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12 June 2008

This week in "Brussels"

Articles from 05 June 2008 - 12 June 2008

ECB Smaghi calls for improved information exchange between supervisors and central banks
Legislative obstacles that prevent supervisory authorities from providing information to the ECB have to be eliminated, Smaghi said. It should be a priority in the EU to guarantee the duty of co-operation.  View Article

Commission calls for advice on conglomerates directive
The Commission requested the IWCFC to advise on legal definitions and general terminology, scope, and internal control requirements of the FCD in the light of contagion, concentration and complexity issues.  View Article

Council Presidency - 18 month draft programme
The draft programme outlines the policy priorities for the next French, Czech and Swedish Presidencies in the financial services and other sectors. Solvency II, UCITS, Clearing and Settlement, and Financial Supervision are among the major subjects.  View Article

EFCC Newsletter No 1
The EFCC discussed the roadmap for the upcoming review of the Financial Conglomerates Directive with a view to establish the supplementary supervision of regulated entities. A Roundtable is planned for 8 September.   View Article

ECB Financial Stability Review - risks increased
The euro area financial stability outlook is highly uncertain and a lot will depend on how economic conditions develop and how banks respond to the operating environment, the Report says stating that systemic risks had increased.   View Article

SEC proposes new rules on CRAs
The approved package regulates the conflicts of interests, disclosures, internal policies, and business practices of CRAs and requires them to differentiate the ratings they issue on structured products from those they issue on bonds.  View Article

EU-US Summit on strategic partnership
The EU and the US discussed the strengthening of the economic and regulatory co-operation and the de-burdening of enterprises on both sides of the Atlantic, following the co-operation in this field in the framework of the TEC.  View Article

PCAOB adopts rules for annual and special reporting
The rules require that each firm report certain information annually. The rules also require special reporting regarding certain specified events within 30 days of the event.  View Article

FDIC Supervisory Insights Journal
The Journal focuses on issues related to the financial markets turmoil such as transparency in the structured finance market, the risks and fallout associated with growth in non-traditional mortgage products and the inappropriate use of interest reserves.  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 a 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

FRTC interim report on payment and settlement - Japan
The interim report was prepared by the Study Group on Payment and Settlements and sums up all points of discussion on payments and settlement that have been raised and discussed by the Group so far.   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 co-operation agreement between the FSA and the China Banking Regulatory Commission.  View Article

BBA proposes supervisory colleges
Key proposals include that each college should reflect the individual needs of the group under supervision, possibly in form of a 2 tier structure with a core college and a general forum for group wide information exchange, BBA suggests.  View Article

BIS assessment on fair value measurement and modelling
The paper summarises the BIS initial assessment of valuation practices and presents the key findings and follow-up actions. It discusses valuation shortcomings exposed during the market turmoil and challenges in the valuation process.   View Article

BIS Quarterly Review, June 2008
The Review presents an overview of recent financial markets developments. Special features include an article on the international banking activity amidst the recent financial market turmoil.  View Article

ECB Tumpel-Gugerell - interdependencies of payment and settlement systems
The financial turmoil has demonstrated that national degrees of trust, transparency and co-operation have not yet been replicated on an international level, Mrs Tumpel-Gugerell said, which also includes appropriate supervisory structures.  View Article

CEA calls for risk-sensitive approach to Solvency II MCR
An inappropriate calculation of the MCR could threaten the Solvency II regime, CEA warns. Approaches to calculating the MCR that are not consistent with the overall system could jeopardise the effectiveness of the whole Solvency II regime.  View Article

France presses call for Solvency II on pensions
The French government has reiterated calls for a 'level-playing field' and argued all pension funds should be included under the requirements of the Solvency II directive, just weeks before it takes over the EU presidency, IPE reports.  View Article

Insurers fear political delay to EU reform
Big insurance companies are becoming increasingly concerned that a planned overhaul of supervision in the European Union could be thwarted by political opposition, the FT reports.  View Article

Commodity ETFs see increasing investor interest
Commodity exchange-traded funds have become increasingly popular and achieved a relatively high level of market awareness, a Deutsche Bank report reveals, due to a combination of the extraordinary recent returns and the ease of access.   View Article

OECD Ministers adopt declaration on sovereign wealth funds
SWFs have become a key player in the new financial landscape, OECD Ministers noted, and agreed that protectionist barriers to foreign investment would hamper growth.  View Article

Hedge fund managers shy away from signing compliance code
Hedge funds have given a voluntary code for the industry a collective thumbs-down. Not a single firm has signed up to the compliance standards since they were launched in January, 'The Independent’ reports.  View Article

Finland must adjust pension system - OECD
The OECD has warned Finland to address further pension reforms in the short-term, IPE reports. There will be serious difficulties ahead if the country’s government does not enact quick reforms.  View Article

Dutch government to lobby against IASB proposals
The Dutch minister of social affairs has agreed to lobby internationally to get essential components of the Dutch national pensions accounting system acknowledged in the new IFRS, IPE reports.  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

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

© Graham Bishop

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