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13 June 2013

This week in "Brussels"
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Articles from 06 June 2013 - 13 June 2013

Banking

EP publishes RRD report
The EP has published the report on the proposed Bank Recovery and Resolution Directive (RRD) adopted by the ECON Committee on 20 May. ECON has made the following amendments to the Commission's original proposals.  View Article
EBF response to EBA consultation on draft RTS on the content of Recovery Plans
The EBF supports the concept of Recovery and Resolution Plans (RRPs) and in general believes that the RTS provide a useful framework to support the planning process and are consistent with approaches set out by global standard-setters and national authorities.  View Article
Eurozone closes in on bank plans
Senior eurozone finance ministry officials will polish by the end of this week crucial details of a plan to allow the bloc's bailout fund to support ailing banks directly, with the amount of funds dedicated to the task likely to be capped at €60 billion.  View Article
Alex Barker: Banking union hits buffers as capitals keep control
Writing in the FT, Barker says that Brussels is poised to serve Berlin exactly what it does not want: a blueprint for a central executioner to shut down failing eurozone banks, if necessary against the protestations of the lender's home state.  View Article
EBF response to the consultation on the materiality of extensions and changes of internal approaches
EBF attaches great importance to the draft RTS that the EBA has put forward in this consultation. The supervision of internal risk models is a central part in the prudential framework established with the adoption of the Basel II standards.   View Article
ECB consults on draft regulation on oversight requirements for systemically important payment systems
The draft regulation will replace the "Core principles for systemically important payment systems", developed by the CPSS, which the Eurosystem adopted in 2001 and has since been implementing. Deadline for comments is 9 August, 2013.  View Article
Spiegel: High Court considers ECB bond buys
Germany's highest court is currently reviewing the European Central Bank's controversial bond-buying programme to shore up eurozone crisis countries. A decision in Karlsruhe could determine the common currency's fate.  View Article
Marcel Fratzscher: The ECB must open itself up
Policy debate should take place within the ECB, but minutes should be published, writes Fratzscher for the FT.  View Article
Bundesbank/Dombret: The role of central banks
In his opening statement at the AICGS panel discussion, Dombret argued that the best contribution to sustainable growth a central bank could make was to keep prices stable and buy governments time to implement necessary reforms.  View Article
'Banking 2020: A Vision for the Future' - Book launch speech by Sharon Bowles MEP
In Tolley and Greenham's new book, 'Banking 2020: A Vision for the Future', Sharon Bowles and Damian Horton have co-authored a chapter: 'The Future of Banking - Going with the Crowd' (link to chapter included). Ms Bowles outlines current banking legislation and looks at the future of banking.   View Article
BBA: Announcement of Libor changes
BBA LIBOR today announced that following the recommendations set out in the Wheatley Review, with effect from 1st July 2013, the publication of individual banks' submissions to Libor will be embargoed for three months.   View Article
FT: UK banks urged to ease switch to rivals
Britain's banks will be urged to make it easier for customers to switch to a rival institution. Andrew Tyrie's banking standards commission believes that more effective competition would be a major driver in tackling the consumer scandals that have dogged the sector.  View Article

