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05 June 2008

This week in "Brussels"


European Finance Forum

Wednesday, 11 June 2008, 10.00 – 13.00 hours, Brussels

Confirmed Speakers:

Wolf Klinz, MEP; Niall Bohan, European Commission;

Eliana Garces-Tolon, Cabinet Kuneva; Valerie Bros, Perm Rep France

Topics to include:

Latest developments on UCITS, Retail Financial Services, French Presidency Programme



ECON Committee Notes
The debate on the report on Hedge Funds and Private Equity revealed that the technical specifications of “Rule 39” still lack clarification. The Committee also held a hearing on the future structure of supervision in Europe and had an exchange of views with CESR chair Eddy Wymeersch. (View)



Articles from 29 May 2008 - 05 June 2008

Commission consultation on revised Impact Assessment Guidelines
The most important elements that have been revised include the risk assessment, subsidiarity, proportionality, impacts on administrative burden and simplification, and the added value of an EU-initiative.   View Article
ECB Trichet - Reflections on the current financial markets correction
The challenge ahead lies in preventing the system from feeding on itself through a spiralling process of leveraging, Trichet said. We must find ways of working out the necessary checks and balances.  View Article
CEPS: EU Retail Financial Market Integration - Mirage or Reality?
Progress on the retail side has been extremely limited judging by certain indicators, the paper states. Not much change can be expected in the coming years in the structure of retail financial markets, it concludes.  View Article
ECB Trichet - responsibilities unchanged despite shocks
Rather than a single deep correction with a single source, the global economy is facing a multiplicity of inter-dependent shocks in key areas, Trichet said. However, the responsibilities of central banks have not changed.  View Article
ELEC Cahier Boël on Pan-EU retail banking
Efforts to improve the internal market for financial services should focus on targeted full harmonisation of other relevant laws and regulations, ELEC says and also recommends the harmonisation of deposit guarantee schemes.  View Article
ECB González-Páramo - Banking industry needs to revive market
The use of ABSs as collateral may have prevented a complete shut down of primary markets, Páramo said. However, this cannot be an alternative to the restoration of a orderly functioning market which offers true secured funding possibilities.  View Article
HM Treasury announces new FSA chair
Lord Adair Turner has been appointed as Chairman of the Financial Services Authority.  Lord Turner will take up his appointment in September when Sir Callum McCarthy steps down.  View Article
Fed Kroszner – financial markets will recover only gradually
The tenor in the financial markets has generally improved this spring and, on the whole, strains have eased somewhat, Kroszner said. However, US banks need still more new capital to put themselves and the economy on more solid footing.   View Article
Attorney General Cuomo agreement with Credit Rating Agencies on RMBS market
The agreement will change how the three major CRAs are compensated for rating mortgage-backed securities and establishes a fee-for-service structure to reduce ‘ratings-shopping’ practices.   View Article
US Treasury: Auditing Advisory Panel asks for more audit firm disclosures
The PCAOB should require auditing firms to make more disclosures, the ACAP recommended. The proposal mirrors the EU’s Eighth Directive, which governs the auditing profession in EU member nations.  View Article
Fed Kohn - Number of banks with less-than-satisfactory ratings will rise further
Banking organizations must be prepared for the possibility that liquidity conditions become tighter, Kohn said. Over the coming months, we expect banking institutions to continue to face deteriorating loan quality.  View Article
Treasury Nason - Fed lending comes with 'regulatory cost'
The 'too inter-connected' assumption does not supplant market forces, Nason said. We need to develop ways to ensure that private institutions, even complex ones, can fail without threatening the real economy.  View Article
Shadow Financial Regulatory Committee criticizes Bear bail-out
If Bear Stearns had been a bank, events during the second week of March should have unfolded quite differently, the US SFRC states and voiced its concern about several aspects of the transaction.  View Article
Fed Bernanke on long-term perspective of the turmoil
Stepping back one can see that the turmoil has been some time in the making and reflects the combined influence of several powerful, longer-term developments, Bernanke said and outlined some of the factors that served as prologue.   View Article
Fed Kohn calls on private firms to establish larger liquidity buffers
Market participants must thoroughly reassess the market-liquidity assumptions, Kohn said. However, major central banks could perhaps agree to accept a common pool of very safe collateral, facilitating the liquidity management of global banks.  View Article
BoJ Shirakawa – uncertainties still substantial
As these headwinds are likely to stay for some while, Japan’s economy seems to slow for the time being, Governor Shirakawa said. Uncertainties in financial markets are still substantial.  View Article
BoJ Suda – U.S. financial markets continue to be unstable
Disruptions in global financial markets might not come to an end until market participants are satisfied with the re-evaluated prices of risk assets and the correction in the U.S. housing market has started to show signs of bottoming out, Suda said.   View Article
Japan financials sub-prime losses reach $ 8bn
Losses from investments tied to the U.S. sub-prime mortgage market cost Japanese financial firms about $8 billion as of the end of March, Japan's FSA said on Friday, up 42 percent from December.   View Article
FSA Japan statement on amendments to Financial Instruments and Exchange Act
Japanese parliament passed the Bill for Amendment of the Financial Instruments and Exchange Act which puts into force a number of measures incorporated in the ‘Plan for Strengthening the Competitiveness’.   View Article
FSA Japan issues newsletter for April 2008
The newsletter includes among others the FSA position on the Financial Instruments and Exchange Act and the cooperation agreement between the FSA and the China Banking Regulatory Commission.   View Article
BIS report on interdependencies of payment and settlement systems
