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02 May 2019

This week in "Brussels"
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  Articles from 18 April 2019 - 02 May 2019

  Banking Union
 
 
European Commission: Report on the application and review of the bank recovery and resolution directive and the single resolution mechanism
As foreseen in the relevant legislation, the European Commission has adopted a Report that reviews the application of the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR).   View Article
POLITICO: European banks still needs 'safe asset,' Commission says
The EU still needs a “safe asset” for banks to hold as an alternative to domestic government bonds, along with capital rules for sovereign debt, the European Commission said.  View Article
POLITICO: Benchmarks law needs no 'fundamental' rewrite, EU official says
Europe’s law financial benchmarks will undergo targeted tweaks rather than a complete overhaul, the head of the European Commission’s securities-markets unit said.  View Article
EBA sees significant improvement in the work of supervisory colleges in 2018 but efforts are still needed
The EBA published its 2018 Report on supervisory colleges, which summarises its findings on the monitoring of supervisory colleges for the main cross-border European banking groups. Considering the progress observed in the functioning of colleges over the years, the Report mainly focuses on the quality of the colleges' deliverables and highlights examples of good practice.  View Article
ECB sets supervisory fees at €576 million for 2019
The ECB estimates that €559 million will be spent on the prudential supervision of banks in 2019. However, total fees will be €576 million to cover a €15.3 million deficit carried forward from 2018 and owing to adjustments to individual fees, amounting to €1.7 million, resulting from changes in banking structures.   View Article
ECB's De Guindos: Challenges for bank profitability
Luis de Guindos, Vice-President of the ECB, in which he focused on bank profitability, saying that returning banks to sustainable rates of profitability is a key step towards ensuring that the sector remains resilient.  View Article
FCA begins review of financial advice market
The Financial Conduct Authority has launched a Call for Input asking for feedback on its proposed approach to reviewing the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).  View Article
EBA publishes clarifications to a third set of issues raised by its Working Group on APIs under PSD2
The clarifications respond to issues raised on the portability of ‘wide usage' data between EU Member States and on eIDAS certificates, in particular with regards to passporting, their use during the ‘wide usage' period, and the reliance on the certificates by account servicing payment service providers (ASPSPs).   View Article
EBA publishes Opinion on the nature of passport notifications for agents and distributors of e-money
The Opinion provides clarity on the criteria that national competent authorities (NCAs) should use for determining when the use of an agent or distributor triggers an ‘establishment' of the appointing institution in the host Member State or falls under the free provision of services.  View Article
UK Finance: Open banking innovation
The development of ‘open banking’ across the UK and EU is arguably one of the most revolutionary events within financial services in recent times. The UK has been at the forefront of developments, through the work of the Open Banking Implementation Entity (OBIE) which was set up to deliver key consumer benefits of PSD2 and open banking more generally.   View Article
Investment & Pensions Europe: Climate risk: Central banks call for action on disclosure, taxonomies
An international group of central banks and financial supervisors has called for a global standardised framework on climate disclosures, urging action from policymakers or supervisory authorities.  View Article
EBA adds MCD to its online Interactive Single Rulebook and QA tools
The European Banking Authority (EBA) has updated its online Interactive Single Rulebook and Q&A tool with the inclusion of the Mortgage Credit Directive (MCD).  View Article
 
