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22 July 2010

This week in "Brussels"

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Articles from 15 July 2010 - 22 July 2010

Financial Services Policy

Herman van Rompuy: Banks have understood that the EU is serious about its commitment of transparency
Herman Van Rompuy highlighted that the EC is focusing on more issues than just the supervisory package such as the limit on bankers' bonuses, regulation of the rating agencies, and the introduction of a bank levy.   View Article
CRIS committee: consideration of amendments on the Draft report on the financial, economic and social crisis
Ms. Beres acknowledged the necessity of working together with the ECON Committee on economic governance and reaffirmed her commitment towards open markets. She underlined the importance of good regulations and proper functioning.   View Article
Commissioner Barnier: proposals on derivatives and short selling will be put forward in September
Speaking on the approval by the U.S. Senate of the financial reform bill, Barnier stresses that Europe is making equally good progress as the US in the implementation of the G20 roadmap. It is essential that the G20 commitments are translated into practice at the same time at international level.  View Article
FSB invites feedback on risk disclosure practices
FSB recommendations related to disclosures about structured products and certain other risk exposures that were of concern to market participants in 2008. The review will focus on the implementation of the recommendations by the major financial institutions located in those jurisdictions.  View Article
US Senate approves legislation to revamp financial regulation
One of the main elements of the bill is a new consumer financial protection bureau within the Federal Reserve. Banking analysts warn the new consumer protections could paradoxically lead to a reduction in banking services for low- and moderate-income people.  View Article
President Obama signed Wall Street Reform: "No easy task."
He stressed that this reform will help foster innovation in the financial industry that is central to the US ability to grow. The reform is designed to promote equality and free competition, and to abolish foul practices.  View Article
CFTC Chairman Gary Gensler: OTC derivatives dealers will be subject to robust oversight
Gensler welcomed the fact that standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties which will greatly improve transparency and lower risk in the marketplace.   View Article


IMF warns that bank stress tests have to be credible in order to restore confidence
IMF highlighted that resolving tensions in the banking system is key to allow consumers, companies and others to benefit from the low policy rates of the ECB. The ECB has stepped up its non-standard operations to ensure sufficient liquidity and to help ease tensions.   View Article
FT: Bankers concerned over stress test results
Bankers and analysts expect between 10 and 20 institutions to fail, many of them among the public sector Cajas in Spain and Landesbanken in Germany.  View Article
Deposit guarantee fund schemes will cost Italian banks 8 billion euro
The proposal to create a Fund for deposit guarantee schemes, made by EU Commissioner Michel Barnier last week, would require Italian banks to contribute with 8 billion euro, two thirds of which payable by 2014.  View Article
CEBS draft guidelines on revised Article 3 of Directive 2006/48/EC – taking up and pursuit of the business of credit institutions
Article 3 of the Directive allows Member States to provide for special prudential regimes for credit institutions which have been permanently affiliated to a central body. The goal of the revision of the Article is to ensure equal conditions for competition between credit institutions.   View Article
Nicolas Véron: Detailed disclosure is the key to stress-test success
Bruegel Senior Fellow Nicolas Véron calls for enhanced disclosure of each bank’s exposure to eurozone countries’ sovereign risk, in order to compensate for the absence of sovereign default in the stress scenario.   View Article
BIS consults on countercyclical capital buffer
The consultation paper describes the primary objective of the proposed buffer and presents a short overview of how it would operate in practice. It also sets out the broader macroprudential goal of protecting the banking sector from periods of excess credit growth.   View Article
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CESR consults on transaction reporting on OTC derivatives and extension of the scope of Transaction Reporting Obligations
CESR proposed that investment firms reporting their transactions to a TR, supporting MiFID standards, would be exempted from direct reporting when they communicate to the competent authority their decision to report their transactions through a TR.  View Article
CESR consults on Standardisation and exchange trading of OTC derivatives
In this paper CESR explores the need for taking regulatory actions in relation to further standardisation for credit, equity, interest rate, commodity and foreign exchange derivatives both as a means in itself and also in relation to the promotion of trading on organised markets.  View Article
AMF financial services newsletter: AMF supports Commission OTC derivatives proposal
The AMF and the Banque de France are jointly calling for clearing houses to be given contracts it clears would give it access to central banking refinancing, thereby fur¬ther reinforcing its solidity. According to AMF Chairman Jean-Pierre Jouyet, this will be a tough negotiating point.  View Article
EBF response to EC consultation on derivatives and markets infrastructures
The EBF encourages the Commission to assess thoroughlythe exemptions from the general clearing obligation for non-financial undertakings on the basis of systemic risk considerations and their applicability to financial counterparties.  View Article
AMF research paper on Post-MiFID developments in equity market liquidity
The study seeks to measure the change in liquidity and implicit transaction costs for a sample of large and mid caps since the introduction of MiFID, contextualising these developments by taking fluctuations in volatility into account. It also describes the institutional framework.  View Article
CESR updates the list of measures regarding short-selling
EU securities regulators have adopted measures in their respective markets either to limit, or to introduce stringent requirements or further reporting obligations by firms to supervisory authorities on short-selling. The latest update has been provided by the Polish KNF.  View Article
AMF published its 2009 report on credit rating agencies
On the basis of the AMF assessment, the European Commission tabled a CRAs draft Regulation, which was adopted by the European Parliament in April 2009. The report points to an increase in the net number of downgrades in France.   View Article
CESR Members elected Portuguese Carlos Tavares as the Chair of CESR replacing Belgian Eddy Wymeersch
Under the CESR Charter, the positions are held for two years, however, it is likely that the creation of ESMA, which is currently anticipated to take effect in January 2011, may result in a shorter term being served on this occasion.  View Article

Asset Management

CESR consults on the selection and presentation of performance scenarios in the Key Investor Information document for structured UCITS
For structured UCITS, the section entitled "objectives and investment policy" of the key investor information document shall include an explanation of how the formula works or how the pay-off is calculated.  View Article
CESR consults on its guidelines for the transition from the Simplified Prospectus to the Key Investor Information document
The paper considers some practical implications of Article 118(2) of the revised UCITS Directive, which allows UCITS management companies up to 30 June 2012 to implement Key Investor Information (KII) as referred to in Article 78.  View Article

Corporate Governance/Accounting

US reform act introduces new mining disclosures, puts pressure on IASB on 'Publish What You Pay' disclosures
The act requires public disclosure to the US Securities and Exchange Commission of payments made to the US and foreign governments, relating to the commercial development of oil, natural gas, and minerals.  View Article
EFRAG's Comment Letter on the IASB ED Fair Value Option for Financial Liabilities
EFRAG believes that the introduction of a new, supplementary measurement attribute is not desirable. Regarding own credit risk, EFRAG supports the recognition and reporting of changes in Other Comprehensive Income.   View Article

Competition: Financial Services

Commission orders recovery of illegal state aid from Banco Privado Português
The Commission has concluded that a State guarantee on a €450 million loan, initially granted in 2008, to Banco Privado Português constituted illegal and incompatible State aid. The bank ran into financing difficulties after the collapse of Lehman Brothers and the severe financial crisis.   View Article

© Graham Bishop

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