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24 March 2011

This week in "Brussels"
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Asset Management Corporate Governance/Accounting Financial Services Policy
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Articles from 17 March 2011 - 24 March 2011

Banking

Commissioner Almunia: The application of competition rules to the financial sector
Speaking at the ECON committee, Almunia said that an issue on the table which may bring more transparency and stability to the financial world refers to some aspects of the functioning of the credit default swaps market. The EC is discussing the best course of action to take over the coming weeks.  View Article
Association of German Banks on new bank stress test
The EBA's decision to use core tier 1 capital as the basis for this year's bank stress test is not appropriate in the view of the German private banks.  View Article
Bank of England's Andrew Haldane: Capital discipline
Haldane, Executive Director for Financial Stability, discussed the success - or otherwise - of international capital standards in forestalling banking distress, and set out one possible framework that might address some of the observed short-comings.  View Article

Securities

Hungarian Presidency published state of play document on short selling and CDS regulation
Concerning Article 12 (Restrictions on uncovered short sales and the issue of sovereign debt), a number of delegations do not want to apply the restrictions on uncovered short sales to sovereign debt.   View Article
ESMA launches a consultation on the Guidelines on the application of the endorsement regime of the Credit Rating Regulation
The Consultation Paper presents ESMA's interpretation of Article 4.3 of the Regulation, providing some reasons in support of the interpretation that third country regulation has to contain enforceable rules that are “as stringent as” the one in the EU regulation.  View Article
FN: The EMIR draft is turning into a battleground
Tensions are mounting over attempts by Brussels policymakers to widen the scope of the European Market Infrastructure Regulation, which would result in increased competition for derivatives trading among exchanges. The move could impact the value of the Deutsche Börse takeover of NYSE Euronext.  View Article
FT: Barnier downplays OTC reform extension
The European Union’s top financial services policymaker has downplayed suggestions that regulations to reform derivatives and clearing markets could be extended to all exchange-traded derivatives.  View Article
FN: Europe ready to proceed on MiFID
The EC is set to proceed with its overhaul of the Markets in Financial Instruments Directive and will not re-consult or split up the mammoth directive, a senior official said yesterday, quashing speculation that the regulator would consult again on the highly controversial text.  View Article
ESMA establishes a framework for third country prospectus and applies this new framework to facilitate Israeli issuers access
The framework allows prospectuses from non-EU countries, drawn up in accordance with third country legislation, to have a ‘wrap’ added, so that the resulting document meets the requirements of the EU Directive.  View Article
Canadian securities regulators update proposal on regulatory regime for credit rating organisations
The Canadian Securities Administrators (CSA) republished for comment proposed National Instrument 25-101 Designated Rating Organisations and related consequential amendments, which would introduce securities regulatory oversight of credit rating organisations.   View Article
EP demands more accountability for credit rating agencies
The European Parliament (EP) voted to approve German Liberal MEP Wolf Klinz's non-legislative report on credit rating agencies that supports measures and initiatives that would make market players more engaged in risk analysis and reduce their over-reliance on ratings.  View Article
Dow Jones: US and EU regulators working on coordinating swaps rules
European Union and US financial regulators are working together to create regulations for swaps markets but there are still areas that need to be clarified, including how to distinguish jurisdiction on international trades.  View Article
FN: CDS sector laments fresh European crackdown
The articles warns that the proposed ban of naked CDS demonstrates a painful ignorance of the way in which markets operate.  View Article

Insurance

EIOPA launched Europe-wide insurance stress test
The stress test is one of a range of supervisory tools for assessing the strength of individual institutions and evaluating the stability of the insurance sector. Furthermore, it helps supervisors to understand the capital positions of insurers and insurance groups in adverse situations.   View Article

Asset Management

EFRP paper: Towards more funded pensions
EFRP calls upon the Spring European Council to maintain the holistic approach to pensions, as economic, pension and social policy are all intertwined and cannot be considered in isolation.  View Article
NAPF comments on OECD pension findings
Joanne Segars, Chief Executive of the National Association of Pension Funds, said: “Unless people want to rely on one of the worst state pensions in Europe, they are going to have to save more if they want to enjoy a comfortable older age.”  View Article
FN: Italian regulators block foreign sale of Pioneer
The Italian central bank has made an attempt to block the sale of UniCredit’s asset manager, Pioneer Investments, to foreign buyers in a sign of growing protectionism and regulatory intervention.  View Article
Hedgeweek: Learning to live with the AIFMD
After more than 18 months of debate and a succession of drafts, in a process that sought to reconcile strongly-held opposing positions, EU economic affairs and finance ministers and subsequently the European Parliament agreed last November on a (nearly) final version of the AIFMD.  View Article
Hedgeweek: Outlook stable for hedge funds in 2011 according to Moody’s
The 2011 credit outlook for hedge funds is stable overall, with signs of improvement underpinned by the industry's positive performance and profitability, says Moody's Investors Service in an Industry Outlook.  View Article
IPE: Six Danish life insurers and pension funds fail Solvency II test
Finanstilsynet, the Danish Financial Services Authority, has released the local results of the fifth Quantitative Impact Study for Solvency II (QIS5), with the new guidelines on course for implementation from January 2013.  View Article
FSA’s Sheila Nicoll: The Alternative Investment Fund Managers Directive - The Road Ahead
The Director of Conduct Policy stressed consistency between regulations, the need to be aware of the operational issues efforts in order to ensure an optimal outcome that has a proportional focus, and the importance of consultations.  View Article
IPE: EFRP criticises 'short-termism' of European pension policy
Governments across Europe have been criticised for their short-term approach to pension savings by the European Federation for Retirement Savings (EFRP), which said clawing back privately-managed pension assets or selling off reserve fund holdings would not change a country's net debt.  View Article

