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03 October 2019

This week in "Brussels"


We have revised our approach to focus on the big themes for the next legislative period. We are targeting the interaction of the driving forces of politics and economics as they force the required changes in over-arching financial regulation, thus promoting greatar financial integration in Europe. Details of these services are here

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Articles 26 September 2019 - 3 October 2019

General Policy

Financial Times: Euroclear/H&F: swarm clouds : Reports that buyout firms are interested in Euroclear, a vital part of Europe’s financial market plumbing, might cause unease. Expect regulators and customers to roll out swaths of protective netting if a deal goes ahead. View Article
ESAs Joint Committee defines its priorities for 2020 : The Joint Committee of the three ESAs will particularly focus on PRIIPs, financial innovation as well as sustainable finance and securitisation. View Article

Banking Union

Financial Times: ECB launches new lending benchmark based on overnight deals : Global authorities’ efforts to move capital markets on to a sounder base took a step forward after European authorities launched a new benchmark based on overnight deals. View Article
EBF: Benchmarks regulation: Statement of the European Credit Sector Associations : Statement of the European Credit Sector Associations (ECSAs) Benchmarks regulation: The banking sector welcomes the recent statements by the European Commission and ESMA on the upcoming migration to the reformed EURIBOR methodology and the migration from EONIA to €STR.  View Article
IASB amends IFRS Standards in response to the IBOR reform : The IASB has amended some of its requirements for hedge accounting. The amendments are designed to support the provision of useful financial information by companies during the period of uncertainty arising from the phasing out of interest-rate benchmarks such as interbank offered rates (IBORs). View Article
Bank of England: How prepared are markets for the end of Libor? : With Libor expected to be discontinued after end-2021, the use of alternative interest rate benchmarks is steadily increasing. But use of Libor remains widespread, and this poses risks to market stability, analysis at the Bank of England shows. View Article
ECB guide to internal models : The ECB provides in this guide its understanding of the CRR provisions which apply currently. The ECB guide to internal models provides transparency on how the ECB understands those rules and how it intends to apply them when assessing whether institutions meet these requirements.  View Article
ECB publishes the Euro money market study 2018 : This is the first study of euro money market based on actual transactions by largest euro area banks. The study shows increased activity in the secured and foreign exchange swaps segments and that some money market rates moved below deposit facility rate, especially in secured segment. View Article
BIS: Where next for the Basel Committee? : Chairman of the BCBS and Governor of the Bank of Spain Pablo Hernández de Cos outlines a set of guiding principles that will help him steer the work of the Committee. These are complemented by a set of longer-term strategic priorities, which the Committee will set out in due course. View Article
The new BIS strategy - bringing the Americas and Basel closer together : Agustín Carstens, General Manager of the BIS provides an overview of the Innovation BIS 2025 strategy and gives concrete examples of how it can benefit stakeholders in the Americas, including supervisory authorities in the region, which are well represented today. View Article

Capital Markets Union

Markets4Europe campaign presents recommendations for building a truly integrated capital markets union in the EU : Markets4Europe, a campaign advocating more effective use of market finance in Europe, presented its main recommendations that are designed to encourage the creation of a more integrated Capital Markets Union in the EU. View Article
ESMA analyses the use of derivatives by UCITS equity funds : ESMA conducted a study on the use of derivatives by UCITS equity funds in collaboration with researchers from the Technical University of Munich (TUM). View Article
ESMA study finds high impact of costs on performance, especially for active equity funds : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has carried out a study of the performance of active equity funds as compared to passive equity funds, ETFs and relevant benchmarks. View Article
IOSCO publishes updates to peer reviews of regulation of MMFs and securitisation : The reports describe progress by IOSCO members in FSB jurisdictions in adopting legislation, regulation and other policies covering MMF and securitisation, which are G20 priority reform areas. View Article
ESMA prepares for new responsibilities in 2020 : ESMA published its 2020 Work Programme, setting out its priorities and areas of focus for the next 12 months in support of its mission to enhance investor protection and promote stable and orderly financial markets. View Article
EIOPA issues Opinion on sustainability within Solvency II : The EIOPA has published an Opinion on Sustainability and Solvency II. The Opinion addresses the integration of climate-related risks in Solvency II Pillar I requirements. View Article
Insurance Europe: Solvency II proportionality principle key for avoiding excessive burden, but doesn’t work in practice : Insurance Europe and AMICE have issued a joint call for the EC to improve Solvency II proportionality rules to ensure that insurers are not disproportionately burdened by the regulatory framework. View Article
City A.M.: New rules force pension funds to consider environmental and social factors : Pension funds are now required to consider environmental and social factors when making investment decisions, under rules introduced as part of the UK government’s bid to tackle climate change. View Article

Environmental, Social, Governance (ESG)

