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14 February 2013

This week in "Brussels"
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Articles from 07 February 2013 - 14 February 2013

Banking

ECB welcomes the European Commission's intention to regulate systemically important reference rates
The Eurosystem welcomes the Commission's intention also to include in its legislative proposal the power to compel mandatory submissions for systemically important reference rates, in order to prevent disruptions to their production process.  View Article
Bloomberg: EU Banks may need to hit Basel liquidity targets early
Banks in the European Union may need to comply with an international liquidity rule before competitors in other parts of the globe, as part of a deal on how the bloc should implement Basel banking standards.   View Article
Reuters: Cracks appear in European banking union scheme
This article claims that fears are growing that a central element of banking union will be scaled back, undermining the whole scheme.  View Article
ECB/Constâncio: Towards the Banking Union
Constâncio highlighted the creation of the Banking Union as an important element to strengthen the financial institutional framework.  View Article
IMF: 'A Banking Union for the Euro Area'
This paper elaborates the case for, and the design of, a banking union for the euro area. It discusses the benefits and costs of a banking union, presents a steady state view of the banking union, elaborates difficult transition issues, and briefly discusses broader EU issues.  View Article
Dirk Schoenmaker: Efficiency gains of a European banking union
This paper analyses the benefits of the prospective banking union for the EU. The most immediate driver behind the banking union is to break the 'diabolic loop' between the solvency of national governments and national banks.  View Article
ECB/Cœuré: Monetary policy and banking supervision
Cœuré said that integrating the SSM in the ECB also creates new opportunities for the conduct of monetary policy and other functions closely related to it. He mentioned four areas in this respect.  View Article
Bundesbank/Lautenschläger: European Monetary and Financial Union - What is needed in terms of banking supervision?
Lautenschläger focused in her speech on the Single Supervisory Mechanism, expanding on the "why" and the "how" of such a European banking supervisory set-up.  View Article
BIS: International financial markets and bank funding in the euro area - Dynamics and participants
This article investigates the development of bank funding in the euro area in recent years, analysing how euro area funding markets were severely disrupted by adverse feedback effects between the weaknesses of sovereigns and banks.   View Article
BFM: German Government approves draft bank separation law and new criminal law provisions for the financial sector
On 6 February 2013, the German Government approved draft legislation on protection against risks, and on planning the reorganisation and winding up of banks and financial groups.   View Article
EBF observations on the Civic Consulting preliminary key findings of the interim report on over-indebtedness
The EBF considers it important for the European Commission to highlight each of the characteristics of over-indebtedness across Europe, in order to build a shared European approach.  View Article
Eurofinas response to the European Commission's consultation on European households' over-indebtedness
Eurofinas welcomes the recognition that the analysis of households' over-indebtedness should be as broad as possible, but is concerned by certain potential methodological and statistical limitations in the study.  View Article
EPC: 'Quick Response Code - Guidelines to Enable Data Capture for the Initiation of a SEPA Credit Transfer'
This document sets out general guidelines for the use of a SEPA-wide quick response code to enable the data capture for the initiation of an SCT. It describes how the data capture prior to the initiation of an SCT can be made by means of a two-dimensional barcode.  View Article

