Sound Practices for the Management and Supervision of Operational Risk' and 'Operational Risk and Supervisory Guidelines for the Advanced Measurement Approaches'. 
BIS December Quarterly Review is released
The Bank for International Settlements' latest quarterly review discusses how the focus of market participants has shifted to renewed worries about sovereign risk in the Euro Area from the global impact of further monetary policy-easing in the United States. 
CPSS publishes payment and settlement statistics
The Committee on Payment and Settlement Systems publishes preliminary data on payments and settlements in the CPSS countries. 

Securities

Parliament stakes out its position on MiFID reform
MiFID's success in reducing transaction costs has also resulted in trades slipping out of sight due to a fragmentation of trading among the proliferation of trading venues and the use made of the directive's exemptions, says the resolution authored by Kay Swinburne. 
EU watchdog placed at the heart of credit rating agency supervision
The latest amendments to the rules regulating CRAs were approved by Parliament. These changes were needed to entrust ESMA effectively with the direct supervision of the agencies. MEPs, with Member State support, empowered ESMA to impose fines on CRAs.  
AFME briefing paper on short selling
The paper claims that any regulatory interventions regarding short selling must be careful not to harm the overwhelmingly positive contribution that short selling makes to the financial markets. 
FT: Goldman teams up with NYSE Euronext in trading venture
Goldman Sachs is teaming up with NYSE Euronext, the world’s largest stock exchange operator by revenues, to create a new kind of trading structure. The move comes at a time when rapidly changing regulation and fierce competition are forcing exchanges and their largest clients to co-operate. 
ISDA Comment letter on financial resources requirements for derivatives clearing organisations
This letter contains the response of the International Swaps and Derivatives Association to the Commodity Futures Trading Commission’s notice of proposed rulemaking (NPR) establishing financial requirements for derivatives clearing organisations (DCOs). 
SEC proposes review process for mandatory clearing of security-based swaps under Dodd-Frank Act
The Securities and Exchange Commission voted unanimously to propose rules required under the Dodd-Frank Act that would set out the way in which clearing agencies provide information to the SEC about security-based swaps that the clearing agencies plan to accept for clearing. 

Insurance

CEIOPS reports update on fifth quantitative impact study on Solvency II
QIS5 is an exercise run to assess the practicability, implications and possible impact of specified approaches to insurers’ capital setting under Solvency II.  
CEA calls for minimum harmonisation regime during IMD review debate
The CEA believes that the review should focus on the true needs of consumers. It is therefore important that the future Directive is a minimum harmonisation directive so that it is flexible enough to adapt to local consumers’ needs.  

Asset Management

Commission launches consultation on UCITS legislative modifications
The Commission is consulting, among other issues, on how the duties of depositaries can be further clarified, including their eligibility and liability and how they can be effectively supervised in the EU. 

Corporate Governance/Accounting

European Parliament own initiative report on corporate governance in financial services
The report highlights the diversity of corporate governance structures throughout the EU and states that a ‘one size fits all’ approach would be inappropriate and damaging to the competitiveness of financial institutions. 
Harvey Goldschmid about IFRS at a critical crossroad
The keynote speech entitled 'Regulatory Reform and IFRS at a Critical Crossroad' at the FEI conference was given by IFRS Foundation Trustee, Harvey Goldschmid. The FEI conference took place from 15-17 November 2010 in New York. 
EFRAG commented on the IASBs ED Insurance Contracts
EFRAG believes the IASB has not sufficiently considered the interaction with IFRS 9, the questions what constitutes the performance of an insurer and the presentation of performance in the financial statements of an insurer. 

Best of Media

FT: Rules to keep bankers honest
The article speaks about the causes of the crisis, the role of RBS in it, and of the banks’ executives being subject to sanctions. 
Irish Times: Government unlikely to call a referendum over a looming revision to the Lisbon Treaty
After the failure of the first Lisbon and Nice treaty referendums, the Government is known to have entered into talks on the insertion of a new paragraph in the Lisbon Treaty with the objective of avoiding a new vote. 
Financial News: Regulation and uncertainty are ‘killing’ recovery
Senior executives across the European investment banking and asset management industry have warned that the barrage of poorly thought-through regulatory reform is causing uncertainty that is stifling the nascent economic recovery in Europe. 
WSJ: CFTC hammers out corporate exemption for derivatives rule
The rules would implement a key provision in the Dodd-Frank Act that was inserted thanks to heavy lobbying by companies across the U.S. that feared they would be ensnared by new derivatives rules. 
Financial News: Clearing interoperability moves step closer
A long-awaited agreement between four of Europe’s leading clearing houses, which is set to bring about widespread competition in clearing for the first time, took a step closer to becoming reality with regulators saying they were “conceptually” satisfied with the arrangement. 

Brief Opinions/Commentaries

Bruegel: A status report on EU financial regulatory reform
In this paper, Nicolas Véron argues that the EU regulatory response to the crisis has been generally slower in the EU than in the United States, for several reasons. 
Wolfgang Münchau: How a mini fiscal union could end instability
Münchau argues in his FT column that a small fiscal union could be effective and also realistic. What matters is not the size, but the content.  

Financial Stability - Policy Analysis

Policy Exchange report: Are we undermining the future of financial services in Britain?
The paper analyses whether new taxes and regulatory changes will undermine the UK’s position as a financial centre. At the same time there has been a lot of media coverage of firms relocating, and of activity and prominent individuals moving abroad. 




© Graham Bishop

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