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23 September 2010

This week in "Brussels"
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Financial Services Policy Banking Securities
Asset Management Corporate Governance/Accounting Financial stability - policy analysis
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Articles from 16 September 2010 - 23 September 2010

Financial Services Policy

Financial Supervision: New EU watchdogs ready for 1 January 2011
The European Parliament has approved the Financial Supervision Package - the set of legislation to create new European watchdogs. It is also an ambitious legislation to protect citizens' financial interests and is a big step towards European economic integration.  View Article
Commissioner Barnier: Europe has learned the first important lesson of the crisis - the failure of appropriate supervision
He stressed that the supervisory package initiatives should allow Europe to avoid severe crises recurring, to protect citizens who are also taxpayers, and to contribute to fair and sustainable growth.  View Article
3L3 Committees welcome European Parliament landmark vote to reform financial supervision in Europe
The 3L3 Committees are more than ever committed to upgrade the quality and consistency of supervision, reinforce the oversight of cross-border groups, and strengthen risk assessments and stress testing.  View Article
European Council conclusions - Task force on Economic Governance
The European Council underlines the need to maintain momentum on the reform of European economic governance, and looks forward to receiving the final report of the Task Force for its October 2010 meeting.  View Article
ECB Bini Smaghi: Improving the economic governance and stability framework of the Union
In Smaghi's view, the EU has to be very careful in considering exemptions, such as providing the possibility for countries to unilaterally modify the value of their debt contracts.   View Article
Chairman Gensler: The CFTC will fully comply with Congress’ intention to lower risk and bring transparency to financial markets
The CFTC is actively consulting with international regulators to harmonize its approach to swaps oversight. Next week, Chairman Gensler will travel to Brussels to discuss US derivatives reform efforts and to consult with the European Commission on its proposals.  View Article

Banking

FSA Chairman welcomes the decisions reached on the Basel III package of capital and liquidity reforms
Lord Turner stresses that he regards the creation of the new Financial Policy Committee as the most important element in the Government’s reform package. The FPC will fill the “macro-prudential underlap” which existed between the FSA and the Bank of England.  View Article
FSB invites feedback on residential mortgage underwriting practices
The review will survey existing practices across the FSB membership, including recent actions taken by national authorities to promote sound practices, and draw internationally applicable lessons.  View Article
EMF Mortgage Information Snapshot
The European Mortgage Federation publishes latest information on where we are on responsible lending and borrowing.  View Article
Greece to postpone bank stress tests on domestic banks
The Bank of Greece says it will postpone stress tests due this fall, arguing they would come too soon after the Europe-wide checks whose results were published in July.  View Article
Commission authorises guarantees for Irish financial institutions
The EC has approved a guarantee scheme for credit institutions in Ireland covering certain short-term liabilities. The scheme lasts until 31 December 2010.  View Article
FT: Basel III is priming big banks to work the system
The slow implementation period for the new Basel III capital regime, which will not be fully phased in until 2019, means that the world cannot afford to have another large-scale banking crisis for nine years.   View Article
FED Tarullo: Regulating the shadow banking system
Tarullo presented the paper by Gary Gorton and Andrew Metrick which reveals that the “shadow” banking system played a major role in the financial crisis, but was not a central focus of the recent Dodd-Frank Law and thus remains largely unregulated.   View Article
FT: French banks fined €385m for fees collusion
Eleven French banks were accused of colluding to fix the price of clearing cheques electronically and fined a total of €384.9m ($503m) by the country’s competition authority.  View Article
WestLB and BayernLB possible merger announcement
The Commission has approved various state interventions on a temporary basis for both banks. In both cases, the EC has opened an investigation into the measures and into the respective restructuring plans.   View Article