Corporate Governance/Accounting

EuropeanIssuers: Corporate Reporting Charter
In the Corporate Reporting Charter, the EuropeanIssuers set out the key principles which should help achieve the provision of high quality information in the financial statements. In related narrative reporting, complementing and supplementing them contributes to confidence in the capital markets.  View Article
IFRS Foundation calls for participation in a voluntary XBRL Detailed Tagging Task Force
The IFRS Foundation is establishing a task force to examine detailed XBRL (eXtensible Business Reporting Language) tagging in IFRS financial statements, and is looking to work directly with preparers from listed companies from different industries and regions.  View Article
IASB and EFRAG March joint meeting
The IASB and the EFRAG met on 18 March 2011 to review the IASB’s current work.   View Article
IFAC sustainability framework supports sustainable value creation
The Professional Accountants in Business (PAIB) Committee of the IFAC has significantly updated its Sustainability Framework (the Framework), a tool to support professional accountants and their organisations as they integrate sustainability into their strategy, operations and reporting.   View Article
EFRAG completed its due process regarding the amendments to IFRS 7
EFRAG completed its due process regarding the amendments to IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets (the Amendments), with Endorsement Advice Letter and Effects Study Report to the European Commission.  View Article

Financial Services Policy

ECON committee: MEPs debate economic governance with ECB President Trichet
A great deal of improvement needs to be done to draw all the lessons from the crisis, according to European Central Bank president Jean-Claude Trichet with regard to the latest plans to strengthen the coordination of economic policies within the EU.   View Article
ECON committee: First discussion of amendments on the economic governance package
Almost 2,000 amendments have been tabled. However, significant support emerged for integrating European Economic Semester economic policy co-ordination plans, as well as parts of the Pact for the Euro, into the package.   View Article
Hungarian Presidency published a synthesis report on the implementation of the European Semester
The Annual Growth Survey presented by the Commission in January 2011 marks the start of the first ‘European Semester’ and initiates a new cycle of economic governance in the European Union.  View Article
ECON committee: Green light for ESAs executive directors
All three candidate executive directors of the EU's new financial watchdogs were given the green light by the Economic and Monetary Affairs Committee. The committee's recommendation now needs to be confirmed by Parliament as a whole, in a vote scheduled for Thursday 24 March.   View Article
Parliament approved Treaty change to allow stability mechanism
Parliament backed a limited Treaty change to allow the establishment of the European Stability Mechanism, one day before the summit where EU Member States are expected to endorse this new tool.  View Article
Lords Committee sceptical on implementation of EU Economic Governance Proposals
The House of Lords EU Committee told the Treasury that EU proposals to tackle Member States’ fiscal discipline were doomed to fail unless EU Member States stuck to the rules.   View Article
Global Financial Centres Index: London outshines Swiss cities for competitiveness
While Zurich and Geneva retained their 2009 rankings - at eighth and ninth place respectively - their ratings fell by four and two points each, according to an index of 75 financial centres compiled by think tank, Z/Yen Group.   View Article

Economic Crisis

Commissioner Olli Rehn: EU leaders must now finalise the response to the debt crisis
Rehn also said that the banking sector repair must be completed to safeguard the provision of credit to the real economy, to enterprises and to households. Furthermore, the next round of bank stress tests will be conducted in the coming months.  View Article
Portugal PM Socrates' resignation overshadows EU summit
Angela Merkel described the Portuguese vote as 'regrettable', while pressure on Portugal's economy intensified on Thursday as the interest rate on the country's 10-year bonds climbed to 7.63%.   View Article
IMF spurs global economic policy rethink
Wide-ranging new ideas and innovative thinking at a high-profile IMF conference marked an important step in the global debate on macroeconomic policies in the wake of the global economic crisis.  View Article

Commentaries

The forthcoming European Council meeting: Let’s face the difficult choices now
André Sapir, Senior Fellow from Bruegel, argues that the long-promised comprehensive solution to the euro area crisis cannot avoid some difficult political choices. The sooner they are made the better it will be for the common good of the euro area.  View Article
Nicolas Véron: Has global financial reform run out of steam?
Véron concludes that the financial reform is a never-ending effort, and the cycle that started with the crisis is far from completed.  View Article
Paul Goldschmidt: The European Stability Mechanism - Initial Comments on the “Term Sheet”.
Goldschmidt raised the issue about the impact of this new Treaty on the obligations of non-EMU Members. Under the present Treaty (with the exceptions of the UK and Denmark benefiting from an “opt out clause”), all other Member States must converge to meet the “Maastricht criteria” and join EMU.   View Article




© Graham Bishop

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