  Capital Markets Union
 
 
Capital Markets Union: European Parliament backs key measures to boost jobs and growth
The Commission welcomes the European Parliament's final votes on legislation putting in place the building blocks of CMU. This adoption of a substantial number of proposals constitutes another step forward in the completion of the CMU, one of the Juncker Commission's top political priorities.   View Article
ESMA updates publication schedule for transparency calculations in May and June 2019
ESMA considers that, following the extension of Article 50(3) in relation to the United Kingdom’s withdrawal from the European Union, it is necessary to provide clarity to stakeholders that transparency calculations due in May and June as well as in the following months will now be published.  View Article
ESMA agrees position limits under MiFID II
ESMA published five opinions on position limits regarding commodity derivatives under the Markets in Financial Instruments Directive and Regulation (MiFID II/MIFIR).   View Article
IPE - Investment Research: MiFIDII – a year of adjustments
Rhodri Preece writes that firms are under competitive pressures as the market for investment research takes shape.  View Article
Bloomberg: Europe blew up financial research hedge funds and US firms won
Recent European rules concerning payment for research, known as MiFID II, may have benefited hedge funds and US-based asset managers more than the European clients they were written to help, according to an analysis by Evercore ISI.  View Article
Bloomberg: From $1,600 to $1 million: research costs under MiFID II
That’s the range of annual payments institutional investors doled out to providers, according to a new survey by US consulting firm Integrity Research Associates LLC.   View Article
MiFID II: ESMA delays the publication of the systematic internaliser regime data for equity, equity-like instruments and bonds
The European Securities and Markets Authority has decided to delay the publication of the systematic internaliser (SI) regime data for equity, equity-like instruments and bonds.  View Article
MiFID II: ESMA makes new bond liquidity data available
ESMA started to make available new data for bonds subject to the pre- and post-trade requirements of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR) through its data register.  View Article
Notice of ESMA’s Product Intervention Renewal Decision in relation to contracts for differences
ESMA adopted a Decision under Article 40 of Regulation (EU) No 600/2014 to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients.  View Article
ECB: Results of the March 2019 survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets
Credit terms tightened for almost all counterparties between December 2018 and February 2019. Financing collateralised with euro-denominated securities declined, especially where domestic government bonds were used as collateral.  View Article
 
  Insurance
 
 
EIOPA issues recommendations to National Competent Authorities to address vulnerabilities identified by the 2018 Insurance stress test
The Recommendations consider the risks and vulnerabilities identified through the findings of the 2018 Insurance Stress Test and are addressed to the National Competent Authorities (NCAs). As a first step, EIOPA analysed the 2018 Insurance Stress Test results at individual group level and, as a second step categorised the Recommendations.  View Article
BaFin: Insurers: New agreement for supervisory cooperation after Brexit
In preparation for Brexit, BaFin concluded an agreement with the PRA in the UK. The agreement supplements the Multilateral Memorandum of Understanding between the supervisory authorities in the UK and the national insurance supervisors of the 27 remaining EU member states together with the EIOPA.  View Article
EIOPA reports about its 2018 supervisory activities and sets out the 2019 priorities
The EIOPA published its 2018 Supervisory Activities Report in accordance with Article 259 of the Solvency II Directive. Following the publication of the Common Supervisory Culture in November 2017 and the Supervisory Convergence Plan for 2018 -2019 in April 2018 this first annual Report outlines the supervisory activities conducted in 2018 and sets out the priorities for 2019.  View Article
 
  Asset Management
 
 
ALFI: Cross-border distribution of investment funds: a trade-off between removing distribution barriers and adequate investor protection
ALFI statement following the adoption by the European Parliament of the Directive amending the UCITS and AIFM Directives and the EU Regulation amending the European Venture Capital Funds (EuVECA) and European Social Entrepreneurship Funds (EuSEF) Regulations.  View Article
EFAMA: Robust capital markets recovery brings net total UCITS assets over €16 trillion mark in February 2019
The European Fund and Asset Management Association (EFAMA) has published its latest Investment Fund Industry Fact Sheet, which provides net sales of UCITS and AIFs for February 2019. Twenty-nine associations representing 98 percent of total UCITS and AIF assets provided us with net sales data.  View Article
Investment & Pensions Europe: EIOPA to prioritise IORP II ‘supervisory convergence'
Europe’s top pension fund regulator will scrutinise how countries and national supervisors have implemented the IORP II directive this year.  View Article
Investment & Pensions Europe: German supervisor disagrees with EIOPA over IORP inspection cycle
Germany’s BaFin has disagreed with the EU pension supervisor’s recommendation that it make more frequent on-site inspections of occupational pension providers to assess their compliance with the prudent person rule.  View Article
Investment & Pensions Europe: Regulators urge pension funds to use new benchmarks ahead of Libor end
Dutch supervisors De Nederlandsche Bank (DNB) and Financial Markets Authority (AFM) have urged pension funds to start seeking alternatives for benchmarks such as Euribor, Libor and Eonia.  View Article
 
