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12 April 2018

This week in "Brussels"
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  Articles from 29 March 2018 - 12 April 2018

  Banking Union
 
 
EBA Risk Dashboard shows significant improvements across EU banks but elevated NPLs are still the main challenge for their profitability
The European Banking Authority published the regular update of its Risk Dashboard summarising the main risks and vulnerabilities in the EU banking sector for Q4 2017. The progress is positive for European banks, but risks remain heightened on sustainable profitability.   View Article
BIS: The identification and measurement of non-performing assets: a cross country comparison
This paper outlines the major differences in identification and accurate measurement of non-performing assets (NPAs) across key jurisdictions and provides a range of prudential policy options to enhance the identification and measurement of NPAs.  View Article
ECB aims to ensure that banks apply rules on internal models in a consistent manner
The ECB has published the first chapter of its guide to internal models for consultation. The guide is intended to ensure a common and consistent approach to the most relevant aspects of the applicable regulation on internal models for banks directly supervised by the ECB.   View Article
Financial Times: Euro area’s banking union heads for ‘critical phase’
Europe’s top financial services official has warned that time is running out to complete a project to strengthen the euro area’s banking system, as national governments spar over competing reform demands.   View Article
ECB: Completing the Banking Union with a European Deposit Insurance Scheme: who is afraid of cross-subsidisation?
This paper provides five analytical contributions to the discussion on the establishment of a European Deposit Insurance Scheme (EDIS)  View Article
EBA updates list of correlated currencies
The list is part of the implementing technical standards that were drafted for the purposes of calculating the capital requirements for foreign-exchange risk according to the standardised rules.  View Article
FCA: Payments after PSD2: evolution or revolution
Karina McTeague, Director of Retail Banking Supervision at the FCA, shares her thoughts on some aspects of PSD2 and Open Banking from a regulator’s perspective.  View Article
FCA: Cryptocurrency derivatives
FCA statement on the requirement for firms offering cryptocurrency derivatives to be authorised.  View Article
Handelsblatt: Central banker Dombret urges EU bank supervisors to merge
Andreas Dombret, a Bundesbank policymaker, says Europe’s bank oversight needs a fundamental reform. The ECB, invested with major watchdog powers since 2013, is unlikely to welcome his advice.  View Article
BIS: Frameworks for early supervisory intervention
The publication presents a range-of-practice study on how supervisors around the world have adopted frameworks, processes, and tools to support early supervisory intervention.  View Article
BIS: Early intervention regimes for weak banks
Prudential authorities conduct early interventions with the aim of prompting banks to address their weaknesses in a timely way. Early supervisory interventions are normally authorised under regular supervisory powers, which generally allow for a significant amount of discretion and scope for supervisory judgment.   View Article
The EBA observes a decrease in high earners in 2016 and differences in remuneration practices across the EU
The EBA published its report on benchmarking of remuneration practices in EU banks for the financial years 2015 and 2016 and high earners data for 2016. The data shows that in 2016, the number of high earners in EU banks receiving a remuneration of more than EUR 1 million decreased by 10.6%.   View Article
Bank of England: Regulated fees and levies: rates proposals 2018/19
This consultation paper sets out proposals for the Prudential Regulation Authority’s fees and levies for 2018/19. The proposed implementation date for the proposals contained in this consultation is 1 July 2018.  View Article
Financial Times: Big banks on notice as tech groups ramp up pressure
Technology companies are set to take a big chunk of customers from banks, as they intensify their challenge to traditional lenders across a range of mass-market financial services, say industry executives and analysts.  View Article
 
