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23 May 2013

This week in "Brussels"
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Articles from 16 May 2013 - 23 May 2013

Banking

Plenary Session: Parliament backs EU banking supervisory system plans
Draft laws setting up a single EU bank supervisory system were approved in a plenary vote on Wednesday. The ECB will supervise the eurozone's largest banks directly and have a say in supervising other banks.   View Article
Plenary Session: Single banking supervision system on right track but one step remains
MEPs broadly welcomed the package of rules setting up a single EU bank supervisor but also pointed out that important steps had yet to be taken to ensure the supervisor's accountability before the deal could be fully ratified by the house.   View Article
"Banking Union is a greater pooling of sovereignty than signing up to the euro" - Sharon Bowles MEP
The ECON chair cautioned that the plans to hand over supervision of eurozone banks to the ECB constituted a major pooling of sovereignty. She also called for the Parliament to hold out for an agreement which would ensure full accountability of ECB supervision.  View Article
EPP: European banking supervision crucial step towards safer banking
The EP today adopted a series of amendments on the legislative package establishing stricter banking supervision. In addition to the Regulation establishing an SSM, the package includes a Regulation that aligns the working of the EBA with the new supervisory structure.  View Article
ALDE: No Single Supervisory Mechanism until an agreement is reached with the ECB
ALDE spokesperson Wolf Klinz said: "No green light to the SSM until we get the necessary guarantees that the ECB's supervisory arm will be fully accountable to European Parliament and national parliaments of participating Member States".  View Article
Sven Giegold: Landmark banking supervision rules approved; final go-ahead pending agreement on EP scrutiny
The rapporteur on the EBA supervision file welcomed the vote and called on the ECB to engage more constructively in negotiations on Parliament's scrutiny role of the new supervisory mechanism.  View Article
EBF: Banks welcome progress towards Banking Union but call for a clear European framework for bank resolution
The Board of the EBF noted with satisfaction the steady progress towards a Single Supervisory Mechanism and reiterated its support for the objectives of the Banking Union.  View Article
ECON Committee: Taxpayers and savers last in line to save banks
Taxpayers and savers must be the last people called upon to bail out bankers, says Parliament's negotiating position, approved by the ECON Committee on draft rules on how to save struggling banks. The "bail-in" scheme should be up and running by January 2016 at the latest.  View Article
Commissioner Barnier: Resolution mechanism for banking union can be created without treaty change
In an interview with Kathimerini, Commissioner Barnier said the major lesson from the Cypriot crisis was that depositors, shareholders and creditors have the right to know the rules of the game regarding banking resolution well in advance.  View Article
ALDE: Recovery and Resolution Directive (RRD) - Protection of small depositors guaranteed
Last night the ECON Committee adopted its report on an EU framework for bank recovery and resolution, which aims to provide Member States' relevant authorities with common and effective tools to address the banking crisis and eventually the orderly winding up of insolvent institutions.  View Article
S&D: "We want to avoid taxpayers bailing out banks in future"
The new rules backed last night to rescue failing banks in the future will mean Member States will have to set up national resolution funds financed by all financial institutions according to the risks they present. The fund should amount to at least 1.5 per cent of the deposits of all credit institutions.  View Article
EPP: Rules for banking resolution to stabilise financial markets
"Europe will now get modern legislation on the management of a bank in crisis and of banking crises", said Gunnar Hökmark, the Parliament's rapporteur for the Bank Recovery and Resolution Directive, following Monday's vote in the ECON Committee.  View Article
EBA recommends supervisors to conduct asset quality reviews and adjusts the next EU-wide stress test timeline
While banks' capital positions were significantly strengthened under the EBA's recapitalisation exercise, the objective of the asset quality exercises will be to review banks' classifications and valuations of their assets to help dispel concerns over the deterioration of asset.  View Article
BBA: Too-big-to-fail is nearly over but regulators must avoid new moral hazards
The Resolution and Recovery Directive (RRD) will give the regulator the power to step in and take over a bank if it stops being financially viable, but a pre-funded "resolution fund" risks undermining much of the progress so far.  View Article
ECON Committee: Small depositors should be protected when a bank needs saving, demand MEPs
Deposits under €100,000 should not be used to prop up failing banks, according to a report adopted by the ECON Committee. Instead, shareholders should bear the losses, followed by bondholders and only as a last resort large depositors.  View Article
European Commission: A bank account if you need one
New measures would give all Europeans a legal right to a basic bank account anywhere in the EU – and make switching to another provider easier. EU leaders will now consider the proposals together with the EP. If accepted, the proposals could come into effect in 2014.  View Article
Commission meets key stakeholders in the context of its consultation on the structural reform of the banking sector
The objective of this work, following on from the Liikanen report, is both to ensure that the EU treats in a comprehensive manner the problems that can arise from banks being too big and too complex, and also to avoid taxpayers having to rescue banks and pay the bill.  View Article
Commission launches consultation on reforming the structure of the EU banking sector
