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19 May 2011

This week in "Brussels"
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Banking Securities Asset Management
Corporate Governance/Accounting Financial Services Policy Economic Crisis
European Council/Parliament International/G20 Commentaries
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Articles from 12 May 2011 - 19 May 2011

Banking

Commission requests implementation of latest bank capital requirements rules
The Commission has requested Greece, Italy, Poland, Portugal, Slovenia and Spain to notify measures within two months to implement important rules concerning the capital adequacy and the remuneration policies of financial institutions, as laid down in CRD III.  View Article
ECB published TARGET Annual Report 2010: The system functioned smoothly and registered a higher turnover
The report indicates that, by 31 December 2010, a total of 866 direct participants had opened an account in the TARGET2 system. These direct participants had registered 3,585 indirect participants from countries in the European Economic Area, as well as 12,950 correspondents worldwide.  View Article
FSB launched second peer review on compensation practices
The review will assess the progress made by national authorities and significant financial institutions in implementing the FSB Principles for Sound Compensation Practices and their Implementation Standards.   View Article
BUSINESSEUROPE and the EBF sent a letter to Commissioner Barnier on liquidity ratios
They urged the EC to defer the inclusion of binding minimum liquidity ratios in European prudential legislation at this moment. It should, however, lay down principles and define the reporting process to allow the observation periods to be fully used to design an appropriate liquidity regulation.  View Article

Securities

Commissioner Almunia: Competition policy is needed to tackle the harmful behaviour of individual financial services market participants
Speaking at a seminar at Cass Business School in London, Almunia also said that the ongoing review of MiFID aims to improve the organisation, transparency and oversight of exchange-based trading. Furthermore, MiFID II may extend the scope of the exchanges’ obligation to publish transaction data.  View Article
ECOFIN Council conclusions: Agreement on short selling and CDS reached
This agreement marks an important moment in view of the next step: trialogue with the European Parliament. EU finance ministers also adopted a decision on financial assistance to Portugal, reviewed implementation of the economic adjustment programme for Ireland.   View Article
Council published general approach on short selling and certain aspects of CDS
The German delegation still has some concerns as to how the uncovered position of sovereign credit default swaps was addressed in the compromise text, and would prefer to have a permanent ban on transactions that lead to uncovered position in these instruments.  View Article
Steven Maijoor, Chair of ESMA, delivers a keynote address on CRA supervision at a conference in the German Parliament
Steven Maijoor addressed the Bundestag on the topic 'Supervision of Credit Rating Agencies in the European Union', including the lessons learned from the financial crises, the role that ESMA plays regarding CRA supervision, and the challenges that we face in the upcoming months and years.  View Article
ESMA announces the appointment of the Securities and Markets Stakeholder Group
All but one of the biggest banks, and all of the industrial companies that use derivatives have been excluded from the advisory group appointed by ESMA to help implement new rules.  View Article
ESMA issues Guidelines on endorsement and clarifies the use for regulatory purposes of credit ratings issued outside the EU
The Guidelines address how ESMA will implement the as stringent as test for credit ratings produced outside the European Union, in what are named third countries. The credit ratings are used by financial institutions to assess the risk of their exposures and in calculating the capital requirements.  View Article
ESMA submits its technical advice to the Commission on fees for CRAs
In order to deliver its advice to the Commission, ESMA considered possible fee structures for Credit Rating Agencies (CRAs) registered or certified in the EU and for CRAs seeking registration or certification.  View Article
FSA publishes Proposed guidance on reporting derivative transactions conducted through derivative exchange platforms
If the transaction conducted through an exchange platform is in a derivative instrument fungible with an exchange standardised derivative, the reporting firm would have the choice to report as an on-exchange derivative transaction or as an OTC derivative transaction.  View Article
BIS published OTC derivatives market activity in the second half of 2010
The BIS report reveals that after contracting by 4% in the first half of 2010, total notional amounts outstanding of OTC derivatives rose by 3% in the second half, reaching $601 trillion by the end of December 2010.   View Article
ISDA responds to the FSB report on OTC derivatives markets reforms implementation
ISDA is supportive of a regulatory approach that encourages an orderly transition to a new clearing environment, and welcomes the increasing awareness of the risks associated with the 'pace of implementation' evident in some jurisdictions.  View Article
NYSE Euronext acknowledges withdrawal of proposal by Nasdaq OMX Group, INC. and IntercontinentalExchange, INC
NYSE Euronext acknowledged the withdrawal of the proposal from Nasdaq OMX Group, Inc and IntercontinentalExchange Inc to acquire all outstanding shares of NYSE Euronext.  View Article
NASDAQ OMX and IntercontinentalExchange withdraw their proposal to acquire NYSE Euronext
The NASDAQ OMX Group and IntercontinentalExchange announced that following discussions with the U.S. Department of Justice, they are withdrawing the proposal to acquire NYSE Euronext and will not commence the exchange offer to acquire all of the outstanding shares of NYSE Euronext.  View Article
WSJ: ICE, Nasdaq warn against rushed NYSE shareholder vote
IntercontinentalExchange and Nasdaq OMX told shareholders of NYSE Euronext yesterday to demand more time to review the proposed merger with Deutsche Börse, warning that the Big Board had rushed to judgement on the deal.  View Article
Hedgeweek: Deutsche Börse management and supervisory boards recommend Alpha Beta offer
The boards point out that the consideration the shareholders of Deutsche Börse AG are entitled to consists of shares in the new holding. This will enable shareholders to participate in potential future value creation in the combined company.  View Article