Securities

ESMA publishes report on Prospectus Directive liability regimes in the EU
ESMA has published a report on the Comparison of liability regimes in Member States in relation to the Prospectus Directive.  View Article
ESMA: Guidelines and Recommendations for establishing consistent, efficient and effective assessments of interoperability arrangements
The objective of these Guidelines and Recommendations 2013/322 is to improve the rigour and uniformity of standards applied in the assessments of interoperability arrangements.  View Article
FN: European regulator threatens derivatives reporting delay
Under-resourced regulators and industry resistance could push key European derivatives reporting rules well into 2014, further delaying Europe's implementation of G20 reforms that will reshape the swaps market.  View Article
Reuters: EU states face showdown over markets overhaul
EU officials are pressing Britain, Germany and France to agree a compromise over trading rules intended to plug gaps exposed by the credit crunch in the $630 trillion market for derivatives and other specialised products.  View Article
ISDA and FOA publish Client Cleared OTC Derivatives Addendum
This Addendum is a template for use by cleared swaps market participants to document the relationship between a clearing member and its client for purposes of clearing OTC derivatives transactions across CCPs that use the principal-to-principal client clearing model.   View Article
Hedgeweek: Negotiating the collateral management paradigm shift under Dodd-Frank & EMIR
Phase one of Dodd-Frank commenced in March this year, requiring swap dealers and major swap participants to clear their OTC derivative contracts through central counterparties. With phase two commencing in June, buy-side firms in the US are now fully engaged in getting operationally ready.  View Article
WSJ: More swaps fall under the auspices of clearing firms
Rules that took effect on June 10 in the US represented a change in how Wall Street handles derivatives known as swaps for many of its customers, accomplishing an objective established by regulators seeking to make the financial markets safer.  View Article
WSJ: EU, clearing houses spar over rules
Some of Europe's biggest clearing houses warned that a new European Union proposal that fails to exempt holders of derivatives from sharing losses when banks fail poses a risk to the region's fragile financial system.  View Article
Sapient: New study shows a significant impact on buy-side portfolio returns due to post Dodd-Frank costs of clearing
A research study from Sapient Global Markets demonstrates significant drag on portfolio returns in the new regulatory environment.   View Article
ESMA seeks new members for its Securities Markets Stakeholders Group
ESMA is seeking new members for the Securities and Markets Stakeholder Group (SMSG), as the current members' term expires at the end of 2013. The SMSG's aim is to facilitate ESMA's consultation on its work with relevant securities markets stakeholders from around the EU.  View Article
FN: UK short-selling suit to test ESMA powers
The outcome of a UK lawsuit over short-selling rules could prove pivotal in determining the future power of European super-regulators created in the wake of the financial crisis, according to legal experts.  View Article
FESE calls for deletion of equity OTFs
Equity OTFs will not provide a fair or neutral environment for investors. OTFs will be allowed to discriminate and give preferential treatment to certain clients to the detriment of others. This means small local players will increasingly have difficulties to provide services to SMEs.  View Article
BoE Quarterly Bulletin: Central counterparties - What are they, why do they matter and how does the Bank supervise them?
Financial market infrastructures lie at the heart of the financial system. They settle transactions and, by stepping in between buyers and sellers, ensure that financial obligations are met. As such, they play a crucial role in helping the economy and financial markets to function.  View Article
BoE/Hauser: The future of repo - Too much or too little?
Speaking at the ICMA Conference on the Future of the Repo Market, Hauser said: "The financial markets of the future will revolve around collateral(...) And at the heart of this system will lie the repo and securities financing markets".  View Article
Philip Stafford: The critical hour for Europe's trading rules
Writing for the FT, Stafford asks: Could momentum be building to finalise Europe's long-delayed markets legislation, colloquially known as MiFID?  View Article
Bloomberg: Greece first developed market cut to emerging at MSCI
Greece became the first developed nation to be cut to emerging-market status by MSCI Inc, after the local stock index plunged 83 per cent since 2007.  View Article

Insurance

EIOPA publishes its 2013 Half-Year Financial Stability Report
EIOPA published its first half-year report for 2013 on the financial stability of the insurance and IORP sectors in the EEA. "This Report underlines that uncertainty about the future is still high and that there is no room for complacency in terms of risk management", said chairman Bernardino.  View Article
Insurance Europe publishes Annual Report 2012-2013 - European premiums return to growth
The report describes the federation's activities on all key regulatory initiatives facing the European insurance industry, both at EU and global level, including Solvency II, systemic risk initiatives and pension regulation.  View Article
MoneyMarketing: Solvency II holding back equity release – Towers Watson
Equity release could boost Europe's retirees' savings by €20 billion a year but Solvency II is stifling insurers' attempts to supply products to facilitate it, according to a report by Towers Watson.   View Article
Insurance Insight: Europe - Capital crisis
This article says that Solvency II - designed to harmonise capital adequacy across the continent - could be in danger of being kicked into the long grass.  View Article
Risk.net: Fears volatile model warning indicators could lead to unjustified action
The UK's Prudential Regulation Authority (PRA) is under pressure to reconsider its plan to use early warning indicators (EWIs) in its supervisory work, amid concerns that they would undermine insurers' Solvency II internal models.  View Article
Risk.net: Swedish insurers warn of manipulation threat to new discount curve
Swedish insurers have welcomed a proposal for a Solvency II-based discount curve, but there are concerns about the ALM implications of the new curve and the potential for it to be distorted by speculative traders such as hedge funds.  View Article
Risk.net: AIA cautions NAIC on US ORSA guidance
The American Insurance Association (AIA) is warning that the US Own Risk and Solvency Assessment (ORSA) must not turn into a "check-box" exercise, as insurers begin to take part in a second test run of the assessment.  View Article
CRE: Airmic's McGloin calls for insurers and brokers to change model
The incoming Chair of Airmic, Chris McGloin, is to focus his efforts on trying to persuade insurers and brokers to change their ways.  View Article