The consultation focuses on the structural separation recommendation of the Liikanen High-Level Expert Group, and on the key attributes of the structural reform, i.e. the scope of activities, the strength of separation, and the possible institutional scope. Deadline for comments is 3 July, 2013.  View Article
EBF remarks on the ECON Committee report on improving access to finance for SMEs
In this paper, the EBF discusses a number of points made in the De Backer report which touch on rather complex areas of banking practice, and offers its perspective as the main counterpart to SMEs in the financing relationship.  View Article
Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)
The ECB published its decisions linked to market operations, financial stability and supervision, advice on legislation, statistics, corporate governance and issuance of banknotes and coins/banknotes (in addition to decisions setting interest rates).  View Article
EBA consults on draft Technical Standards for the definition of material risk-takers for remuneration purposes
EBA launched a consultation paper on draft RTS on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile. The consultation runs until 21 August, 2013.  View Article
FT: EU set to widen cap on bonuses
Europe's banking regulator said it had broadened the definition of staff affected by the incoming cap significantly by including anyone who receives a bonus of more than €75,000 that is worth at least three-quarters of their salary.  View Article
EBA consults on draft RTS on own funds (Part III)
EBA launched a consultation on draft RTS on own funds (Part III) related to criteria to define broad market indices, the calculation of minority interest, and the deduction of indirect and synthetic holdings. The consultation runs until 18 July, 2013.  View Article
EBA consults on draft Technical Standards on securitisation retention rules
EBA launched a consultation paper on: i) draft RTS to specify the securitisation retention rules and related requirements; and ii) draft ITS to clarify the measures to be taken in the case of non-compliance with such obligations. The consultation runs until 22 August, 2013.  View Article
EBA consults on draft RTS on the definition of market and on option risks under the standardised approach for market risk
The two consultation papers aim to define: i) the term market for the purpose of calculating the general component of market risk for equities under the standardised rules; and ii) a range of methods to reflect in the own funds requirements non-delta risks for options and warrants. Deadline: 31.8.13.  View Article
EBA consults on joint decisions on institution-specific prudential requirements
The consultation aims at facilitating the reaching of effective joint decisions between the consolidating supervisor and the competent authorities responsible for the supervision of subsidiaries in a Member State. The consultation runs until 16 August, 2013.  View Article
EBA consults on draft RTS to determine overall exposure to a client/group of connected clients re transactions with underlying assets
This consultation defines the conditions and methodologies used to determine the overall exposure to a client or group of connected clients resulting from a transaction with underlying assets and the risks inherent in the structure of the transaction itself. Deadline for comment is 16 August, 2013.  View Article
EBA consults on draft Technical Standards on Passport Notifications
The two consultations on draft RTS/ITS on passport notifications aim at specifying the information to be notified to the competent authorities as well as to develop standard forms, templates and procedures underlying the submission of passport notifications. Both consultations run until 21.8.13.  View Article
Call for Expression of Interest regarding the renewal of the EBA's Banking Stakeholder Group
EBA launched a Call for Expression of Interest to prepare the renewal of its Banking Stakeholder Group (BSG). The BSG has been established to help facilitate the EBA's consultation with stakeholders. The deadline for application is 28 June, 2013.  View Article
BaFin/Röseler on Basel III/CRD IV: "Preventing future crises"
In an interview, Röseler said that to achieve a more resilient banking system, it was important to adjust the supervisory practice. "In future, banking supervision will have to analyse and assess business models as well as risk management systems and controls in much greater detail."  View Article
DW: Germany beefs up banking regulations
The Bundestag has passed the Capital Requirements Directive into German law, becoming one of the first EU countries to do so. The Directive contains further new regulations for the banking world.  View Article
NewEurope: Sweden determined to preserve high capital ratios
Swedish Finance Minister Anders Borg said he was determined not to succumb to pressure from banks or the EU to lower capital ratios, and insisted that they have to remain higher compared to other EU countries.  View Article
BoE publishes Haldane paper on constraining discretion in bank regulation
Speaking at the conference, 'Maintaining Financial Stability: Holding a Tiger by the Tail(s)', Haldane said that making greater use of simple, prudent regulatory metrics could restore faith, hope and clarity to the financial system - to the benefit of banks, investors and regulators alike.  View Article
BoE/Tucker: Resolution and future of finance
Tucker outlined the keys steps necessary to further the progress already made by the international regulatory community on resolution since the crisis.   View Article
ESBG: Electronic legal tender is now a matter of fairness
The EPC's Norbert Bielefeld analyses the changing behaviour of the European 'payment citizen' in the digital world. In line with stated policy objectives, he advocates an alternative approach: a SEPA legal tender model spanning both cash and electronic payments.  View Article
GreySpark: Banks must adapt to the growth of fixed income electronic trading to retain customer flow
A new piece of research from GreySpark Partners examines the state of electronic trading in fixed income markets for bonds, CDS and IRS.  View Article