Central bankers recommend a number of actions to address the risk-transmission channels brought by system interdependencies. The report draws upon the implications for the safety and efficiency of the global payment and settlement system.  View Article
Euronext announces fee reduction by 30 percent
NYSE Euronext announced a new fee package that will reduce fees by up to 30% for high frequency trading on its European cash equity markets and will be effective from 1st July 2008.   View Article
DTCC receives approval to settle alternative investments products
DTCC received regulatory approval from the U.S. SEC to launch its Alternative Investment Products. Back in April, DTCC has been selected to provide a clearance and settlement solution for Turquoise.   View Article
Turquoise to go live on 5 September
Eli Lederman, chief executive of Turqouise, told an industry conference that the platform would start by offering 300 stocks across 14 European markets. Turquoise is one of the new equity trading platforms emerging in Europe.  View Article
Euroclear to acquire Nordic Central Securities Depository
The four Scandinavian banks that own the Nordic Central Securities Depository (NCSD) have signed a preliminary deal to sell their stakes in the business to European depository Euroclear.  View Article
S&P in warning over leveraged loans
The standards of leveraged loans used to fund private equity buy-outs have loosened in Europe this year in spite of the credit crisis, sharply raising the risk of corporate defaults, Standard & Poor’s warned on Wednesday.  View Article
CEA calls to use Solvency II to improve insurance supervision
The purely voluntary co-operation between national supervisors has not made it possible to go beyond an exchange of information and achieve effective supervisory co-operation, Michaela Koller, director general of the CEA criticized.    View Article
CEA position on cost of capital methodology
The different methodologies of cost of capital calculations being advocated by various stakeholders do not necessarily result in mutually exclusive approaches, CEA notes and specifies attributes that market risk margin approaches should have.   View Article
IFSL commodities trading report
The report provides an overview about OTC derivatives trading and Exchange-traded commodities. It predominantly focuses on commodity derivatives that are traded on exchanges and OTC derivatives markets.   View Article
OECD warns EU against pensions ‘complacency’
The OECD warned that there should be no “complacency” on the future of pensions, as at least four countries still need to make “major reform efforts”.  View Article
IASB hints at watering down of pensions review
The IASB could be on the verge of scaling back the scope of its Phase I project to address pensions accounting. The IASB unveiled a discussion paper in March proposing a new definition of contribution-based pension plans.   View Article
IASB forms advisory panel on valuation of financial instruments
In response to the recommendations made by the FSF the IASB plans to form an advisory panel that will assist in reviewing best practices in the area of valuation techniques. The first meeting will take place on 13 June 2008.   View Article
SEC Cox supports IASB new monitoring group
As IFRS gain acceptance around the world the only real question is how quickly both the accounting standards and the process by which they are established and developed can be globally recognized as world-class, Cox said.   View Article
CEA criticizes recommendation to cap auditors’ liability
A cap on liability implemented in Europe will make no difference at all and will not prevent large losses, CEA criticizes. It will not improve the insurability of large auditing firms and hence the availability of insurance coverage.   View Article
Commission recommendation on limiting audit firms' liability
The Recommendation leaves it to Member States to decide on the appropriate method for limiting liability, and introduces a set of key principles to ensure that any limitation is fair for auditors, the audited companies, investors and other stakeholders.   View Article
EFRAG final comment letter on D23
EFRAG agrees that existing IFRS lacks guidance on the accounting for distributions of non-cash assets to owners and supports IFRIC in its efforts to develop interpretative guidance.   View Article
EFRAG requests comments on amendments to IFRS 1 and IAS 27
The amendments provide relief for first-time adopters when measuring the cost of investments in subsidiaries, associates, and jointly controlled entities. IAS 27 has been amended to change among others the rules for recognition of dividend revenue.  View Article
ECOFIN meeting 2-3 June
The Council adopted conclusions on the clearing and settlement of securities transactions and took note of progress on Solvency II. Council also held a debate on deposit guarantee schemes.  View Article
ECON meeting 2-3 June
The debate on Hedge Funds and Private Equity revealed that the technical specifications of 'Rule 39' still lack clarification. The Committee also held a hearing on the future structure of supervision and had an exchange of views with CESR.  View Article
IMCO meeting 2-3 June
IMCO Committee held a hearing on consumer financial education which provided a snapshot on the different measures provided by commercial banks, national authorities, and consumer organisations.   View Article
Plenary Meeting 4-5 June
Parliament adopted the two own-initiative reports from Othmar Karas, reacting to a Commission Green Paper on retail financial services, and from Gianni Pittella, which responds to the Commission’s inquiry into competition in retail banking.   View Article
Commission approves restructuring of Sachsen LB
The Commission has concluded that a liquidity facility and a state guarantee for German bank Sachsen LB are compatible with EC Treaty state aid rules.   View Article
Commission doubts Northern Rock rescue package
The Commission expressed serious reservations about the restructuring package for Northern Rock, including doubts whether the duration of the plan is as short as possible.  View Article
MLex: Banks seek solution to EC's payments network concerns
Europe's banks are seeking to address anti-trust concerns raised by the European Commission over the way they set standards for payments cards in a bid to avoid full-scale anti-trust action.  View Article
Commission starts procedure against Volkswagen law
The Commission opened an infringement procedure against Germany on its failure to comply with a Court of Justice ruling on the Volkswagen law.  View Article