Securities

Commission's declaration on delegated acts under EMIR
The Commission is prepared to make sure that, when it adopts its decisions on mandatory clearing for specific classes of OTC derivatives, the obligation for non-financial firms to clear will be phased-in over an appropriate period of time.   View Article
Statement by Commissioner Barnier on the technical standards to implement the new rules on derivatives
"I take note of the fact that the European Parliament has decided not to object to our proposed technical standards to implement our new rules on derivatives. (...) This means that the standards can now enter into force around mid-March."  View Article
EMIR: Illustrative implementation timeline - Update
The EP has removed the last obstacle to the EU derivatives reforms, setting in motion an implementation timetable beginning in mid-March 2013. Clifford Chance has produced an update of its illustrative timeline, showing when the obligations under EMIR could begin to apply.   View Article
EACT/Raeburn: So ECON went and did it - What should the real economy be thinking?
Raeburn writes on his blog that he is still puzzled by the vote in ECON, in effect rejecting ESMA's rule drafting for EMIR. EACT has "no interest in seeing the whole fabric of ESMA's rules being put back into the melting pot".  View Article
Commission publishes summary of contributions to its public consultation on benchmarks
There was a fair degree of consistency in the responses regarding the need to re-establish confidence in benchmarks, which have been shown to be susceptible to potential manipulation. However, opinions differed as to the form this regulation should take, and to whom it should apply.  View Article
Statement by Commissioner Barnier on interbank interest rate benchmarks
The Commission will propose further legislation on benchmarks in the second quarter of 2013, in order to clarify further the framework under which benchmarks should operate.  View Article
FESE response to IOSCO consultation report on financial benchmarks
FESE believes that it is appropriate that all benchmarks should be brought within the scope of civil and criminal sanctions against manipulation, and their governance, transparency and calculation methodology arrangements should be subject to a set of high level principles by IOSCO.  View Article
ICMA submits comments regarding benchmarks to IOSCO
The ICMA notes that IOSCO seeks the views of stakeholders on the questions posed in this report to inform its final Principles on Financial Benchmarks; and that the formulation of any specific recommendations relating to any given benchmark it is not an objective of this work.  View Article
ICMA response to ESMA-EBA's joint consultation on "Principles for Benchmark Setting Processes in the EU"
The ICMA notes that these ESMA-EBA Principles are designed as a first step towards a potential formal regulatory and supervisory framework for benchmarks to be developed in the EU, and also take into account other international efforts in this field.  View Article
ECB/Praet: Transition of the financial system 
in the wake of the financial crisis
Speaking at AFME's 8th annual European Market Liquidity Conference, Praet addressed i.a. the post-trade transparency calibration under MiFID II.  View Article
Bundesbank: CDS spreads and systemic risk – A spatial econometric approach
This study applies a novel way of measuring, quantifying and modelling the systemic risk within the financial system. The magnitude of risk spillover effects is gauged by introducing a specific weighting scheme.  View Article
IPE: CCPs, asset managers oppose rehypothecation of securities
Central clearing houses (CCPs) have no interest in rehypothecating the non-cash margin calls posted by pension funds for derivatives trades, a number of market participants, including CCPs themselves, have claimed.   View Article
ISDA: Preparation for mandatory clearing requirements
ISDA prepared an advisory note to highlight legal developments under CFTC rulemakings that may affect trading in certain swaps on and after March 11, 2013.  View Article
FT: NYSE pushes for shorter disclosure period
NYSE Euronext has asked regulators to force large investors to disclose their stock holdings far sooner, in the name of greater transparency and improved corporate governance.  View Article
FT: Covered bond to test risk appetite
Germany's Commerzbank is poised to test market appetite for a new style of covered bond backed by loans from small and medium-sized enterprises rather than mortgages or public sector loans.  View Article

Insurance

EIOPA: Executive Director Carlos Montalvo interviewed by Reactions magazine
Montalvo confirmed that EIOPA would do the work necessary to make the implementation of Solvency II happen by January 2016. "But let's be clear, once we settle the pending issue of Long-Term Guarantees, parties must avoid the temptation of reopening more issues."  View Article
Insurance Europe: Support for EIOPA's long-term guarantee assessment
Insurance Europe has published a helper tab to assist insurance companies that are taking part in the technical assessment currently being run by the European Insurance and Occupational Pensions Authority (EIOPA).  View Article
EBF preliminary position on the European Commission proposal for an Insurance Mediation Directive (Recast)
The EBF stressed that when creating an integrated market, it is necessary to take into account the peculiarities of the sales' structures that exist in individual Member States. Some points of the proposal should be adjusted and adapted to the current market reality.  View Article
Risk.net: Bridging the gap - Solvency II phase-in troubles insurers
Proposed interim measures hope to bring some regulatory consistency across Europe in the period prior to Solvency II's eventual implementation, but supervisors are still seeking their own solutions, while insurers warn that any interim measures must not go too far.  View Article
Insurance Insight: Solvency II is biggest challenge for captives, says AM Best
European captives have weathered the global economic downturn well, but the implementation of Solvency II remains among the biggest challenges for the sector, according to a report from AM Best.   View Article
BIS: Joint Forum releases consultative paper - Mortgage insurance (MI): market structure, underwriting cycle and policy implications
This report examines the interaction of MI with mortgage originators and underwriters, and makes a set of recommendations directed at policymakers and supervisors, aimed at reducing the likelihood of mortgage insurance stress and failure in such tail events. Comments are requested by 30 April, 2013.  View Article
CRE: French buyers, brokers and insurers sign best practice charter for non-life insurance
France's risk management association has signed an agreement with its risk transfer peers intended to guide the relationship between buyers, intermediaries and underwriters in the non-life insurance sector.  View Article
Insurance Insight: Political risk threatens global infrastructure sector
Organisations involved with the infrastructure sector must build political risk assessments and protection mechanisms into their project decision-making to help safeguard future investments, according to Marsh.   View Article

