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06 May 2010

This week in "Brussels" + Podcast

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  Articles from 29 April 2010 - 06 May 2010

  Financial Services Policy

Barroso: Whatever necessary will be done to ensure that financial markets are not a playground for speculation
Speaking at the EP plenary session and ahead of the Eurozone summit, Barroso stressed that the EC is focused on two main strands for reflection and action - the reassessment of the rules for economic governance, including the Stability and Growth Pact, and the financial markets reform.  View Article
Commissioner Rehn and IMF Strauss-Khan: Greece will have to make great sacrifice in the coming years
The total amount of financial support provided to Greece accounts for €110 billion, being provided by euro area countries and the IMF. Greece will now have to implement a rigorous stability programme to bring down its debt and spur competitiveness.  View Article
ECON committee: Financial system in the spotlight as MEPs quized Barnier
In a wide-ranging debate, the Commissioner covered crisis prevention and CRAs amongst others. Mr Barnier avoided commenting on the Goldman Sachs case, because of legal proceedings in the US, but added that the Commission would be looking at how to deal with CDS and naked short selling in October   View Article
Commission spring forecast 2010-11: gradual economic recovery in progress in the EU
The report also reveals that uncertainty is still high with broadly balanced risks. As the economy is emerging from a recession accompanied by a financial crisis, the recovery crucially relies on the soundness of financial markets, which has yet to be solidly re-established.   View Article
EBF: Banking remuneration policy under the spotlight
The report provides an overview of the various measures put in place to regulate remuneration in the financial sector by each EU member country. The report supports the FSB principles but underlines the importance of a level playing field to ensure the competitiveness of Europe at a global level.   View Article
Geithner urges lawmakers to support bank fee
The fee would be applied over a period of at least ten years and is estimated to raise about $90 billion. However, it should stay in place longer, if necessary, to ensure that the cost of TARP is fully recouped, he said.  View Article


ECON committee hearing on CRD IV and Basel III
MEPs quizzed a panel of experts on issues such as the level and quality of capital, how to address the pro-cyclical nature of the Basel II rules, the introduction of supplementary measures such as leverage ratio, and liquidity management.   View Article
German Bundesbank Axel Weber: Complement Basel II with capital surcharges
Weber underlined that Basel II is only part of the solution when talking about the treatment of systemically important financial institutions. Capital surcharges, better resolution regimes and a stronger market infrastructure might also be needed. However, he warned against over simplistic solutions  View Article
EBF calls on BCBS to implement capital requirements only once recovery is assured
EBF also stated that the placement of grandfathering clauses and the recognition of a sufficiently long transition period will be key to succeed in the adoption of the overhaul of the prudential regulatory framework.   View Article
European Parliament states its terms on the Swift agreement: “Bulk data” transfer must be avoided
On the issue of bank data transfers, Parliament argues in a resolution adopted by show of hands, that bulk data transfers infringe EU legislation. Parliament opted to postpone its vote on the existing agreements with the US and Australia and called for those accords to be renegotiated.  View Article
ECB Gertrude Tumpel-Gugerell: SEPA for cards, more than a symbol of SEPA’s success
Speaking at the Monnet Symposium, Tumpel-Gugerell emphasized that very often SEPA for cards is associated with the establishment of an additional European card scheme. However, SEPA for cards is about much more than that; it is about business rules and technical standards too.  View Article
EFAMA concerned about Commission’s definition of “high quality liquid assets” in CRD IV consultation
Some of the Commission proposals would have a considerable indirect impact on the fund industry as credit institutions represent an important investor group, EFAMA argues. It also hopes that CRD IV will facilitate the qualification of fund units as collateral eligible for credit risk mitigation.   View Article
BCBS: Risk weight for the Multilateral Investment Guarantee Agency (MIGA)
The Basel Committee on Banking Supervision has agreed that supervisors may allow banks to apply a 0% risk weight to claims on the Multilateral Investment Guarantee Agency (MIGA) in accordance with paragraph 59 of the document International Convergence of Capital Measurement and Capital Standards.  View Article


EFAMA’s comments on ECON draft report on OTC derivatives
EFAMA calls for a robust risk management system for the CCP as it is vital to protect both its clearing and non‐clearing members. Of particular importance are margin and collateral management, as well as pricing and default procedures.   View Article
EBF on high frequency trading: regulation should not seek to undermine technological progress
EBF believes that market abusive behaviour must not be tolerated and supports the strengthening of the tools available to supervisory authorities. If additional rules are considered necessary, they should be introduce through the trading platforms’ own rules or through Level 2 or Level 3 rules.   View Article