Securities

European Commission: Memo on the practical implementation of the EMIR framework to non-EU CCPs
EMIR introduces a new recognition procedure for central counterparties that are established outside the EU but wish to provide services to market participants that are established in the EU. The purpose of this memo is to specify how this recognition procedure will be implemented.  View Article
ESMA publishes updated report: 'Data on Prospectuses approved and passported'
This Report is an amended version of the Report published on 25 September 2012. The previously published Report was amended on 15 May 2013, following the discovery of factual errors in the statistical information in Section III.2.  View Article
FT: EU securities settlement rules move closer to agreement
European policymakers and regulators are increasingly confident that regulations opening Europe's €800 trillion securities settlement market to competition will be finalised and passed into law by the end of the year.  View Article
Reuters: Regulators set September deadline for derivatives deal
Financial regulators have given themselves until September to try to resolve differences over how to supervise derivatives markets in the wake of the financial crisis.   View Article
ICMA submits comments to IOSCO regarding principles for benchmarks
ICMA underscored its view that any reform of rate-setting processes for existing transactions referenced to indices should not disrupt the international capital market.  View Article
FT: ICE and NYSE file deal with European regulators
IntercontinentalExchange and NYSE Euronext have formally filed their planned $10 billion deal to create one of the world's largest derivatives exchanges with antitrust authorities in Europe.  View Article
FN: Bats Chi-X Europe plots ETF clean-up
Bats Chi-X Europe, the largest pan-European trading platform, is looking to shake up the region's exchange-traded fund market with a new model for secondary trading.  View Article
Sveriges Riksbank: Swedish financial markets are functioning well despite continued uncertainty in euro area
According to the Riksbank's spring 2013 risk survey, it is still developments in the euro area that comprise the main risk to the Swedish financial system in the coming period.  View Article
FT: Rating agencies under fire again
After coming under fire for their blessing of risky mortgage-backed securities in the lead-up to the financial crisis, credit rating agencies are again facing criticism – this time for misjudging the impact of the rebound in the US housing market.  View Article

Insurance

Solvency II interim measures a 'win-win' for insurers and supervisors – Bernardino
Interim guidelines for Solvency II will help insurance companies prepare for the new regime and improve consistency between Member States, according to Gabriel Bernardino, the EIOPA chairman.  View Article
Moody's says volatility of Solvency II ratios could have broad implications for European insurers
Moody's Investor Service has outlined its expectation that solvency ratios will ultimately exhibit a more complex volatility under Solvency II than under Solvency I, as both the available capital and the capital requirements of the solvency ratio will change with market conditions.  View Article
CRE: Pricing challenges and Solvency II dominate discussion at European Insurance Forum
Insurance buyers must be persuaded to change their attitude towards pricing to allow insurers and reinsurers to cope with the rising cost of capital, regulatory change and a non-performing investment market.  View Article
Finansinspektionen: New discount rate for insurance
The Swedish regulator Finansinspektionen (FI) is proposing a new Solvency II-based approach to calculating the discount rate for insurance companies. The approach is intended to be more stable and predictable for the companies, which in turn protects policy-holders.   View Article
ABI: UK Government announces dedicated insurance sector strategy
Financial Secretary to the Treasury Greg Clark announced a Government strategy for the insurance sector to enhance its position as a leader in global business.   View Article
Risk.net: Insurers target value-in-force monetisation transactions to boost regulatory capital
The number of value-in-force (VIF) monetisations by life insurers could surge in the coming years, as companies look to shore up their capital position in the face of economic and regulatory challenges.  View Article
IAIS: India joins International Information Exchange Agreement
The IAIS Multilateral Memorandum of Understanding is a global framework for cooperation and information exchange between insurance supervisors. It sets minimum standards to which signatories must adhere, and all applicants are subject to review and approval by an independent team of IAIS members.  View Article

