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26 April 2012

This week in "Brussels"

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Articles from 19 April 2012 - 26 April 2012


ECB: Presentation of the ECB Annual Report 2011 to the Committee on Economic and Monetary Affairs of the European Parliament
In his introductory statement, ECB Vice-President, Vítor Constâncio, said that 2011 had "continued to be an exceptional year, confronting the ECB again with rather challenging economic and financial conditions".  View Article
ECB Consultation announcement: Recommendations for the security of internet payments
On 11 April 2012, the Governing Council of the European Central Bank (ECB) endorsed for public consultation the "Recommendations for the security of internet payments", in the context of the work undertaken by the European Forum on the Security of Retail Payments.   View Article
Bank of England/Haldane: Financial arms races
Andrew Haldane argues that structural features of the financial system can make it prone to arms race-type behaviour. He argues that macro-prudential policy intervention to constrain this behaviour can create healthier outcomes for the financial system as a whole.   View Article
BBA: Commitment to help consumers agreed at PPI summit
Representatives from all the major banks and credit card providers, regulators and the Financial Ombudsman Service have today pledged action to help make Payment Protection Insurance claims easier and prove that a Claims Management Company is not required.  View Article
José Manuel González-Páramo: Future challenges for central bank statistics
Mr González-Páramo said that a strategic shift towards granular, multi-purpose data collection and more integrated data production processes can effectively reduce the burden on reporting agents and, at the same time, deliver more information to data users.   View Article
Vítor Constâncio: How fit are statistics for use in macro-prudential oversight?
Mr Constâncio stressed that the establishment of a common legal entity identifier (LEI) that is applied universally should contribute greatly to the quality of macro-prudential analysis.  View Article Bail-in regimes will reduce demand for bank debt - poll
Over three-quarters of poll respondents believe new resolution plans will hurt market for bank bonds - at a time when issuance needs to increase.  View Article
State aid: Commission temporarily approves Danish rescue aid to facilitate merger between Vestjysk Bank and Aarhus Lokalbank
The Commission approved the measures for reasons of financial stability either for a period of six months, or - if Denmark submits a restructuring plan within six months - until the Commission has adopted a final decision on this plan.  View Article


ESMA identifies divergence in Member States’ use of sanctions under the Market Abuse Directive
The report provides a comparison of the use of administrative sanctioning powers across 29 EEA Member States for 2008-2010. The results of the report will provide input to the legislative process on the new market abuse regime.   View Article
ISDA publishes best practices for OTC commodity derivatives trade processing
This paper analyses existing and potential opportunities for further standardisation in the OTC commodity derivatives markets, in order to drive improvements in operational efficiency, reduce operational risk, and increase netting and clearing for appropriate products.  View Article
ESMA advises Commission on short-selling regulation
ESMA has published its final advice on possible delegated acts concerning the Short-Selling Regulation.  View Article
EBF: Reform of the Transparency Directive
In a letter, EBF encourages MPs Pietikainen and McCarthy to be more ambitious about reinforcing the single market and harmonising the notification rules to the greatest extent possible, which means as little scope for Member States as possible to implement diverging regimes.  View Article
FSA/Turner: Securitisation, shadow banking and the value of financial innovation
In his speech, FSA chairman Adair Turner considered how and why the wave of financial innovation in the area of securitised credit ended in the financial crash of 2008, and assessed what is known about the value of financial innovation.  View Article
AFME's response to the EU discussion paper on debt write down
The response focuses on the flexibility issue with respect to the place of the bail-in, and the extent of liabilities to be bailed in.  View Article
ECB Eurosystem Oversight Report 2011
The Eurosystem Oversight Report 2011 describes the basis of the Eurosystem's oversight function and recent changes, as well as the main oversight activities conducted since the publication of the previous oversight report at the end of 2009.  View Article
ECMI Rethinking Asset Management Task Force Report: 'From Financial Stability to Investor Protection and Economic Growth'
This report examines the asset management industry, including its key links with financial stability, product integrity, investor protection and the real economy, and evaluates several legislative proposals on the table, as well as the discussions on product integrity in UCITS and 'shadow banking'.   View Article