Securities

Commission hearing on MiIFD review – High frequency trading will be carefully monitored
Concerning high-frequency, ECON chairwoman Sharon Bowles said that it is not recommended to forbid all HFTs transaction; however, there is an urgent need to control this type of transaction. She added that MAD should also look at HFT and flash orders.   View Article
Commissioner Barnier: Nobody should be able to escape surveillance under MiFID review
He also stressed that excessive risk taking must be eliminated which requires full transparency vis-à-vis the regulators and the public.  View Article
CESR Chair Tavares welcomes the Commission proposals for the regulation of derivatives markets and short selling
Tavares said that “the measures will improve the safety, transparency and efficiency of EU securities markets. By assigning a strong role to ESMA, the European Commission reinforced its stand for a harmonised supervisory framework at EU level.”  View Article
The Commission will carefully analyse commodities markets
During the EC public hearing on MiFID review, a stakeholder said that what is missing from the regulatory side is how to prevent speculation on commodities markets and the only way to achieve this is through a position limit as has been done in the US.   View Article
EACT comments on the EC proposal for a regulation of OTC derivatives, central counterparties and trade repositories
The EACT has been actively making input to the EC and other EU bodies with the objective of maintaining the ability of companies to use derivatives to mitigate financial risk in their core activities.   View Article
ISDA publishes research notes analyzing swap pricing and speculation
One note seeks to reconcile the theoretical and actual pricing of swaps at inception. The other provides a brief review on speculation and the important role it plays in the functioning of markets.  View Article
ISDA comments on proposals released by the European Commission relating to markets infrastructure and aspects of CDS
ISDA fully supports increased central clearing where this reduces counterparty risk in the financial system. It also welcomes moves to increase transparency of derivatives markets to supervisors through internationally consistent reporting to trade repositories.  View Article
FSA and FINRA sign cooperation agreement
The Financial Services Authority (FSA) and the US Financial Industry Regulatory Authority (FINRA) have entered into a memorandum of understanding to support more robust cooperation between the two regulators.  View Article

Asset Management

CESR publishes the responses to four consultations concerning the Key Investor Information Document
The paper considers some practical implications of Article 118(2) of the revised UCITS Directive, which allows UCITS management companies up to 30 June 2012 to implement Key Investor Information (KII) as referred to in Article 78.  View Article
AIFM passport compromise for non-EU hedge funds mooted
If agreed by the EU council, the compromise could end the months-long deadlock between the negotiating parties in Brussels. The EP and the Council have been unable to find common ground on the issue of how to deal with funds and managers based outside the EU.  View Article
EFAMA/ KPMG’s European Investment Management practice UCITS IV report
The report, entitled Analysis of the tax implications of UCITS IV, recognises that the UCITS IV Directive to be implemented by Member States by July 2011 offers considerable scope for re-structuring fund management operations in the EU.   View Article

Corporate Governance/Accounting

AFME publishes a report on financial stability after the crisis
This report notes the valuable work already undertaken and progress made to reform the financial system and puts forward for discussion a number of further ideas that could contribute to a reduction of systemic risk.  View Article
EFRAG comments on the IFRS Committee decision in relation to put options written over non-controlling interests
In summary, EFRAG agrees with the Committee that the NCI put issue is a matter that warrants action from the IASB because there is conflict between accounting standards that has lead to significant divergence in practice.   View Article
EFRAG comments on IASB ED Measurement Uncertainty Analysis Disclosure for Fair Value Measurements
In particular, the comment letter welcomes the clarification that the analysis is focused on unobservable inputs and by implication provides information about measurement uncertainty as opposed to market risk.   View Article

Financial stability - policy analysis

BIS: Offshore markets for the domestic currency - monetary and financial stability issues
This paper shows that offshore markets intermediate a large chunk of financial transactions in major reserve currencies such as the US dollar.   View Article

Best of Media

Il Sole: Olli Rehn aims to make the procedures for the excessive deficit more efficient
Europe’s economic revival “has gained speed, but the perspectives of growth in short-term are very uncertain, and the financial markets in Europe are still fragile.” said Olli Rehn.  View Article
Il Sole: Italian banking system not at risk
Italian Committee for Financial Stability announced that there is no evidence of increasing risk for Italian banking and financial system.  View Article




© Graham Bishop

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