Asset Management

Plenary Session: Public pensions must ensure decent living standards, MEPs say
The economic crisis and the challenges of an ageing population have revealed the vulnerability of both funded and public pension schemes, MEPs said in a resolution passed on Tuesday. They asked EU Member States to introduce or maintain diversified pension schemes.  View Article
EIOPA publishes Discussion Paper on a possible EU single market for personal pension products
This paper focuses on two possible approaches for creating a single market for PPPs – passporting and the 2nd regime. Deadline for comments is 16 August, 2013.  View Article
FT: Divisive pension deficit law may be ditched
The quantitative impact study drawn up by EIOPA in support of the proposed Directive pointed to massive funding gaps in some countries.  View Article
UK Pensions Regulator warns on asset-backed funding risks
The Pensions Regulator (TPR) has set out its strategic approach to regulating defined benefit (DB) and defined contribution (DC) schemes and maximising employer compliance with new automatic enrolment duties in its latest Corporate plan.  View Article
NAPF: Pension funds key players in driving responsible investment
This NAPF guide sets out key actions that pension funds should take to understand and manage Environmental, Social or Governance (ESG) factors, embed them in their investment policies, select appropriate investment managers, and hold them to account.  View Article
IPE: Pension funds' hands tied on low-yielding sovereign bonds - APG
Dutch pension asset manager APG's head of asset liability management has said that pension funds cannot forsake low-yielding, safe-haven sovereign bond investments entirely, despite their return often being outstripped by inflation.   View Article
IPE: Towers Watson reveals impact of QIS on German pension funds
According to Towers Watson, Germany's pension protection fund helped the country's Pensionsfonds avoid posting a deficit in the quantitative impact study (QIS) for the revised IORP Directive, but technical reserves still soared by 50 per cent for some schemes.  View Article
IPE: Single regulatory system needed to avoid conflicts of interest
Debbie Harrison of the Cass Business School's Pensions Institute is critical of the lack of clarity on how the UK's two new regulators – the Prudential Regulation Authority and Financial Conduct Authority – will interact. "We need a single regulatory system – however that is delivered."  View Article
Central Bank of Ireland launches AIFMD regime
The Central Bank of Ireland has issued the necessary application forms and accompanying rules to allow alternative investment fund managers and alternative investment funds to apply for authorisation under the new AIFMD.  View Article
TheCityUK: London remains Europe's hedge fund capital as UCITS funds increase
With less than three months to go until new legislation ushers in major changes for the European hedge fund industry, this new report reveals that the continent's share of the global market has remained surprisingly stable at just over a fifth.  View Article