Asset Management

ESMA clarifies pay rules applicable to investment firms
ESMA has published Guidelines on remuneration policies and practices which apply to relevant staff of investment firms, credit institutions and fund management companies when providing investment services, and to national securities regulators enforcing those rules.  View Article
Reuters: EU wrangling could soften rules on fund manager bonuses
Wrangling in the European Parliament over proposals to rein in the pay of fund managers is making a strict banker-style limit on bonuses ever less likely.  View Article
Opening speech by EIOPA/Bernardino at the public event on personal pensions in Frankfurt
"The implementation of the EU agenda for adequate, safe and sustainable pensions also calls for a sufficient level of regulation and supervision of the so-called 3rd pillar - personal pensions."  View Article
IPE: EC asks ECB, Joint Research Centre to conduct IORP II impact studies
Brussels has asked the ECB and the Commission's Joint Research Centre in Ispra, Italy, to conduct an impact assessment study for the revised IORP Directive, looking at the potential impact the framework could have on financial markets and occupational pension funds.  View Article
Aon Hewitt warns of IORP Directive's impact on smaller pension funds
Aon Hewitt has urged the UK pension industry to "keep up the fight" to ensure small and medium schemes are covered by the "right" IORP II legislation, at a time when Brussels shifts its focus onto pillars two and three of the revised Directive.  View Article
IPE: Key influencers at pension funds 'sceptical' of private equity
More than one-third of pension fund respondents to Coller Capital's latest Global Private Equity Barometer, and 43 per cent of endowments and foundations, said they faced "influential colleagues" who think private equity allocations should be reduced or even removed entirely.  View Article
IPE: France - Where is the new pension reform going?
This article argues that at a time when all eyes are fixed on the unemployment rate, the French government would do well to think through pensions reform more carefully.  View Article
IPE: Dutch schemes should take supervision conclusions to heart
Pension fund trustee boards in the Netherlands should be more open to taking the conclusions of internal supervision to heart, while the quality of visitation reports must also be improved. This was the main message stressed by DNB, the Dutch pension fund supervisor.  View Article
AIFMD: Significantly higher costs for depositaries will outweigh advantages, say fund industry players
Philippe Seyll, Member of Executive Board and Head of Investment Funds Services at Clearstream, said the discussions at Clearstream's Fund Summit clearly demonstrated that there is still a high level of uncertainty imposed by AIFMD in the industry.  View Article
IMA chairman urges asset managers to take action and rebuild investors' trust
The asset management industry needs to look past the heavy intermediation of much of its business model and take proactive steps to reconnect with investors and to build reputation and trust. This was the message at the heart of the IMA chairman's speech.  View Article
WSJ: Asset managers in bid to delay swaps rules
The largest US trade bodies representing asset managers have asked the US derivatives regulator for a last-minute delay to key G20-led swaps reforms. They argue insufficient progress has been made by banks and clearing houses on measures to protect client assets.  View Article
Reuters: Ireland calls on EU and US to align money market rules
The European Union and the United States should align their rules for money market funds to avoid European funds relocating across the Atlantic, a senior regulator in Ireland said.   View Article

Corporate Governance/Accounting

Commissioner Barnier welcomes EP vote on Accounting and Transparency Directives (including country by country reporting)
"With the new rules on country by country reporting, we have created a framework where businesses and governments must disclose revenues from natural resources. This framework will also contribute to the fight against tax fraud and corruption."  View Article
IAASB releases 2012 Annual Report—Responding to the Needs of an Interconnected World
The annual report highlights the IAASB's work in the public interest to enhance the quality and consistency of practice throughout the world.  View Article
FASB clarifies investment company status and accounting
The FASB issued an Accounting Standards Update (ASU) that sets forth a new approach for determining whether a public or private company is an investment company. The Update also clarifies the characteristics and sets measurement and disclosure requirements for an investment company.  View Article
FRC: Key facts and trends in the accountancy profession
The FRC issued its annual 'Key Facts and Trends in the Accountancy Profession' report which gives key data on the accountancy profession, its member bodies and practising firms.  View Article
ACCA: Public sector finances will play a critical role in preventing future crises
According to Chris Ridley, member of ACCA's Public Sector Global Forum, accounting standards support the generation of consistent quality management information for controlling and reporting on the use of current resources, as well as informing future planning decisions.  View Article
ECA and EU Member State Audit Institutions: GEMU and enhanced economic governance need strong audit
Addressing President Van Rompuy, the heads of the European Court of Auditors and EU Member State Audit Institutions have called on the upcoming European Council to enact legislative measures that strengthen audit and accountability within EU economic governance.  View Article
Sharon Bowles MEP: Union programme to support specific activities in the field of financial reporting and auditing for the period 2014-20
Syed Kamall, Sven Giegold, Theodor Dumitru Stolojan, Wolf Klinz and Sharon Bowles prepared amendments to the Union programme to support specific activities in the field of financial reporting and auditing for the period 2014-2020.   View Article
FRC: Consultation paper on sanctions guidance
The FRC issued draft Auditor Regulatory Sanctions Procedure: Sanctions Guidance for consultation. Responses should be sent by 10 July, 2013.  View Article
ECIIA: The role of Internal Audit under Solvency II
The ECIIA has set up a working group of chief auditors of insurance companies to arrive at a common understanding and view of the role of internal auditing in the new future legal background of Solvency II.  View Article
FRC implements lessons from consultation on going concern guidance
The FRC consulted on how best to implement Lord Sharman's proposals on going concern. It is pleased with the considered feedback to its CP, 'Implementing the Recommendations of the Sharman Panel – Revised Guidance on Going Concern and revised International Standards on Auditing (UK and Ireland)'.  View Article
FASB indefinitely defers certain disclosures for non-public employee benefit plans
The FASB voted to defer indefinitely certain disclosures about investments held by a non-public employee benefit plan in its plan sponsor's own non-public equity securities.  View Article
FASB endorses private company council proposals dealing with GAAP for private companies
The FASB voted to endorse three alternatives within US GAAP proposed by the Private Company Council (PCC) to address concerns raised about the relevance and complexity of certain aspects of GAAP for private company stakeholders.  View Article
EFRAG: Feedback statement on the questionnaire on subsequent measurement of goodwill
The results of the study indicate that information on goodwill is used in many different manners and that there are many different views on how to measure goodwill after initial recognition.  View Article
ACCA: Investors have lost trust in company reports
According to new research from ACCA, investors are less trusting of corporate reports since the global financial crisis, with more than two-thirds saying they are more sceptical about the information companies provide.  View Article
ACCA: The new EU draft legislation on disclosure of non-financial and diversity information
The conclusions of a recent roundtable at the EP organised by ACCA were that transparency, consistency and comparability of non-financial and diversity information are crucial to restore the trust of investors and stakeholders in large companies, but that materiality is key to avoid creating new burden.  View Article

