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10 June 2011

This week in "Brussels"
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Articles from 02 June 2011 - 10 June 2011

Banking

Commissioner Barnier: Time for delivery, making the reforms of the financial system in Europe and the US a reality
Barnier highlighted that he hopes the US will adopt regulations to restrict compensation packages for bankers, noting "certain remuneration packages and bonuses are simply beyond our citizens' comprehension".  View Article
Commissioner Rehn: The current stage of the crisis is a combination of a sovereign debt crisis and banking sector fragilities
Rehn highlighted that the first essential element of the comprehensive response is to complete the financial repair in Europe. This is why supervisors are currently conducting a new round of bank stress tests, which are being carried out across the EU and managed by the recently established EBA.  View Article
FT: German regulator attacks EBA stress tests
Germany's senior bank regulator has criticised the European Banking Authority for its conduct of this year's bank stress tests, accusing it of acting without legitimacy in setting controversial rules that define bank capital.  View Article
Commission authorises extension of bank support schemes in Ireland and Spain
During the application of the crisis rules for State aid to banks, the Commission has been authorising guarantee schemes on banks’ liabilities for periods of six months, in order to be able to monitor developments and adjust conditions accordingly.  View Article
BIS Quarterly Review: Inflation and growth perceptions drove recent financial market developments
The BIS report discusses how the reassessment of growth and inflation prospects in the advanced economies, as well as euro area sovereign debt concerns, drove asset prices. It also provides highlights from the latest BIS data on international banking and financial activity.   View Article
WSJ: EBA postpones publication of bank stress test results
The European Banking Authority is said to have decided to delay the publication of results of its latest round of bank stress tests until July, from later this month, amid worries that banks and their national supervisors submitted overly optimistic data.  View Article

Securities

Hungarian Presidency published latest Council compromise text on EMIR
Unresolved questions include whether to cover only OTC derivatives or all derivatives, and what role to give the European Securities and Markets Authority.  View Article
MiFID II adoption by the Commission pushed back to October
The MiFID text, which was due to be released in July, has been pushed back by three months, with the EC some way off agreement on its final scope and provisions.  View Article
New HFT lobbying group for Europe
The Futures Industry Association has announced the creation of a new European lobbying group for high frequency traders. The FIA European Principal Traders Association will comprise 15 of the largest trading firms that use their own money to trade in markets such as equities or derivatives.  View Article
FT: Geithner pushes alignment on OTC reform with US
Tim Geithner, in a letter sent to the Hungarian presidency of the EU, has urged Europe to ensure that new rules governing the vast derivatives markets are aligned with those in the US, risking further inflaming sensitivities over the US approach to global regulatory reform.  View Article
Speech by FSA Alexander Justham about derivatives reform and progress against the G20 objectives
Alexander Justham, Director of Markets, FSA, stressed that the FSA is currently involved in a number of European and global workstreams that are aiming to ensure there is a consistent application of the OTC derivatives reporting requirements across jurisdictions.   View Article
ISDA publishes a discussion paper 'The Economics of Central Clearing: Theory and Practice'
Regulations requiring the clearing of certain OTC derivatives through central counterparties are causing profound changes in market structure and trading practices. This paper by Craig Pirrong discusses how CCPs are structured and what effects increased use of them will have on the financial system.  View Article
FT: FSA issues warning on structured products
The FT reported that investment products described as "guaranteed", "protected" or "secure" may have to carry an explanation stating exactly what these terms mean, in the latest warning from the Financial Services Authority that financial companies are not properly advertising risk to consumers.  View Article
ESMA and the Japanese FSA establish cooperation framework for CRAs
The purpose of this EOL is notably to establish a mechanism for cooperation on cross border credit rating agencies. This will create conditions for the exchange of information between authorities and the procedures concerning the coordination of supervisory activities.  View Article
AFME/ESF published securitisation data report, 2011 Q1
The AFME/ESF data report consolidates both US and European data for the securitisation markets, including issuance activity; deal sizes; outstanding balances and rating changes.  View Article
FT: Stock exchanges mergers discussed at the annual International Derivatives Expo
The issue of whether London would suffer as a result of the proposed DB-NYSE merger came to the fore. Garry Jones, head of global derivatives at NYSE Euronext, said the exchanges operator employed 650 people in the UK, more than the LSE.   View Article

Insurance

FT: Barnier launched defence of insurance reform
Barnier has hit back at criticism from insurance companies that new capital rules are too conservative, claiming that the changes are necessary to protect policyholders and improve an outdated regime.  View Article

Asset Management

IPE: ‘Thinking the unthinkable’ – an important contribution to the euro debate by Graham Bishop
Writing for IPE, Christopher Walker says that the ‘Anglo-Saxon high priests of finance’ have been universally critical and ‘frankly ridiculed’ the euro’s chances of survival. And yet the euro not only refuses to die, but goes from strength to strength against the dollar.  View Article
Private Equity Growth Capital Council files comment letter on incentive compensation
The PEGCC filed comments on the proposed rule calling on the Securities and Exchange Commission (SEC) to modify the proposed rules as they apply to private equity and growth capital funds.  View Article
IASB published ‘near final’ draft of IAS19 Employee Benefits
The IASB released a 'near final' draft of amendments to its standard on accounting for pensions and other postretirement benefits. This project is part of the Memorandum of Understanding between the IASB and the FASB. The 'near final' draft was sent out to paying subscribers to the IASB's website.  View Article