Corporate Governance/Accounting

IASB and FASB: Lease accounting proposals
The IASB and the FASB published for public comment a revised ED outlining proposed changes to the accounting for leases. Stakeholders are encouraged to review and provide feedback on the revised ED by September 13, 2013.   View Article
EFRAG/National Standard-Setters invite companies to participate in field-testing of the proposed accounting guidance for leases
EFRAG and the National Standard-Setters ANC, ASCG, FRC and OIC are performing a field test in order to evaluate how IASB's proposals for leases would affect European companies applying IFRS. This field test will start on 3 June, 2013; completed questionnaires should be returned by 31 July, 2013.  View Article
FRC comments on IASB's ED on lease accounting
The FRC is interested in hearing the views of UK constituents on whether the IASB's exposure draft provides the optimal solution.  View Article
FT: Lease accounting – lighter leverage
The standard-setters attempt a fresh stab at new rules to tackle the problem in lease accounting. These will require lessees to bring all leases of 12 months or more on to their books.  View Article
FASB: FAF completes post-implementation review of FASB standard on business combinations
The FAF completed the Post-Implementation Review (PIR) of an accounting standard intended to improve the relevance, representational faithfulness, and comparability of information that a company or organisation reports about a business combination and its effects.  View Article
IASB: New IFRIC Interpretation 21: Levies
The IASB has issued IFRIC Interpretation 21: Levies, an Interpretation on the accounting for levies imposed by governments. The Interpretation had been developed by the IFRS Interpretations Committee ('the Interpretations Committee').  View Article
ACCA: PCAOB – There is safety in numbers
ACCA responded to the Proposed Framework for Reorganisation of PCAOB Auditing Standards (Rulemaking Docket Matter No 40), a consultation from the PCAOB. ACCA welcomes a proposed reorganisation of auditing standards.  View Article
EFRAG: Feedback statement on 'Classification and Measurement: Limited Amendments to IFRS 9'
EFRAG published its feedback statement for its final comment letter on the ED, 'Classification and Measurement: Limited Amendments to IFRS 9'. The feedback statement describes the main comments received on EFRAG's draft comment letter from January to April 2013.  View Article
Deloitte (US) commented on classification and measurement of financial instruments
Deloitte & Touche LLP commented on the FASB's proposed ASU, 'Recognition and Measurement of Financial Assets and Financial Liabilities', issued in February 2013. The comment letter compares the proposed ASU with the IASB's ED on proposed limited changes to IFRS 9 (2010), published in November 2012.  View Article
IFAC, IAASB & IASB: Constructive cooperation for international standards
Representatives from former Soviet republics in Europe and Central Asia gathered in London at a two-day conference titled 'Adoption and Implementation of International Standards in the Former Soviet Republics in Europe and Central Asia', convened jointly by the IFAC, IAASB, and IASB.  View Article

Financial Services Policy

EBA: EP commissions two studies reviewing the European system of financial supervision
The EP has commissioned two studies reviewing the European system of financial supervision. Part 1 deals with the work of the ESAs; Part 2 addresses the work of the ESRB. The deadline for responses is 21 June, 2013.  View Article
Rapporteur Kamall: Concerns over the extension of PRIPs Directive
In the EC's mission to amend PRIPs, the most significant gap to be bridged is on the scope of the proposal, with the Socialists and Greens calling for it to be widened to all retail financial products, not just packaged ones.  View Article
FN: Industry decries regulatory bottleneck
Frustration is mounting across Europe, with the financial sector complaining it is being left in limbo by delays and confusion surrounding a swathe of regulations.  View Article
Oxera: Analysis of European Commission staff working document on the proposed Financial Transaction Tax
This report concludes that further analysis is required to understand the potential impact of the FTT fully.  View Article

European Council/Parliament

Plenary Session: MEPs call for EU-wide action to collect tax lost to fraud and evasion
EU Member States should join forces to halve the €1 trillion uncollected "tax gap" by 2020, voted Parliament in a resolution. MEPs want governments to agree measures to clamp down on tax havens, close avoidance loopholes and combat aggressive tax planning. (Includes Barroso/van Rompuy comments.)  View Article
European Council Conclusions on tax fraud and tax evasion
The Council agreed to accelerate work in the fight against tax fraud, tax evasion and aggressive tax planning. In particular, work will be taken forward as a matter of priority on promoting and broadening the scope of the automatic exchange of information at all levels.  View Article
EP President Schulz: Speech to the European Council
In his speech, Schulz addressed the issues of unemployment and tax fraud/evasion, and spoke briefly about the reform of Economic and Monetary Union.  View Article
European Economic Area Council Conclusions
The EEA Council agreed that the current economic crisis is a common concern, and reaffirmed the need for responsibility and solidarity among the countries of Europe in tackling the challenges ahead. The Council held an orientation debate on recent developments in financial services.  View Article
Results of the General Affairs Council on the MFF
The General Affairs Council discussed negotiations on the EU's €960 billion multi-annual budget for 2014-2020. (Includes quotes from Tánaiste Eamon Gilmore and Budget Commissioner Lewandowski.)  View Article
Plenary Session: Solidarity and democracy must also be part of deeper economic governance
Parliament gave a lukewarm response to the Commission's next steps for economic and monetary union. Its resolution says full implementation of the governance rules already set up must take precedence over new proposals.   View Article





© Graham Bishop

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