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31 March 2010

This week in "Brussels" + Podcast

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Financial Services Policy Banking Securities
Insurance Asset Management Corporate Governance/Accounting
Edited Minutes of key legislative Bodies Brief Opinions/Commentaries Financial stability - policy analysis
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  Articles from 26 March 2010 - 31 March 2010

  Financial Services Policy

Council conclusions: ESAs to begin work early 2011
The EC believes progress is particularly needed on capital requirements; systemic institutions; financing instruments for crisis management; increasing transparency on derivative markets and measures in relation to sovereign credit default swaps.   View Article
EBF: Council conclusions need fine-tuning
EBF acknowledges that an increase in capital requirements is necessary. But it also believes that over-burdening the banks with stringent financial measures would prevent them from fully playing their part as providers of credit to the economy at large.  View Article
MEPs discuss Eurozone issues and governance with Jean-Claude Trichet and Olli Rehn
Many MEPs stressed the need for more economic governance and that Europe is not yet out of the financial crisis. "We are now in the second phase of the crisis, characterized by massive public deficits", Sven Giegold (Greens,DE) warned.   View Article
ECB: opinion on Omnibus I Directive
The ECB believes it is of particular importance for the fulfilment of their respective tasks to remove legal obstacles to information sharing between the ECB/ESCB, the ESRB, the three ESAs and the national supervisory authorities.  View Article
Christian Noyer: French perspective of financial stability in Europe and the world
The universal model adopted by French banks has weathered the storm relatively well. There needs to be scope for different countries to tailor solutions to their circumstances within a globally agreed framework.  View Article
IMF chief: difficult choices ahead for Europe's policymakers
The EU must finalize its planned overhaul of financial sector regulation. While policymakers have made progress, more work is needed on crisis management and resolution. Strauss-Kahn is calling for the establishment of a European Resolution Authority.   View Article
UK MPs’ report: too important to fail – too important to ignore
The Commons Treasury Committee believes the EU should rethink its rules for cross-border banking. It should require banks to operate subsidiaries, rather than branches, in other EU countries in order to prevent a repeat of the financial crisis.   View Article
Euro area heads: statement on Greek situation
After weeks of speculation, Euro area heads of state have decided to implement a package involving substantial IMF and European financing. Euro area member states are ready to contribute to coordinated bilateral loans.  View Article
Kathimerini: Greek Minister claims IMF role in financial aid scheme would not change fiscal policy
The government would like to raise 5 billion euros over the next few days. It is expected to issue either a three- or seven-year bond this month, followed by a similar issue in April. Greece has to find a way of repaying 20 billion euros of debt by May.   View Article
Irish Finance Minister announces measures to shore up banking system
Brian Lenihan revealed that Ireland’s banks could face a capital shortfall of €32 billion. He described the state of the banking sector as "truly shocking" and condemned the banks for playing "fast and loose" with the country's economy.  View Article
FSB publishes compensation practices peer review
Significant progress has been made in incorporating FSB Principles and Standards into domestic regulatory and supervisory frameworks, while compensation structures within major financial firms have been revised. However, full implementation is far from complete.   View Article
G20 calls for leaders to deliver on ambitious reform agenda agreed in London and Pittsburgh
Gordon Brown and his counterparts from Canada, South Korea, France and the US have written to other G20 countries to reiterate leaders’ agreement to work together to reform the international financial institutions and promote economic growth at the next summits in Toronto and Seoul.  View Article
Japan's FSA: disclosure items concerning corporate governance
The Japanese FSA has revised the Ordinance on Disclosure of Corporate Affairs. Amendments include information disclosure on the structure of corporate governance, remuneration of directors and statutory auditors, and cross-shareholding.  View Article


Basel Committee issues consultative paper on good practice principles for supervisory colleges
The principles give broader guidance on cross-border cooperation and information-sharing by clearly outlining expectations for both home and host supervisors in relation to college objectives, governance, communication and information.  View Article


The House of Lord EU Committee - The future regulation of derivatives markets: is the EU on the right track?
The Committee recognise the economic and commercial value of derivatives instruments but acknowledge that the derivatives market, which had a global net value of around $25,000bn in 2009, has the potential to destabilise the financial system in the EU.  View Article
Richard Portes: banning naked CDS
A positive side effect of Greece’s troubles is that regulators and central bankers are finally paying attention to the CDS market. Portes has been pointing out for years the destabilising effects of naked CDS in the financial crisis and the dangers of these instruments as a speculative device.   View Article
MIFID review: AFME, APCIMS, FOA and ISDA joint briefing paper
Concerns exist that MIFID has not worked well or fulfilled expectations. The report presents cases such as OTC trading in cash equities where it has been asserted that OTC trading in equities is unregulated, untransparent and increasing.  View Article


CEIOPS: pilot exercise findings on supervisory disclosure
This was undertaken following the ECOFIN request to adopt common formats to disclose national transposition and implementation of EU legislation. It has been conducted in relation to the Reinsurance Directive and with the responsibility of CEIOPS members.   View Article
CEIOPS: First Level 3 Guidance for Solvency II on pre-application process for internal models
Although the pre-application process is voluntary, CEIOPS believes it is beneficial for undertakings and supervisors to have a consistent internal process to facilitate the introduction of a balanced internal models approval process.  View Article

  Asset Management

EFAMA report: revisiting the landscape of European long-term savings
This presents the views of 23 CEOs from some of the largest European asset management firms. It addresses the long-term savings challenges facing Europe, transparency, efficient pan-European distribution of retail financial products, and the improvement of business practices.  View Article
Hedge funds review: AIFM equivalence criteria proposed
Gauzès believes the proposed equivalence criteria - though it would need to be broadly similar - would not require non-EU countries to have identical legislation to the EU. He is “not worried" about the US being able to meet the criteria since the transition period would be between 3 and 5 years.  View Article
ALFI/Lipper study on future of UCITS: “Symbiosis in the evolution of UCITS”
The Association of the Luxembourg Fund Industry has unveiled a study on the European cross-border fund industry. Produced by Lipper FMI, it looks at the market's growth from its inception in 1988 and the future size of the industry.   View Article

  Corporate Governance/Accounting

BIS on public governance of central banks: an approach from new institutional economics
The paper argues that the literature of new institutional economics sheds new light on the public governance of central banks. It present different economic theories including Williamson’s theory of "governance as integrity" applied to the internal management of central banks.  View Article
IESBA seeks views on 2010–2012 strategy and work plan
The International Ethics Standards Board for Accountants (IESBA) has released for comment an exposure draft setting out its proposed strategy. The work plan includes two high-priority projects: conflicts of interest and responding to suspected fraud or illegal acts.  View Article

  Brief Opinions/Commentaries

Wolfgang Münchau: smoke and mirrors in Brussels
Münchau believes the agreement does not solve the problems of Greece or of any other country. But it solves Merkel’s problems and those of the ECB. During the summit, EU leaders did not even contemplate trying to solve the double threat hanging over the future of the eurozone.  View Article

  Financial stability - policy analysis

BIS: prospects for, and implications of, public debt
The paper examines what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next decades. The projections of public debt ratios suggest that the path pursued by fiscal authorities in a number of industrial countries is unsustainable.   View Article



© Graham Bishop

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