Barnier on Solvency II: Fifth quantitative impact study essential for final fine-tuning
The Solvency 2 Directive should enable us to propose an internationally recognised standard, based on rigorous economic principles and leaving no room for regulatory loopholes, Commissioner Barnier underlined. Also, the QIS 5 will be used for the final calibration of the directive.   View Article
CEA calls for further work on Solvency II implementing measures
CEA’s Michaela Koller warned against imposing overly conservative capital requirements on the insurance industry through the implementing measures. ”Excessive capital requirements would have harmful consequences for the insurance industry”, she said and called for changes in the QIS5.   View Article

  Asset Management

EFAMA third annual review on asset management in Europe: facts and figures
The review provides a snapshot of the industry, looking at its overall size, general structure, asset allocation and client base. It also reveals that the UK, France and Germany together accounted for 66% of total assets under management in Europe at the end of 2008.   View Article
EDHEC RISK: Hedge funds and mutual funds converge
Dr Arjuna Sittampalam argues that convergence of mainstream asset management and alternative hedge funds has been much debated but has not been realised on any significant scale until recently. Several forces are accelerating the trend on both sides of the Atlantic, one of these being fees.  View Article
IPE: Threat of AIFM impasse as UK looks to hold firm on next ECOFIN Council meeting
MEP Jean-Paul Gauzès revealed that 25 EU member states had come to a relatively firm agreement over the directive, but he said the UK was opposing the consensus “very determinedly”, IPE reports. The Czech Republic also has some concerns with the current draft over depository issues.  View Article
AIFMD depositary rules would force UCITS change
Hedgeweek also reports that short selling also comes under the AIFM microscope. An ECON committee working document proposes inserting a clause that will require the European commission to amend its market abuse directive to harmonise short selling across the EU and ban naked short selling.  View Article
Commission report on removing tax obstacles to cross-border venture capital investment
The findings include that venture capital funds may be treated in very different ways for tax purposes by the different Member States. This can lead to cases of double taxation. The Experts Group suggests that EU Member States should agree on a mutual recognition of the tax classification.  View Article

  Corporate Governance/Accounting

CESR’s comments on IASB’s exposure draft measurement of liabilities in IAS 37
CESR’s main concerns relate to the due process applied on the IASB’s project to amend IAS 37 provisions, contingent liabilities and contingent assets. CESR shares EFRAGs view that the IASB should re-expose the entire proposed standard and not just the proposed measurement requirements.   View Article
IASB and ASBJ discuss convergence with IFRS
Representatives of both boards believe that the IASB’s and the ASBJ’s ongoing work towards convergence of Japanese GAAP and IFRSs is essential for the successful adoption of IFRSs in Japan. The meeting follows the G20 mandate to complete convergence of global accounting standards.  View Article
FRC Chief Executive says it is time to review whether the value of the audit can be enhanced
Stephen Haddrill argued that audit is a key part of high quality governance as the auditor sees the company’s approach to risk. The auditor reports to shareholders on whether the company is providing a true and fair view of the business. The investor only sees the tip of the iceberg of work.   View Article

  Financial Services Month in Brussels - Report

April 2010 - with Podcast
The crisis in Greece has highlighted the risks from rising levels of public debt. The Overview highlights Graham Bishop’s latest article proposing that CRD IV apply higher capital requirements to eurozone States that fail to implement Excessive Deficit Procedure requirements.  View Article

  Brief Opinions/Commentaries

Bruegel: The Blue Bond Proposal
Jakob von Weizsäcker and Jacques Delpla propose a Blue Bond where European governments pool up to 60 percent of GDP of their government debt in the form of a common European bond to efficiently resolve the finance of member states debt.  View Article
Wolfgang Münchau: Europe’s choice is to integrate or disintegrate
He argued that a crisis resolution system, better fiscal policy co-ordination, and policies to reduce intra-eurozone imbalances are needed if the eurozone is to survive in the medium term. In the long term, survival the eurozone will certainly need an emergent fiscal union and a single European bond  View Article
Bruegel: Where does Spain stand compared to Greece?
Benedicta Marzinotto argues that Greece has a fiscal problem, whose origin is domestic. The costs of a possible default are greater for euro zone partners than for Greece. On the contrary Spain’s problem has a European origin but the costs of delayed adjustment shall be borne by Spanish citizens.  View Article



© Graham Bishop

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