31 October 2011

2011年10月「金融サービス」マンスリー

The eurozone economic crisis is set to continue for quite some while until public finances are manifestly on a sound path. Then there must be a fundamental re-think about how the financial system was corrupted by excessive public debt. So GrahamBishop.com will now separate monitoring and analysis of financial services regulation from the aspects of the economic crisis that will be relevant to it. These topics will include economic governance, Council and Parliament statements on the powers of the eurozone and financial regulators, issues about financing the eurozone, comments on states “at risk”, the international context, and the thoughts of some leading commentators.

This means that the “Financial Services Month in Brussels” will henceforth only cover financial regulation topics. Please contact office@GrahamBishop.com if you wish to receive our “Economic Crisis Monthly” from next month onwards.

So the ambition remains undimmed, but opposition is mounting to some specifics. For example, the EFR is seriously concerned about the debate on the imposition of additional taxes on financial services, specifically a financial transactions tax, and the global banks (via GFMA) remain opposed to the capital surcharge for G-SIFIs. Opposition to the FTT is also rising rapidly – most obviously in the UK where the major financial services trade associations urged the UK to continue to take a strong stance against the FTT. The German Banking Federation also described the decision to introduce a European financial transactions tax as a mistake, while CEPS questioned whether the FTT would enhance financial stability or if it was more of a political gimmick. 

The EBA detailed the EU measures to restore confidence in the banking sector focusing on the capital and term funding needs in the EU banking sector, but the French Banking Federation reiterated that market concerns originate from the public finance situation of certain eurozone countries, and not that of the European banks themselves. This point was underscored by Herve Hannoun (BIS Deputy General Manager): “Sovereigns should aim to restore their low-risk (if not risk-free) status in the bond market through fiscal reform and consolidation”. Such comments foreshadow many difficulties on CRD IV – not least about maximum capital standards - as highlighted by Lord Turner of the FSA: “The idea that securing the single market requires the harmonisation of maximum as well as minimum standards is simply wrong and potentially harmful”.

This debate has a lot further to run, as Dirk Schoenmaker argued that stable cross-border banking is incompatible with national financial supervision, which means the European banking market needs European authorities. The European Banking Authority must get the cross-border banks under its supervisory wings. Supervision would then move from a national mandate (with loose coordination) to a European mandate; deposit insurance for cross-border banks should be based on a European footing; and a European resolution authority should be established to resolve troubled cross-border banks. Ex-ante burden-sharing rules are needed to raise the required funds for resolving cross-border banks.

The European Commission published its review of the Markets in Financial Instruments Directive and Commissioner Barnier said: "Financial markets are there to serve the real economy – not the other way around”. Unsurprisingly, there was a rash of comments by those who might be impacted. Some were generally supportive, such as the EBF, but many expressed reservations, such as AFME on pre-trade reporting, blanket transparency obligations across non-equity markets and the definition of Organised Trading Facility

However, the Commission also published its review of the Market Abuse Directive, clarifying that market abuse occurring across both commodity and related derivative markets are prohibited, and Commissioner Barnier pointed out that "Market abuse is not a victimless offence”. Meanwhile, MEPs and the Polish Presidency reached a deal on the regulation beefing up standards and requirements for the practices of short selling and trading in credit default swaps (CDS). The rules will impose much more transparency, increase the powers of the EU's financial watchdog, and virtually ban certain CDS trades.

FSB published its progress report on implementing OTC derivatives market reforms concerning standardisation, central clearing, exchange or electronic platform trading, and reporting of OTC derivatives transactions to trade repositories. Given the 21 recommendations, the report concludes that jurisdictions should aggressively push forward to meet the G20 end-2012 deadline in as many reform areas as possible but, with only a year left, few FSB members have the legislation or regulations in place to provide the framework for operationalising the commitments.

ECB Vice-President Vítor Constâncio focused on how T2S fits into the wider Single market picture. A proposal for a new legislation on CSDs is expected soon. This will help to ensure a level playing field between the different business models operating across Europe. And on the custody side, the proposed Securities Law Directive will also help provide legal certainty. T2S fits extremely well into the financial market reform process, as it complements the regulatory initiatives to strengthen significantly the Single Financial Market and its infrastructure. T2S will – for the first time – create a single market in the settlement services space. Combined with legislation on CSDs and CCPs as well as MiFID, T2S will stimulate a new competitive environment in post-trading, and will be an indispensable tool for banks to optimise their collateral management. It will eliminate the need to hold multiple buffers of collateral across various CSDs. It will also eliminate the need to shift securities across borders in order to use them. The savings in collateral will be very significant.

Solvency II start date is now a hot topic, and the FSA has decided to split the implementation dates for Solvency II, so January 1st 2013 remains the date at which the responsibilities of supervisors would be switched on and February 1st 2014 is when the requirements would be switched on for firms. The European Council has now put its weight behind the European Economic and Monetary Affairs Committee’s recommendation for a delay, making it nearly certain that most of Europe’s insurers will not have to adhere to the new rules until January 2014. However, the debate about full application of Solvency II to pension funds continues to rage.

Accounting standards also attracted comment: IASB Chairman, Hans Hoogervorst, told ECON that more and more countries have chosen to follow Europe's lead and adopt IFRSs, and the majority of the G20 members are IFRS adopters. The SEC will decide shortly whether to incorporate IFRSs into its own financial reporting regime, and he is optimistic about the prospects for a positive decision as a negative decision would be a tremendous disappointment after so many years of convergence work. But the momentum behind adoption of IFRSs is now too powerful, and too important to be rolled back. The IASB’s decision to postpone the effective date of IFRS 9 to 2015 continues to attract widespread support: from FEE, EBA, EBF, CEA, the Insurers CFO Forum, etc.

© Graham Bishop