Corporate Governance/Accounting

ECIIA: EC Commissioner Šemeta delivered the keynote during the IIA Lithuania conference
Algirdas Šemeta, the Commissioner responsible for Budgetary Discharge and with the responsibility for the IAS of the EC, addressed the Annual Conference of IIA Lithuania on 25 March 2011. Mr Šemeta spoke of the value that internal audit could add to the well being of an organisation.  View Article

Financial Services Policy

European Semester: Commission presents 2011 country-specific recommendations
The recommendations will be endorsed by Heads of State and Government, reflecting the collective economic governance of the EU and the fact that the EU is a single economic space, much more than the sum of 27 separate economies.   View Article
Polish Presidency published priorities for EU Presidency
Scheduled to take over the European Presidency on July 1, the Polish delegation published its agenda ahead of its six month term. The Poles identified the improvement of economic governance in the European Union as a top priority issue.  View Article
IMF: UK must go for top quality financial supervision
The IMF stressed that the UK’s financial sector is important not just for the national economy but also for global macroeconomic stability. The analysis of spillovers shows that the size of the UK financial system puts it in a position to transmit shocks throughout the global financial system.  View Article
ECB González-Páramo: What have we learned about financial markets and regulations?
González-Páramo highlighted that in order for the new regulatory regime to be effective, a coherent and consistent implementation of the reforms at a global level is of paramount importance. Only then can regulatory arbitrage be prevented and a level playing field ensured.  View Article
Hungarian Presidency made final push on key economic governance ingredient
The Hungarian Presidency will now steer discussions on the proposals through the EPSCO and ECOFIN councils, with a view to adopting tailor-made policy recommendations for the development of national budgets and economic policies for 2012.  View Article
ECON committee: Draft report on the appointment of the President of the European Central Bank
The ECON committee published a written questionnaire with Mario Draghi’s answers, covering issues such as what the guiding objectives are that he will follow, and what his assessment is of the Monetary Policy.   View Article

Economic Crisis

Barroso met with Mr Andonis Samaras, leader of the main Greek opposition party
In their meeting they discussed the present economic and financial situation of Greece. President Barroso urged Mr Samaras to show his commitment to reach a broad national consensus so that Greece can face its present historical challenges to address the situation of its public finances.  View Article
German Finance Minister Wolfgang Schäuble: Greece needs more aid
In a letter to ECB and IMF leaders dated 6 June, Mr Schäuble said a new package was needed because the current aid package for Greece is "insufficient", adding there is a "real risk" of default if funds are not released soon.  View Article
FT: Obama fears Greece default
Obama weighed into Europe's debate about whether to restructure Greek debt, saying it would be "disastrous" for the US if the crisis led to "an uncontrolled spiral and default in Europe".  View Article
Statement by European Commission, ECB and IMF on the fourth review mission to Greece
Significant progress has been made, in particular in the area of fiscal consolidation. However, reinvigoration of fiscal and broader structural reforms is necessary to reduce the deficit further and achieve the critical mass of reforms needed to pave the way for sustainable economic recovery.   View Article
Commissioner Rehn on Greece: The EC and the Member States are ready to reinforce their assistance
Rehn called on all political forces in Greece to put aside their domestic disputes and endorse the main objectives and policies of the programme, for the sake of the recovery of the country.  View Article
Barroso on the EU semester: Achieving the goals we have set will mean making hard choices
Barroso also stressed that many Member States need to show more ambition when it comes to fiscal consolidation, while maintaining investment in growth-enhancing areas such as research and development, innovation and education  View Article
ECON committee: Juncker and Rehn discussed today's and tomorrow's eurozone
In a particularly frank discussion, Rehn and Juncker called on the EP to keep the flag of ambition flying in what Mr Rehn dubbed a "crucial month for the eurozone on a number of fronts". At the same time, both called for a dose of realism in the face of what is often a difficult balancing act.  View Article

International/G20

IIF stressed concerns about use of capital controls
"In most cases, strong capital flows and rising exchange rates are simply the counterparts of strong fundamentals and a necessary part of macroeconomic adjustment. Moreover, capital controls are a distraction from the main policy task of reducing aggregate credit growth and inflation."  View Article
FT: Geithner urged united front on regulation
Geithner warned overseas regulators against undercutting US financial regulations, citing the "tragic" example that the UK set in light-touch oversight. Geithner said the world's largest banks should hold more equity capital.  View Article

Commentaries

Wolfgang Münchau: Ingredients of a European political union
Münchau states in his FT column that the European Council will probably step back from the brink at its meeting on June 23-24, with national leaders agreeing a new loan for Greece. The alternative is a messy, disorderly Greek default in July.   View Article

Graham Bishop's Webinars

Graham Bishop's Webinar: 3rd June 2011
Graham was joined online by Burçak Inel (FESE), Michael H Sterzenbach (BWF-Verband), Robert Marchal (Swift), Josef Christl (Macro Consult), Ian Williams, John Serocold (ICMA Group), Takaniro Onojima and Yoshio Okubo. Our thanks go to those who attended and participated.   View Article




© Graham Bishop

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