  Capital Markets Union
 
 
ESMA asks the European Commission to clarify ancillary activity test under MiFID II
ESMA's Maijoor wrote a letter to the Commission Vice-President Dombrovskis regarding the exemption from authorisation as investment firm which non-financial entities are eligible for when their commodity derivative trading activity is ancillary to their main business as set out in MiFID II.  View Article
Financial Times: UK banks and brokers face MiFID II reckoning
UK banks and brokers are readying themselves for a second round of tense negotiations with fund managers over the cost of investment research, as a grace period following new European legislation comes to a close.   View Article
CPMI and IOSCO issue guidance on supervisory stress testing of central counterparties
The framework provides authorities with guidance to support their design and implementation of supervisory stress tests for CCPs.  View Article
ESMA proposes simplifications to prospectuses format and content
The Technical Advice has been published in response to a mandate from the Commission, and has been developed following extensive consultation with the public through three Consultation Papers.  View Article
ESMA data shows EU exchange-traded-derivatives market volumes at €200tn
The EU market for Exchange-Traded-Derivatives is worth approximately €200tn – with an average daily turnover of €1.3tn – a recent report by ESMA shows.  View Article
CPMI-IOSCO: Harmonisation of critical OTC derivatives data elements (other than UTI and UPI)
A new report provides technical guidance to authorities on harmonised definitions, formats and usage of a set of critical data elements for over-the-counter derivative transactions reported to trade repositories, excluding UTI and UPI.  View Article
IOSCO issues recommendations to improve regulatory reporting and transparency in corporate bond markets
The Board of the IOSCO published its recommendations for improving the information on secondary corporate bond markets available to both regulators and the public.  View Article
ISDA, EBF, ICMA and ISLA Publish Whitepaper on Benefits of Post-trade Risk Reduction Services
ISDA, the EBF, ICMA and ISLA recommend that EMIR be amended as part of the REFIT to exempt transactions resulting from post-trade risk reduction services from the clearing obligation, or to empower the European Securities and Markets Authority to do so.  View Article
ESMA updates its double volume cap register
The updates include DVC data and calculations for the period of 1 March 2017 to 28 February 2018 (so-called March 2018 publication) as well as updates to already published DVCs.  View Article
ISDA Board Statement on Narrowly Tailored Credit Events
ISDA published a statement from its Board of Directors on reported instances of narrowly tailored credit events and a process to consider improvements to the efficiency of the credit derivatives market.  View Article
ESMA publishes the calculations for the March DVC
ESMA published its calculations for March 2018.  View Article
 
  Clients Union
 
 
IFAC: Global Ethics Board releases revamped Code of Ethics for Professional Accountants
The IESBA released a completely rewritten Code of Ethics for Professional Accountants that is easier to navigate, use and enforce. The Code brings together key ethics advances over the past four years, and is clearer about how accountants should deal with ethics and independence issues.  View Article
 
  Insurance
 
 
FCA: Insurance firms still failing to meet FCA general insurance renewal rules
The Financial Conduct Authority has warned it will take action against general insurance firms who are failing to properly implement rules introduced to increase transparency and encourage shopping around at renewal time.  View Article
Bank of England: Solvency II: external audit of the public disclosure requirement
The Prudential Regulation Authority sets out its proposal to amend the rule that requires the external audit of parts of the Solvency and Financial Condition Report (SFCR), under Rule 2 of the External Audit part of the PRA Rulebook. The SFCR is the key public disclosure under Solvency II.   View Article
Bank of England: Solvency II: Internal models – modelling of the volatility adjustment
This CP sets out the PRA’s proposal to consider applications from internal model firms that include a dynamic volatility adjustment, as well as draft expectations of internal model firms when determining the risks that might arise from the DVA when calculating the solvency capital requirement.  View Article
EIOPA: Changes to EIOPA’s Management Board composition
The Board of Supervisors of the EIOPA elected Ms Zuzana Silberova, Executive Director of the Financial Market Supervision Department at the Czech National Bank as a new member of the Management Board from 3 June 2018, replacing Ms Julia Cillikova, Director of the Department of Regulation at the National Bank of Slovakia.  View Article
 
  Asset Management
 
 
VentureEU: €2.1 billion to boost venture capital investment in Europe's innovative start-ups
The European Commission and the European Investment Fund (EIF) have launched a Pan-European Venture Capital Funds-of-Funds programme (VentureEU) to boost investment in innovative start-up and scale-up companies across Europe.  View Article
ESMA finds high degree of asset concentration in EU alternative fund industry
The EU Alternative Investment Fund (AIF) industry is highly concentrated around a few large participants and asset classes, a recent report by the European Securities and Markets Authority shows.  View Article
ICMA AMIC publishes statement on fund delegation
ICMA’s Asset Management and Investors Council (AMIC) has published a statement on fund delegation, underlining the importance of fund delegation to the asset management business model and the threat from recent legislative proposals.   View Article
Investment & Pensions Europe: Fund manager rules ‘will hurt margins and boost passives’
UK active asset managers will see their profit margins reduced by rules published last week by the country’s financial regulator, according to analysis by Moody’s Investors Service.  View Article
FCA sets out next steps to improve competition in the UK’s asset management industry
The FCA has published the latest step in its response to the concerns identified through its asset management market study. This is part of a package of remedies to ensure fund managers compete on the value they deliver, and act in the interests of the millions who entrust them with their savings.  View Article
 