Asset Management

ESMA rules aim to curb excessive risk-taking by alternative fund managers
ESMA has published final Guidelines on remuneration of alternative investment fund managers (AIFMs). The rules will apply to managers of alternative investment funds (AIFs), including hedge funds, private equity funds and real estate funds.  View Article
IOSCO publishes recommendations regarding the protection of client assets
IOSCO published a consultation report on Recommendations Regarding the Protection of Client Assets, which seeks to help regulators improve the supervision of intermediaries holding client assets. Comments on the consultation paper are sought by 25 March, 2013.  View Article
PensionsEurope: Holistic Balance Sheet Approach
PensionsEurope has warned that the Holistic Balance Sheet approach is not a workable tool for IORP supervision, and that alternatives should be considered.  View Article
IPE: Quantitative impact study for revised IORP Directive a complete failure
According to the association of German company pension schemes (VFPK), the European Commission's first quantitative impact study (QIS) for the holistic balance sheet approach in the revised IORP Directive has been a "complete failure".  View Article
IPE: Brussels failing to recognise social aspect of IORP Directive
The European Association of Paritarian Institutions (AEIP) has accused the European Commission of ignoring the social aspects of the revised IORP Directive and "mistakenly" concluding the Directive relates only to internal market policies.  View Article
UK Work and Pensions Committee: Lift NEST restrictions now
In a report, 'Lifting the restrictions on NEST', the Work and Pensions Committee reiterated its previous recommendation that the Government should remove the cap on annual contributions to National Employment Savings Trust (NEST), and the ban on transfers in and out of NEST.   View Article
IPE: Irish report presents misleading view of pension charges
The Irish government should not focus exclusively on lowering the absolute level of pension charges but rather seek to increase levels of transparency around management fees, the Irish Association of Pension Funds (IAPF) has said.  View Article
IPE: Swiss pensions group questions mandatory engagement
The president of Switzerland's pension association has questioned the practicality of proposals that would force the country's funds to exercise voting rights on all domestic shareholdings – noting the inherent cost implications and difficulty in assessing fund members' views on individual votes.  View Article
Liikanen-light proposal exemplifies role of financial regulation in election campaign
The German government tabled a "Liikanen-light" legislation, essentially requiring the separation of proprietary trading, lending to hedge funds on a secured and unsecured basis, and high-frequency trading, into separate units.  View Article