17 June 2008

CEBS hearing on options and discretions in the CRD

CEBS will hold a public hearing on its consultation paper on on options and national discretions in the Capital Requirements Directive as part of developing its response to the Commission's Call for Technical Advice. The hearing will take place at CEBS premises in London.

Agenda, registration form


17-18 June 2008

FESE Convention

The 12th FESE Convention in Stockholm will focus on the most topical market and policy developments affecting the exchange industry and financial services institutions. Issues include the latest developments in integration of the EU-US financial services markets, a special focus on MiFID implementation, clearing and settlement of securities, financial stability in global capital markets, and trading and risk management in global derivatives markets.

Programme, registration


4 July 2008

CEBS hearing on technical advice on Liquidity Risk Management

CEBS is organising a public hearing on the second part of its' advice on liquidity risk management at CEBS premises in London.



7 July 2008

Public hearing on the CESR and CEBS joint consultation paper on commodities

CEBS and CESR organise a hearing on the technical advice to the European Commission’s review of commodities business at CEBS’s premises in London.



15 July 2008

Commission public hearing on "substitute" retail investment products

The hearing will discuss the evolving market for retail investment products and whether the current fragmented regulatory framework provides a sound basis for ensuring that investors receive the information and the quality of service they need to make appropriate investment decisions.

Registration, Programme


11-12 September 2008

Eurofi Conference 2008

The Conference on “EU priorities and proposals of the financial services industry for the Ecofin Council” will take place in Nice, prior to the informal ECOFIN Council session. Speakers include: Joaquin Alunmia, Charlie McCreevy, Wolf Klinz, Michel Pébereau, Tommaso Padoa-Schioppa, Thomas Steffen, Eddy Weymeersch, Pervenche Berès, Magdalena Kuneva, Christine Lagarde, Gertrude Tumpel-Gugerell, and many others.

Programme, Further information


Published by The GrahamBishop Team

© Graham Bishop

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