Asset Management

EFAMA publishes report on the evolving investment strategies of UCITS
“Newcits” are UCITS that can be described as aiming actively to manage the risk-return trade-off. They are subject to and are managed in compliance with the UCITS framework. As such, they offer the same level of investor protection as other UCITS.  View Article

Corporate Governance/Accounting

Nicolas Véron: Suggestions for reforming the governance of global accounting standards
Public authorities overseeing the IFRS Foundation, through the Monitoring Board in place since early 2009, should encourage the Foundation to make itself more directly accountable to the global investment community.   View Article
IASB´s Investor perspectives: “At long last – a single model for consolidation”
Patrick Finnegan as a Board member of the IASB contributed with the article “At long last – a single model for consolidation” to IASB´s Investor perspectives. The views expressed in this article are about two new standards dealing with consolidation accounting and disclosures.  View Article
FASB Update - Financial statement user edition, May 2011
The FASB provides a summarised overview because it recognises that investors may not have the time to read and respond to detailed technical proposals. This summary is meant to update investors on standard-setting activities that may impact the companies they follow.  View Article
IASB and FASB: New guidance on fair value measurement and disclosure requirements
The IASB and the FASB conclude their major convergence project - important element of response to the financial crisis – by issuing new guidance on fair value measurement and disclosure requirements for IFRSs and US GAAP.  View Article
IASB finalised standards dealing with accounting requirements for off balance sheet activities and joint arrangements
The IASB completed its improvements to the accounting requirements for off balance sheet activities and joint arrangements by issuing IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements' and IFRS 12 'Disclosure of Interests in Other Entities'.   View Article
IAASB: Enhancing the value of auditor reporting
The IAASB published the consultation paper 'Enhancing the Value of Auditor Reporting: Exploring Options for Change' to obtain views on enhancing the quality, relevance and value of auditor reporting on an international basis. Comments on the Consultation Paper are expected by September 16, 2011.  View Article
IFAC PAIB Forum: Integrated reporting can result in better governance
The focus of the forum was on how professional accountants in business can support their organisations to improve governance practices through the integration of financial and non-financial information into their reporting, including a focus on environment, social and governance (ESG) factors.  View Article

Financial Services Policy

Nicolas Véron: The era of corporate split personalities
Véron stressed that the saga of securities exchanges consolidation is a vivid illustration of links between companies and nations in a state of flux. The likes of the New York Stock Exchange are national icons of capitalism.  View Article
The Bank of England and the FSA published joint paper: Prudential Regulation Authority - The future approach to banking supervision.
The Prudential Regulation Authority will be responsible for supervising both insurance companies and deposit-takers. A companion paper will be published in June 2011 to cover the PRA’s approach to supervising insurance companies.  View Article

Economic Crisis

Barroso: Debt restructuring could never be an alternative to the painful adjustments that need to be implemented
President Barroso also stressed that Europe has responded decisively to the sovereign debt crisis by setting up the EFSF and EFSM temporary support mechanisms, which will be replaced by the permanent European Stability Mechanism in 2013.  View Article
Eurogroup and ECOFIN Ministers agreed to grant financial assistance to Portugal
The programme will cover financing needs up agreed to €78 billion, which should be shared equally (€26 billion each) amongst: the European Financial Stabilisation Mechanism, the European Financial Stability Facility (EFSF) and the IMF.  View Article
ECOFIN Council: Nomination of the president of the ECB
The Council adopted a recommendation on the nomination of Mario Draghi (Italy) as president of the European Central Bank, to succeed Jean-Claude Trichet whose term of office expires on 31 October.  View Article
EU and EFSF funding plans to provide financial assistance for Portugal and Ireland
EU and EFSF have revised their issuance calendars – previously established on the basis of the Irish programme only - to include financial support to Portugal. The calendars are closely coordinated to ensure smooth market operations over the entire duration of the support programmes.   View Article
Angela Merkel backs a European candidate to head the IMF
Ms Merkel did not name a preferred candidate but said it was important to act quickly in light of the problems afflicting the eurozone.  View Article
FN: Fund managers fear eurozone crisis
More fund managers are negative than positive on Europe's growth prospects over the next twelve months for the first time since July 2010, according to a survey of fund managers by Bank of America Merrill Lynch.  View Article

Commentaries

Martin Wolf: The eurozone after Strauss-Kahn
Martin Wolf pays tribute to DSK, a man whose appointment he once opposed, and praises his unique blend of ability to bang European heads together in a time of crisis. Wolf suspects that the Europeans and Americans will collude to push another European candidate, possibly Lagarde.  View Article
Bruegel: The euro area's macroeconomic balancing act
Guntram B. Wolff argues that the European Systemic Risk Board (ESRB) and the proposed prevention and correction of macroeconomic imbalances regulation are designed to avoid imbalances. However, these instruments overlap and need clarification.   View Article




© Graham Bishop

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