FSA confirms traded life policy investments should not generally be promoted to UK investors
The Financial Services Authority (FSA) has confirmed guidance that traded life policy investments (TLPIs) are high risk products that should not be promoted to the vast majority of retail investors in the UK.  View Article
CRE: New working group looks to develop minimum conditions for cyber cover
NCC Group, an information assurance firm, has established a working group to 'lead the march' towards a minimum security standard for the placement of cyber insurance, supported by insurers Zurich, CNA Europe, Liberty and insurance broker Oval.   View Article
WSJ: Insurers could give fresh life to lending
Europe faces a corporate funding crunch. Insurers have long lent to companies in public bond and equity markets and indirectly through large bank debt holdings. Now they are expanding that model. One insurer wants to start syndicating loans jointly with banks; others are investing in private placements.  View Article Insurers stress liquidity and lapse risk, amid concern over interest rate spike
The financial crisis put insurers' liquidity under pressure when falling interest rates prompted policyholders to let their policies lapse. Now insurers and regulators are looking ahead to the potential impact of rising interest rates and how this could affect surrender rates and liquidity.   View Article
FN: Banks and buyside pour into sterling covered bonds
UK banks are issuing record amounts of sterling covered bonds to diversify their funding options and to meet demand from investors keen to avoid onerous new capital rules.  View Article
LEXOLOGY: EIOPA voices concerns on Solvency II timeline
By way of letter to the European Commission, the European Insurance and Occupational Pensions Authority (EIOPA) has voiced its concerns regarding the recent developments relating to Solvency II, in particular the delays in finalising the Omnibus II Directive.  View Article
FSA/Adams: The new approach to insurance regulation and the implementation of Solvency II
Julian Adams, Director of the FSA's Insurance Supervision, Prudential Business Unit, gave a speech at the City & Financial Conference in London.  View Article

Asset Management

Regulators to decide over UCITS split
Under current MiFID rules, all UCITS funds are considered as "non-complex" products, meaning the buyer's knowledge of financial products does not have to be assessed.  View Article
EFAMA publishes new European Fund Classification Categories
The European Fund and Asset Management Association (EFAMA) has published a report presenting a complete set of categories to facilitate the use of the European Fund Classification (EFC) by all industry stakeholders.  View Article
KPMG/AIMA Report: 'The value of the hedge fund industry'
This report, presented by KPMG and the Alternative Investment Management Association (AIMA), examines and summarises the value provided by the hedge fund industry to investors, to markets, and to the broader economy.  View Article
IPE: Pension funds must act fast to seal bulk annuity, longevity swap deals
According to Towers Watson, pension schemes looking to offload defined benefit risk by buying bulk annuities and longevity swaps will have to act fast to seal deals, as market volatility means prices will change rapidly.  View Article
IPE: European reform will not damage pensions industry
Karel van Hulle, head of the European Commission's insurance and pensions unit, said: "The objective of the reform is not to damage the pensions industry. On the contrary, it is there to make sure occupational pension schemes can thrive."  View Article
TheCityUK/Cummings: We need to encourage a savings culture
In his speech, the CEO of TheCityUK spoke about the defined ambition pensions, as well as auto-enrolment and the wider savings challenge issues.  View Article
EIOPA thinking to revise timeline for holistic balance sheet study
According to this IPE article, the European Insurance and Occupational Pensions Authority (EIOPA) is looking to postpone releasing results for a full impact study on its 'holistic balance sheet' (HBS) proposal for occupational pension funds.  View Article
IPE: UK minister criticises 'horrifying' lack of IORP impact assessment
The UK pensions minister has criticised as "horrifying" the fact that European Commission proposals for a revised IORP Directive have yet to undergo an impact assessment, and warned that plans for Solvency II-based regulation would undermine the country's plans for 'defined ambition' schemes.  View Article