BIS launches green bond fund for central banks : The BIS has launched an open-ended fund for central bank investments in green bonds. Responding to a growing demand for climate-friendly investments among official institutions, the BIS's green bond fund initiative helps central banks to incorporate environmental sustainability objectives in the management of their reserves. View Article
IIA Global: Foundations of internal auditing in financial services firms : The practice guide provides additional information, advice and best practices for providing Internal Audit Services. It supports the IIA Standards by addressing topical areas and sector-specific issues. View Article
FRC: Public views on regulation of corporate reporting, audit and governance : New research supports the FRC taking firmer action to hold companies to account. Participants in a series of ‘citizens’ juries’ believed the FRC should have more "power" and "teeth" to hold companies to account, but any increase in regulation should not stifle companies’ ability to operate and flourish. View Article
FRC strengthens Going Concern audit standard : The FRC has issued a revised going concern standard in response to recent enforcement cases and well-publicised corporate failures where the auditor’s report failed to highlight concerns about the prospects of entities which collapsed shortly after. View Article
ACCA: Research shows benefits of multidisciplinary firm structure in producing high quality audits : A global alliance of accounting organisations has found that firms that offer both audit and non-audit services are best positioned to deliver robust and reliable assurance. View Article
City A.M.: London retains green finance crown : London has retained the top spot in a major ranking of the world’s best hubs for green finance. Western Europe’s financial sector continues to dominate the charts for its sustainability, infrastructure and human capital, with the top five spots on the table all being filled by cities on the continent. View Article
Investment & Pensions Europe: Investors ‘still believe ESG investing limits returns’ : More than half of professional investors still believe that incorporating environmental, social and corporate governance (ESG) factors into their investment strategies will limit their overall returns, according to a survey by NN Investment Partners. View Article
ACCA: Creating value and driving sustainability, accountability and the digital agenda through Public Sector Innovation : ACCA leads the debate on Public Sector Innovation with EU experts at the European Court of Auditors and calls for more radical change. View Article

Fin Tech Regulation

New Europe: Libra not likely to launch by 2020 : The launch of the Libra cryptocurrency is postponed. Libra is essentially a cryptocurrency that aspires to guarantee smaller value fluctuations and can be used as a medium of exchange in transnational transactions and payments. View Article
Financial Times: Tech forecast to destroy more than 200,000 US bank jobs : US banks will cut more than 200,000 jobs in the next decade as robots and other technology bring about the “greatest transfer from labour to capital” the industry has seen, a report by analysts at Wells Fargo claims.  View Article

Friends' Basic Services

Brussels for Breakfast (155): A round-table discussion with Graham Bishop, Jacques Lafitte (Avisa) and Anna Isaac (Wall Street) : To be held on Tuesday, 8th October, 2019, 8.30-10.00am At the Chartered Institute for Securities & Investments 20 Fenchurch Street (the Walkie-Talkie), London EC3M 3BY.  View Article

Economic Policies Impacting EU Finance

Financial Times: Draghi backs calls for fiscal union to bolster eurozone : European Central Bank president Mario Draghi has thrown his weight behind French president Emmanuel Macron’s call for fiscal transfers between eurozone member states to bolster the long-term future of the single currency. View Article
Financial Times: ECB’s German board member quits over loose monetary policy : Germany’s representative on the European Central Bank’s executive board has quit in a move that highlights the widening split within the institution’s top ranks over its recent decision to loosen monetary policy. View Article
Financial Times: German scepticism of the ECB reveals a eurozone paradox : Germany’s dissent feeds concerns that Europe’s monetary union, rocked to its foundations in the sovereign debt and banking sector crises of 2010-12, is still not solid enough, warns Tony Barber.  View Article
European Parliament: The ECB’s Unfinished Business: Challenges ahead for EMU Monetary and Fiscal Policy Architecture : Authors argue that monetary policy stimulus alone may not resolve the situation of having the euro area stuck in a slowing growth environment, and ask whether the next President may want to pass the ball more strongly to national governments. View Article
Olli Rehn: Next steps towards a stronger monetary union : The Governor of the Bank of Finland discusses major challenges for the euro area: short term ones relate to the current economic downturn, while long-term ones to the unfinished business of the Economic and Monetary Union. View Article
Project Syndicate: Are Europe’s economic prospects brighter than they appear? : Despite all the headlines about the trade war causing a recession in the US or some kind of collapse in China, recent economic data reveal a very different picture: the main victim has been Europe. But, fortunately for the European economy, overdependence on foreign trade is not the whole story. View Article
The Economist: America announces a limited trade agreement with Japan : The deal shows how hard it is for the Trump administration to rewrite the rules of world trade. View Article

Basic Enconomic Indicators

September 2019: Economic Sentiment abates in both the euro area and the EU : In September 2019, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.4 points to 101.7) and the EU (by 1.4 points to the long-term average of 100.0). View Article
Euro area unemployment at 7.4% : The euro area (EA19) seasonally-adjusted unemployment rate was 7.4% in August 2019, down from 7.5% in July 2019 and from 8.0% in August 2018. This is the lowest rate recorded in the euro area since May 2008.  View Article

EU27 Politics

Main results - Competitiveness Council (Internal Market and Industry) : The Council debated the long-term EU strategy for sustainable growth and the external dimension of the EU's competitiveness. View Article
The New York Times: Kurz wins Austria election. Will he turn to far right or Greens to govern? : Austria’s former chancellor Sebastian Kurz has won again a snap election he called after his government collapsed. But the result of the vote raised the question of whether he would need to team up again with the far right to form a government, or would shift to the left. View Article
Graham Bishop #FBPE retweeted
BBC Breaking News BBC Breaking News
UK publishes #Brexit proposals to the EU, including plans to replace the Irish backstop with an "all-island regulatory zone"
Graham Bishop #FBPE retweeted
Bloomberg Brexit Bloomberg Brexit
BREAKING: EU governments have discussed giving the UK a major concession on Brexit by possibly time-limiting the contentious backstop mechanism for the Irish border
Graham Bishop #FBPE retweeted
<a href=FT Brussels" /> FT Brussels
Johnson to ‘know by the weekend’ whether he has chance of Brexit deal
Graham Bishop #FBPE Graham Bishop #FBPE
UK proposes customs posts on both sides of border - @rte has the story…
Graham Bishop #FBPE retweeted
BREAKING: Sebastian Kurz's party has won the Austrian election
Graham Bishop #FBPE retweeted
City A.M. City A.M.
Juncker says no-deal Brexit will be all Britain's fault

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