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15 April 2010

This week in "Brussels"+ Podcast

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Financial Services Policy Banking Securities
Asset Management Corporate Governance/Accounting Edited Minutes of key legislative Bodies
Financial stability - policy analysis   About this email

  Articles from 10 April 2010 - 15 April 2010

  Financial Services Policy

Barnier: Future ESAs need to have the power to impose binding mediation
Commissioner Barnier reiterated that it is essential for ESAs to possess the option to make biding decisions when national supervisors fail to agree. Speaking at the joint ECB and Commission conference he also urged the Council and the EP to reach an agreement on the supervisory package.   View Article
Spanish Presidency compromise text on Omnibus I Directive giving powers to the new ESAs
Changes to existing financial services Directives are necessary for the ESAs to work effectively. The most polemic issue on the debate has been the possible ESAs binding mediation powers; some Member States prefer the ESAs not having them. The Council and the EP are currently debating this Directive  View Article
ECON committee: MEPs hear views of leading figures on the Greek fiscal crisis
The first part of the hearing focused on the next steps in economic surveillance and governance in the EU, and on how to improve the reliability of national statistics. The second part was devoted to Member State debt management and stepping up the surveillance of the derivatives markets.  View Article
ECB's fourth report on financial integration in Europe: Return towards integration is taking place
The report reveals that most integrated markets, such as the money markets, showed clear signs of retrenchment within national borders. The bond and retail banking markets, by contrast, were less affected, and the equity markets did not show any appreciable retreat from cross-border integration.  View Article
Trichet: There is a need to strengthen global governance - in particular in the financial field
Speaking at the Bocconi University in Milan ECB President Trichet called on all institutions, governments, central banks and other parties concerned to make the new post-crisis global governance work exemplary .He added that crucial for the success is the FSB and G20.  View Article
IMF’s report on systemic-risk-based regulation
The report presents a methodology to compute and smooth a systemic-risk-based capital surcharge. It also formally examines whether a mandate, by itself, to explicitly oversee systemic risk, as envisioned in some recent proposals, is likely to be successful in mitigating it.  View Article
Eurozone Members agreed to provide € 30 billion in emergency loans to Greece
Although some technical details still need to be determined, it was announced that the interest rate will be at about 5 percent. The programme will cover a three-year period and it will be cofinanced by the IMF.  View Article
Wolfgang Münchau is still sceptical on the Greek deal
Münchau questioned the EU response to the Greek crisis. Greece is lucky because it was the first country to receive EU help, he said and wonders what will happen to Portugal and Spain. The EU has still not provided a generalized crisis resolution regime, he criticized.   View Article
Commission warned Portugal on excessive debt
The Commission examined the ambitious Portuguese stability programme for the years 2011 to 2013 concluding that additional measures may be needed if risks to the macroeconomic and fiscal developments materialize. Portuguese public debt is expected to reach around 90% of GDP by 2013.  View Article
EP draft report on Directors’ remuneration
Saïd El Khadraoui (S&D/BE) issued his draft report calling on every financial institution and listed company to have an independent remuneration committee accountable to supervisors. The rapporteur added that individual’s bonus must not make up more than 50 percent of their total annual remuneration  View Article
SEC proposed large trader reporting system to protect investors
The SEC is proposing that large traders be required to identify themselves to the Commission, which would then assign each trader a unique identification number. Large traders would provide this number to their broker-dealers, who would be required to report transaction records to the SEC.  View Article


ECON committee discusses draft report on cross-border crisis management
MEPs raised concerns on how the European crisis management framework will have to be differentiated among systemic and non-systemic banking groups. Rapporteur Elisa Ferreira (S&D/PT) called on the future EBA to clarify and define what a systemically risky financial institution is.  View Article
Basel Committee on Banking Supervision consults on sound practices for backtesting counterparty credit risk models
The paper provides additional information on supervisory expectations and recommendations to strengthen the backtesting of internal assessments of counterparty credit risk exposures. The Committee believes these sound practices will enhance the resilience of individual banks and the financial system  View Article
FT: Financials seek to soften Basel position on capital requirements
Banks’ return on equity levels would be cut by at least a half, according to many bankers and analysts, to as little as 5 per cent. They argue that the industry would find it impossible to attract new investors, in competition with more profitable sectors.   View Article


EuropeanIssuers responded to CESR’s consultation on enlargement of scope of shareholding notifications
One of their main concerns is that instruments that may be used to acquire voting rights, de facto control over or influence on the exercise of voting rights should be aggregated to shares and entitlements to shares for the calculation of the notification threshold.  View Article
IMF: Making OTC derivatives safer- the role of central counterparties
The IMF report shows that properly regulated CCPs reduce counterparty risk among OTC derivatives market participants. Systemic risk is also in part reduced due to the ability to net transactions across multiple counterparties. However the short-run costs of moving contracts to CCPs are high.  View Article
MiFID review: CESR consults on equity markets
CESR’s consultation focuses on definition of obligations for systematic internalisers, improvement in the quality and timeliness of post-trade transparency regime, application of transparency obligations to equity-like instruments and cost of market data.  View Article
MiFID review: CESR consults on investor protection and intermediaries
The main topics of the consultation include the definition of personal recommendation, supervision of tied agents and related issues, requirements for complex versus non-complex financial instruments and the recording of electronic communications.   View Article
MiFID review: CESR consults on transaction reporting
CESR’s proposals cover: introduction of a third trading capacity, collection of client and meaningful counterparty identifiers, client ID collection when orders are transmitted for execution and transaction reporting by market members not authorized as investment firms.  View Article
ECB confirms delay to T2S - delayed by at least a year to 2013
The T2S system was conceived by the ECB as a mechanism for cutting cross-border trading costs through the creation of a streamlined pan-European platform. However, it became apparent towards the end of 2009 that the complex project was foundering in the face of resistance from market participants.  View Article

  Asset Management

The Parliament Magazine published stakeholders’ view on the AIMFD
The AIMFD coverage includes five short articles written by ECON rapporteur Jean-Paul Gauzès (EPP/FR); Poul Nyrup Rasmussen, the president of the Party of European Socialists; Syed Kamall (ECR/UK); Javier Echerri, Secretary General of EVCA and Andrew Baker of AIMA.   View Article

  Corporate Governance/Accounting

IASB and FASB quarterly report shows continued progress towards convergence goal
As regard the Fair Value issue, the joint reports reveals that the FASB expects to issue an exposure draft of proposed amendments to its fair value measurement requirements so as to improve them and achieve convergence with the proposed IFRS.   View Article
EFRAG amends draft comment letter on IASB's ED measurement of liabilities in IAS 37
EFRAG's initial considerations included the scope and constructive obligations. It has now expanded its position on the measurement of liabilities involving a service.   View Article
EFRAG comments on IASB's ED conceptual framework for financial reporting
The Exposure Draft focuses on the description and characteristics of a reporting entity. It also sets the definition of control as the basis for determining the boundaries of a reporting entity where it includes more than a single entity.  View Article

  Financial stability - policy analysis

ECB Bini Smaghi: Has the financial sector grown too big?
Speaking at a Nomura Seminar in Kyoto, Bini Smaghi said that ECB research has shown that while a deep financial sector leads to more optimal economic diversification, its contribution to diversification is substantially weakened when it becomes too large so it is essential to define the optimal size  View Article
Bank of Portugal publishes paper on financial stability and policy cooperation
The paper concludes that the EU supervisory reform will only be possible to evaluate it on the basis of its practice. The whole process should be regarded as institutional building; success is difficult and should not be taken for granted.   View Article



© Graham Bishop

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