  Corporate Governance/Accounting
 
 
ESMA continues to focus on convergence in enforcement of IFRS across the EU
The ESMA has published its 2017 annual report on the enforcement and regulatory activities of accounting enforcers within the EU.  View Article
IASB completed revisions to its Conceptual Framework
The IASB has issued a revised version of its Conceptual Framework for Financial Reporting that underpins IFRSs.  View Article
ECIIA: EU announces ‘fitness check’ for public reporting framework
The ECIIA has welcomed the launch of a ‘fitness check’ consultation on the EU’s public reporting framework for companies.  View Article
IASB: Insurance Contracts—Accounting to reflect economics
The IASB member Darrel Scott offers his perspective on the new information about insurers’ financial performance that will be available when IFRS 17 is applied. The article discusses what is a unit of account and why the unit of account in IFRS 17 matters to investors.   View Article
EFRAG invites users of the financial statements of insurers to express their views
IFRS 17 Insurance Contracts is intended to improve the information that is available to users of financial statements of insurance companies and financial conglomerates. EFRAG is inviting users to express their views on this change to IFRS financial reporting.  View Article
FRC implements sanctions review recommendations
The FRC is implementing the recommendations of the independent review of sanctions undertaken in 2017 and has published updated guidance for the Tribunal that hears FRC Enforcement cases involving auditors, accountants and actuaries.  View Article
FRC: Consultation on the Third Country Auditors (Fees) Instrument 2018
The FRC charges fees for the registration of third country auditors and for the annual renewal of registration of third country auditors.   View Article
FRC to enhance monitoring of audit firms
The FRC has announced plans to enhance its monitoring of the six largest audit firms to avoid systematic deficiencies within firms’ networks, disruption in the provision of statutory audit services and instability in the financial sector.  View Article
FRC: Call for participation – opportunity to get involved in the Digital Future
The Financial Reporting Lab is calling for listed companies, investors/analysts, technology experts and those with interest in the potential uses of Artificial Intelligence in the production and consumption of corporate reporting to participate in the next phase of their project, Digital Future.  View Article
 
  Financial Services Policy
 
 
IFAC: Patchwork financial regulation a $780 billion drag on the economy
Fragmentation in global financial regulation costs more than USD $780 billion annually, according to a survey released by IFAC and Business at OECD (BIAC).  View Article
EBF: Review of EU system for financial supervision - EBF position on the ESAs review
The EBF fully supports the intended objective of promoting finance and reinforcing financial integration, with the ultimate aim of creating a true Financial Union, comprising both a Banking Union and a Capital Markets Union.   View Article
ECB launches public consultation on cyber resilience oversight expectations
The ECB is launching a public consultation calling on financial market infrastructures (FMIs) and other interested parties to give their input on draft cyber resilience oversight expectations. Cyber resilience is an important aspect of FMIs’ operational resilience and is thus also a factor affecting the overall resilience of the financial system and the broader economy.  View Article
ACCA: Fintech, Blockchain and ICOs - adapting to the changing landscape
Experts, regulators and decision-makers discussed the latest policy developments on Fintech and blockchain alongside the risks and opportunities of ICOs at joint ACCA and EY conference in Brussels.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
Less than a year for an increasingly unlikely Brexit - 140th Brussels for Breakfast – CPD Notes
The countdown to Brexit day is on, but with less than a year to go, British withdrawal from the EU is not secured: voters are asking for a say over the final deal. The economic and political implications of a post-Brexit deal with Brussels may make them reconsider EU membership under a new light.  View Article
 
  Friends Services
 
 
Less than a year for an increasingly unlikely Brexit - 140th Brussels for Breakfast – CPD Notes
The countdown to Brexit day is on, but with less than a year to go, British withdrawal from the EU is not secured: voters are asking for a say over the final deal. The economic and political implications of a post-Brexit deal with Brussels may make them reconsider EU membership under a new light.  View Article
 
  Economic
 
 
ECB's Cœuré: The consequences of protectionism
Benoît Cœuré, Member of the Executive Board of the ECB, shares a central banker’s perspective on potential structural changes to the current global trade regime – one where restrictions to trade are managed through multilateral agreements.   View Article
EU28 current account surplus €63.5 bn
The EU28 seasonally adjusted current account of the balance of payments recorded a surplus of €63.5 billion (1.6% of GDP) in the fourth quarter of 2017, according to estimatesreleased by Eurostat.  View Article
Volume of retail trade up by 0.1% in euro area
In February 2018 compared with January 2018, the seasonally adjusted volume of retail trade increased by 0.1% in the euro area (EA19) and by 0.2% in the EU28, according to estimates from Eurostat.  View Article
Euro area unemployment at 8.5%
The euro area (EA19) seasonally-adjusted unemployment rate was 8.5% in February 2018, down from 8.6% in January 2018 and from 9.5% in February 2017. This is the lowest rate recorded in the euro area since December 2008.  View Article
 

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