  Corporate Governance/Accounting
 
 
IASB: IFRS Foundation consults on proposed amendments to its Due Process Handbook
The Trustees of the IFRS Foundation are inviting stakeholder comment on proposed amendments to its Due Process Handbook, the procedural requirements followed by the IASB and the IFRS Interpretations Committee.  View Article
IFAC: IPSASB seeks comments on measurement proposals
The IPSASB has released a consultation paper which addresses how measurement bases are determined in the public sector. The CP includes within it an illustrative ED which shows what the IPSASB currently envisages a final pronouncement will comprise.  View Article
EFRAG’s comment letter and feedback statement on onerous contracts - cost of fulfilling a contract
EFRAG has published its comment letter and its feedback statement in response to the IASB's Exposure Draft ED/2018/2 Onerous Contracts - Cost of Fulfilling a Contract (Proposed Amendments to IAS 37).  View Article
Accountancy Europe: Study on EU statutory audit reform
Professor Marleen Willekens presented to and discussed with the Board of Accountancy Europe as well as with the Chairs and members of working groups the findings of her team’s recent study on the early effects of the Audit Reform.   View Article
IFAC: Audits of less complex entities
The IAASB published a discussion paper that seeks to further understand the challenges of using ISAs in audits of less complex entities—and views about possible actions to address these challenges.  View Article
ACCA responds to CMA report on the future of the audit market
In its response to the CMA’s December 2018 update paper, ACCA highlighted the risks to audit quality of the CMA’s proposed remedies to increase choice in the audit market. ACCA is therefore disappointed that many of these remedies have been carried forward unchanged in the CMA’s final report.  View Article
ECGI: Corporate capture of blockchain governance
The paper written by Daniel Ferreira, Jin Li, Radoslawa Nikolowa shows that the proof-of-work system is not immune to capture by interest groups. Their main finding is that proof-of-work may lead to a situation where the governance of the blockchain is captured by a large corporate stakeholder.  View Article
UK Finance: SMCR: What comes next?
As the Financial Conduct Authority (FCA) expands the scope of the Senior Managers and Certification Regime (SMCR) to focus on the insurance and wealth management sectors, the banks who have already been through the process have built their frameworks, assigned the SM roles and mapped responsibilities. The FCA has seen the results and many banks will be feeling a sense of relief.   View Article
FRC: JFAR’s latest risk perspective highlights the importance of changing trends to actuarial work
The Joint Forum on Actuarial Regulation (JFAR) has published its Risk Perspective: 2018 Update setting out its collective view on current risks to high quality actuarial work.  View Article
BusinessEurope: Digital door finally open for EU companies
The European Parliament agreed on the EU Company Law Package which grants EU businesses access to digital tools and processes in company law, such as set-up of a company, updating commercial registers, providing documents to authorities.  View Article
 
  Financial Services Policy
 
 
FCA's Bailey: The future of financial conduct regulation
Andrew Bailey, Chief Executive of the FCA, spoke at at Bloomberg's offices about the need for a debate about the future of regulation "but this needs to be in a public interest framework."   View Article
BIS's Carstens: Central banking and innovation: partners in the quest for financial inclusion
BIS General Manager Agustín Carstens stressed the benefits of financial inclusion and suggested how financial authorities might build on success by partnering with fintech. Carstens outlined how the BIS can help to foster international cooperation in this field.  View Article
DG Trade consultation on EU-US regulatory cooperation: EBF comments
The European Banking Federation has responded to a European Commission consultation on financial regulatory cooperation between the European Union and the United States.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
Thoughts for a third EU Referendum: Revoke Article 50 OR Leave with “a” deal
Emotionally, the UK has already `left’ the EU, so the pro-Europe campaign must set out a positive case to answer the question of why Britain wants to `join’ Europe.   View Article
 