Financial Services Policy

Fighting tax evasion: Commission proposes widest scope of automatic exchange of information within the EU [Proposal]
The Commission has proposed extending the automatic exchange of information between EU tax administrations, as part of the intensified fight against tax evasion. This paves the way for the EU to have the most comprehensive system of automatic information exchange in the world.  View Article
Commissioner Barnier: Financial regulation - Laying sound foundations for stability and growth in Europe
"New capital requirements, supervision and resolution will bring back financial stability. But this is not sufficient to restore what Europe needs most: innovation, competitive industries, modern infrastructures and green growth. To achieve this, we need long-term investment."  View Article
Irish Presidency secures increased recognition of professional qualifications among EU Member States
The EP and the Council reached an agreement on the modernisation of the Directive on Professional Qualifications. New proposals include the introduction of a European Professional Card and an alert system to protect consumers and patients. (Includes Barnier statement and link to EP press release.)  View Article
MoneyMarketing: European disclosure rules 'face years of delay'
ECON chair Sharon Bowles says European investment disclosure rules could be delayed by years after EU deadlock.  View Article
UK Chancellor: Letter to the EBF on the FTT
The UK Chancellor has written to the Chief Executive of the EBF regarding concerns expressed in a letter dated 21 May on the proposed FTT, which he described as "poorly designed", "badly-timed" and "unlawfully extraterritorial".   View Article

European Council/Parliament

Schulz on negotiating mandate on Transatlantic Trade and Investment Partnership
"The European Parliament position on the Transatlantic Trade and Investment Partnership is clear: the EU-US economic relationship should be reaffirmed and deepened."  View Article
Plenary Session: EU countries and Commission need to deliver faster on financial sector reform
Delays cause uncertainty, which holds up sustainable economic growth and job creation, said Parliament in a resolution. The resolution lists laws held up by lack of agreement in Council, such as draft rules, frozen since the start of 2012, to guarantee deposits below €100,000.  View Article
Plenary Session: Stop talking and act on financial services reform, MEPs tell Member States
MEPs took aim at Member States and, to a lesser degree, the Commission, for holding up financial services reforms. A number of MEPs said EU countries were unable to translate their words into deeds and many stressed that the lack of progress was undermining confidence in the EU.  View Article
Plenary Session: Wake-up call for the Council before the next summit
Jobs for young people, social investment responses to economic crisis and the architecture of EMU were the key issues debated by MEPs, the Council Presidency and the Commission President in the run-up to the European summit on 27 and 28 June.   View Article

International/G20

President Barroso: Strengthening the EU's economic partnership with the world
Barroso set out the EU's views on the 'Three T's' identified for this year's G8 summit in Lough Erne: Trade and the economy; Taxation; and Transparency.  View Article
Simon Nixon: Still hiccups on path to economic NATO
US and European leaders make a key decision this week on whether to proceed with negotiations on a trade pact that could boost growth and make them more competitive against Asia. WSJ's Nixon looks at the benefits and the problems.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: 48 Hours in the Tallinn City-State
After speaking at the Finance Estonia First International Forum, Graham reflects on some of the drivers of Estonia's remarkable economic recovery. He develops his thoughts about the future of the EU's financial system as a result of banking union and the current regulatory reform programme.  View Article





© Graham Bishop

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