Corporate Governance/Accounting

ECA: EU auditors to support democratic accountability of ECB
The Court considers that its examination of the operational efficiency of the management of the ECB in respect of its supervisory tasks encompasses the audit of sound financial management as applied to other bodies held accountable to the EP and Council under the provisions of Article 287 TFEU.  View Article
BoE & FSA welcome publication of draft guidance for effective internal audit in financial services sector
The Bank of England and the Financial Services Authority welcome the publication of the consultation paper, 'Effective Internal Audit in the Financial Services Sector', by the Chartered Institute of Internal Auditors.   View Article
FEE commented on FRC discussion paper on thinking about disclosures in a broader context
FEE encouraged the FRC to liaise with the IASB as to how to deal with disclosures as part of the overall conceptual framework for financial reporting.  View Article
IASB & IIRC formalise cooperation on work to develop integrated corporate reporting framework
The IASB and IIRC announced an agreement that will see the two organisations deepen their cooperation on the IIRC's work to develop an integrated corporate reporting framework.  View Article
EFRAG & FRC issue Feedback Statement on discussion paper, 'Improving the Financial Reporting of Income Tax'
The Feedback Statement provides an analysis of comment letters received on this consultation, together with their responses to the main issues raised by respondents.  View Article
FASB issues ASU dealing with clarification to fair value disclosure exemption
The FASB issued ASU No 2013-03, 'Financial Instruments (Topic 825): Clarifying the Scope and Applicability of a Particular Disclosure to Non-public Entities', which clarifies the scope and applicability of a disclosure exemption that is specific to private companies and not-for-profit organisations.  View Article
FASB: New projects in the PCC's agenda
The Private Company Council (PCC) added three projects to its formal agenda and voted, along with the FASB, to seek additional public comment on the FASB's staff paper on a proposed private company decision-making framework.  View Article
Ian Williams: EU Corporate Governance Agenda and its Action Plan
The UK, through the work of the FRC and the Kay Review, appears to be in a position to make a strong and influential contribution to the Corporate Governance debate in the EU.  View Article

Financial Services Policy

Bundesbank/Dombret: Regulatory agenda of the international financial system - A coherent strategy
Dombret said that the close linkages in the financial system made it necessary to take account of existing connections and cross-linkages in regulation too. Otherwise, there is a risk of individual regulatory measures working in opposite directions or even cancelling each other out.  View Article
Luxembourg's Frieden seeks credible financial centre
Luxembourg's Finance Minister Luc Frieden has recently underlined the need to adapt the country's financial sector to international developments, and to strengthen and improve the financial centre to ensure that it remains "credible and competitive at global level".  View Article

European Council/Parliament

ECOFIN Council conclusions on the sustainability of public finances in the EU
The Council welcomed the fact that sustainability-enhancing reforms enacted in some Member States since the Sustainability Report 2009, notably in the field of pensions, have reduced the projected cost of ageing in these countries.  View Article
ECOFIN Council conclusions on the Annual Growth Survey 2013
The Council welcomed the Commission's third Annual Growth Survey, and agreed that the five broad priority areas outlined by the Commission on which national and EU level efforts should concentrate in 2013 remain valid. (Includes remarks from VP Rehn.)  View Article
ECOFIN Council conclusions on the Alert Mechanism Report 2013
The Council welcomed the Commission's second Alert Mechanism Report, providing the starting point of the macro-economic imbalances procedure in the context of the 2013 European Semester.  View Article
ECOFIN Council conclusions on Budget guidelines for 2014
Following agreement on the Multiannual Financial Framework (MFF), the Council stressed the importance of quickly taking the necessary steps to ensure that all EU programmes can commence without delay and in an efficient way.  View Article
Plenary Session: Commission can do better on economic coordination, say MEPs
Much more must be done this year to cut unemployment, thoroughly democratise EU economic governance and ensure that structural reforms foster growth, says Parliament's opinion on the Commission's Annual Growth Survey of the EU.  View Article

International/G20

IIF calls on G20 to strengthen global regulatory framework
The IIF and its members have said they are 'deeply troubled' by the current tendency towards increasingly fragmented financial regulation, which they say is a 'serious stumbling block' to the global economy in its efforts to exit the financial crisis and attain sustainable growth.  View Article
FT: G7 fails to defuse currency tensions
The Group of Seven nations took the unusual step of issuing a public statement to address rising concerns over a fresh round of global "currency wars".  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: Bolstering the Still-Fragile Euro - A Plan for a Temporary Eurobill Fund
This Note proposes a time-limited plan carefully structured to avoid opening its members to the virtually unlimited liability of guaranteeing all the debts of other members – as would happen in a mutualised pool of debt.  View Article





© Graham Bishop

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