  Political
 
 
Strength in unity: Commission makes recommendations for the EU's next strategic agenda 2019-2024
Ahead of the meeting of EU27 leaders in Sibiu, Romania, on 9 May 2019, the European Commission set out a number of policy recommendations for how Europe can shape its future in an increasingly multipolar and uncertain world.  View Article
European Commission: Closer to the Citizens, Closer to the Ballot
Parliament’s Spring 2019 Eurobarometer, conducted three months ahead of the European elections, shows continued strong support for the European Union.  View Article
Fondation Robert Schuman: The electoral context 2019: new and increasingly European issues
Today the focus is less on economic matters but rather more on issues, already nascent in the 2014 election, like climate change and immigration, write Emmanuel Riviere and Julien Zalc.   View Article
Paul Goldschmidt: European Elections: The overlooked importance of the €!
Goldschmidt writes that the stakes of the coming elections should be viewed between a powerful integrated Union and the subservience of each Independent State to the dominance of foreign world political and/or economic powers.  View Article
EurActiv: Europe’s far-right touts ‘new European harmony’ in EU vote
Marine Le Pen, head of France’s National Rally party, said Europe’s populist far-right parties are offering a “new European harmony” to voters in European parliament elections next month.  View Article
Bloomberg: Macron says France is having ‘fruitful confrontations’ with Germany
President Emmanuel Macron said France and Germany are on a different page these days but believes their different views on Brexit, climate policies or on trade talks with the United States, are “fruitful confrontations.”  View Article
POLITICO: UK’s unpredictable European election — and its impact on Brussels
New parties look set to profit from Brexit uncertainty in the UK.  View Article
New York Times: Spain’s election gives a lift to the left and a warning to the far right
Vox’s national debut showed that Spain was not immune to the advance of far-right parties that have made inroads elsewhere in Europe. But the emergence of Vox did as much or more to mobilize its opponents on the moderate left, with voters doubling support for socialist President Pedro Sánchez.  View Article
 
  Economic
 
 
Il Sole 24 Ore: Italy’s debt restructuring would do enormous damage
Lorenzo Codogno and Giampaolo Galli argue that restructuring Italy’s debt "would do immense damage; it would not solve the debt problem and should, therefore, be avoided at all costs until it is still possible to do so."  View Article
Financial Times: The unbreakable, unsustainable eurozone
Without an ECB to do the heavy lifting in the next crisis, real reform will be needed, warns Wolfgang Münchau.  View Article
Joint statement of the 26th EU-Japan summit
President of the European Council Donald Tusk, President of the European Commission Jean-Claude Juncker and Prime Minister of Japan Shinzō Abe, met in Brussels for the 26th EU-Japan summit.  View Article
ECB: The economic implications of rising protectionism: a euro area and global perspective
This article, part of the ECB's April Economic Bulletin, discusses the macroeconomic implications of the recent surge in protectionism and evaluates the possible effects that an escalation in trade tensions could have on the global economy and the euro area.  View Article
Jacques Delors Institute: Five reasons why the ESM reform will fail to deliver
Lucas Guttenberg argues that while the planned reform of the European Stability Mechanism (ESM) is necessary to finally bring home the backstop for banking union, it clearly falls short of its initial ambition to also substantially improve the Eurozone’s crisis management framework.  View Article
Euro area unemployment at 7.7%
The euro area (EA19) seasonally-adjusted unemployment rate was 7.7% in March 2019, down from 7.8% in February 2019 and from 8.5% in March 2018.   View Article
April 2019: Economic Sentiment decreases markedly in both the euro area and the EU
In April 2019, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.6 points to 104.0) and the EU (by 1.5 points to 103.7).  View Article
 

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