Corporate Governance/Accounting

FSA/Sants: "Delivering effective corporate governance - the financial regulator's role"
Hector Sants, Chief Executive of the FSA, gave a speech on effective corporate governance at Merchant Taylors' Hall on 24th April, 2012.  View Article
FEE commented on the JURI Draft Reports of 26 and 28 March 2012 on EC proposal for the Transparency and Accounting Directives
FEE published its comment letter in relation to some of the amendments currently discussed in JURI regarding the EC proposal for the Accounting Directive and the Transparency Directive.  View Article
FRC: AADB launches consultation on sanctions guidance
The Accountancy and Actuarial Discipline Board, an operating body of the FRC, published a consultation document on the guidance it proposes to issue to AADB tribunals on determining sanctions in disciplinary cases under its Accountancy Scheme.  View Article
IASB: Summary of Capital Markets Advisory Committee meeting
At CMAC's meeting held in London on 22 February, discussion focused on the EFRAG/FASB disclosure framework projects, financial instruments, leases, ESMA's materiality consultation paper, investment entities, revenue recognition, post-implementation review of IFRS 8, and IFRSs 10-12 effective date.  View Article
FEE commented on the revised IASB Exposure Draft 'Revenue from Contracts with Customers'
FEE published its comment letter to the IASB on the revised Exposure Draft 'Revenue from Contracts with Customers'. In FEE's view, the revised ED is more closely aligned with the existing revenue recognition model but requires further clarifications to increase consistency in application.  View Article
FRC: Proposed revisions to the UK Corporate Governance Code, Stewardship Code and Auditing Standards
The FRC has begun consultation on proposed revisions to the UK Corporate Governance Code and International Standards on Auditing (UK and Ireland) to give effect to its Effective Company Stewardship proposals. The FRC is also consulting on updates to the Stewardship Code.  View Article
FT: FRC weakens audit tendering reform
The FRC has diluted a proposed reform of audit tendering that was already much less aggressive than changes put forward elsewhere in EU. The FTSE 100 and FTSE 250 would initially be affected by its plan to ask companies to put their audit contract out to tender at least once a decade.  View Article
IASB/FASB joint update on their accounting convergence
The November 2011 G20 Declaration called on the IASB and the FASB to provide a progress report on their convergence activities, for consideration at the April 2012 meeting of G20 Finance Ministers and Central Bank Governors. The FSB issued a joint IASB/FASB progress report describing these activities.  View Article
EFRAG: Field-test of the revised IASB proposals on general hedge accounting
EFRAG is conducting a joint field-test of the revised IASB proposals on general hedge accounting. The Review Draft on general hedge accounting, which is expected to be released by the IASB during April 2012, will introduce significant changes to the current general hedge accounting requirements.   View Article

Financial Services Policy

Commission published the European Financial Stability and Integration Report (EFSIR)
Resilience in the financial sector has improved in the aftermath of the financial crisis, and action is now focusing on longer-term growth goals, although vulnerabilities remain, according to an annual European Commission report on financial integration and stability.   View Article
ECON Committee: Financial transaction tax - a wider and stronger net is possible
The proposed financial transaction tax should be better designed to capture more traders and to make evading it unprofitable, says a resolution adopted today by the Economic and Monetary Affairs Committee. The resolution also says the tax should go ahead even if only some Member States opt for it.  View Article
S&D Euro MPs win big majority in the European Parliament for a European FTT
According to the deal adopted today in the European Parliament, stocks and bonds would be taxed at a minimum rate of 0.1 per cent and derivatives at 0.01 per cent by 2014.  View Article
Ministers renew the mandate of the Financial Action Task Force until 2020
Ministers of the Financial Action Task Force agreed to extend the FATF mandate for another eight years, continuing to safeguard the integrity of the international financial system.  View Article
EP Plenary: Combating tax fraud and evasion
Parliament urges EU Member States to overhaul their tax systems to make them more efficient, remove unjustified exemptions, and broaden the tax base in order to shift taxes away from labour. Member States should focus on tax collection and tackling tax evasion.  View Article
EP Plenary: Corporate taxation - Parliament pushes for a compulsory common base
The use of a common consolidated corporate tax base (CCCTB) should be made compulsory, said Parliament in a vote on Thursday outlining its position on legislation proposed by the Commission. The Commission had proposed a voluntary scheme.  View Article
EPP/Marianne Thyssen MEP: Taxation - European harmonisation of corporate tax base - an opportunity for growth and jobs
"Setting the tax rates remains a prerogative of the Member States, but the possibility to apply a common set of rules for calculating the tax base will help in reducing administrative and fiscal barriers when doing business in Europe."  View Article
ACCA welcomes European Parliament's step towards a single set of corporate tax rules to facilitate EU businesses cross-border activities
The Association of Chartered Certified Accountants welcomes the adoption by the European Parliament of the Thyssen Report on the Common Consolidated Corporate Tax Base (CCCTB).  View Article
ECGI Working Paper: 'Transparency, Tax Pressure and Access to Finance'
In choosing transparency, firms must trade off the benefits from better access to finance against the cost of a greater tax burden.  View Article

Financial Stability - Policy Analysis

Germany adopts 2012 Stability Programme
The Federal Cabinet today adopted the 2012 update of Germany's Stability Programme, which was prepared by the Federal Ministry of Finance. The programme will now be forwarded to the European Commission and the ECOFIN Council.   View Article

European Council/Parliament

Speech by EP President Martin Schulz to the Members of the European Commission
President Schulz said that for the first time in its history, the collapse of the European Union has become a realistic scenario. The close cooperation which exists between the Commission and Parliament is therefore an important sign that Community method is being defended with determination.  View Article

© Graham Bishop

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