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21 October 2010

This week in "Brussels"

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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 14 October 2010 - 21 October 2010

  Financial Services Policy

Commission sets out its plans for a new EU framework for crisis management in the financial sector
The EC Communication also includes a "roadmap" providing a longer-term view of some of the major challenges which will need to be overcome in order to ensure smooth handling of crises. Orderly failure should be permitted and no bank should be "too big to fail".  View Article
Commission-backed project to help identify systemic financial market risks
The EC is investing in a research project to develop new systemic risk indicators for “early warning systems” that could alert governments and bankers to impending financial crises in the earliest stages and take early action to stop them from spreading.   View Article
Council President Van Rompuy: "The economic governance package should be in place as quickly as possible"
He stressed that the Task Force has worked like a pressure cooker and that the Commission, the Central Bank and the Ministers of Finance have contributed actively to prepare the final report on economic governance.   View Article
MEPs approved their own contribution to the EU economic governance debate
In a resolution on measures and initiatives to combat the financial crisis, MEPs called for a strong pan-European and global regulatory and supervisory system to cover all financial markets, instruments and institutions. They also called for an FTT and for surplus countries to adjust.  View Article
ECOFIN council debates levies and taxes on financial institutions
At both G-20 and EU levels, it has been underscored that in any future financial crisis, should a further crisis occur, taxpayers' money should not be used to cover bank losses. Some member states have imposed levies on banks but competitive distortions and over-burdening must be avoided.  View Article
EFAMA expresses serious concerns regarding commission’s financial activities tax
EFAMA considers that increased costs due to the introduction of a Financial Activities Tax are likely to be passed on to the end consumer/investor.   View Article
FSB: All countries should have supplementary safeguards for systemically important financial institutions
The Financial Stability Board met in Seoul ahead of the G20 Summit to discuss key elements of financial reforms. The meeting also reviewed progress on other elements of the financial regulatory reform agenda, including accounting convergence.  View Article
EBF urges the Commission to give priority to prevention on crisis management in the financial sector
European banks fully agree with the need to establish as a first step a coordination crisis management framework based on resolution tools that would be available to supervisors in all EU jurisdictions.   View Article
IMF: Difficult policy choices await Europe as recovery gets under way
The IMF is predicting growth of 2¼ percent for Europe in 2010. While the recovery remains sluggish and uneven, it represents a turnaround for Europe, which was gripped by fears over sovereign solvency in May 2010 that threatened monetary union.   View Article
IMF study finds that the worst possible outcome was avoided in emerging Europe
The report reveals that policymakers moved quickly to stabilise their banking systems. Monetary policy was adjusted either to guard against excessive currency depreciation or stimulate domestic demand, depending on country circumstances.  View Article
IMF underlined the need for broader financial sector reform
In Shanghai, central bankers and other senior financial officials from around the world discussed ways of reinforcing the stability of a global banking and financial system still vulnerable to the shocks that triggered the recent international financial and economic crisis.  View Article


BCBS issues consultation report on remuneration and risk performance
The Basel Committee on Banking Supervision has issued a report on the range of methodologies for aligning remuneration with risk and performance for consultation. This report is intended to enhance banks' and supervisors' understanding of risk-adjusted remuneration.  View Article
Basel Committee reports on the responses to the financial crises for the G20 in Seoul
In a report for the Finance Ministers and Central Bank Governors at the forthcoming G20 summit in Seoul, the Basel Committee mentions identifying the weaknesses of the pre-crisis banking sector and describes the measures it has taken to strengthen the resilience of the global banking system.  View Article
UK Banks will face higher taxes
In his spending review, George Osborne laid out the UK government’s plans to tax the banking industry, saying: “we neither want to let banks off making their fair contribution, nor do we want to drive them abroad.”  View Article
UK Government publishes draft legislation on the bank levy
The levy is expected to generate around £2.5 billion of annual revenues by 2012-13 and it will be permanent. According to the BBA, the treasury’s statement is largely silent on how the bank levy would interact with taxation in other countries  View Article
BBA: Treasury’s statement is largely silent on how the bank levy would interact with taxation in other countries
BBA warns that some banks could be taxed multiple times by multiple jurisdictions on the same activities. There is also no international consensus on how banking activities should be taxed: the G20 members still hold very different views.  View Article
ECB Tumpel-Gugerell: SEPA, where do we stand?
She revealed that by 1 November 2010 the reachability of payment accounts for SEPA direct debits will be legally ensured across the EU. This will allow the effective use of SEPA direct debits throughout Europe.  View Article


IOSCO publishes recommendations for market interventions and securitisation in emerging markets
The Emerging Markets Committee of the IOSCO meeting in Istanbul approved two reports containing recommendations for regulators in the jurisdiction of emerging markets, aimed at assisting them in relation to market interventions and the securitisation market.  View Article
IOSCO forms task force on OTC derivatives regulation
The task force will report on exchange and electronic trading, on data reporting and aggregation requirements and on international standards. The Task Force will be led by the US SEC, the US CFTC, the UK FSA and the Securities and Exchange Board of India.  View Article
CEPS debate on new trading technologies and financial stability
The evolution of trading technologies has changed the market microstructure of today’s financial markets. Panelists mainly discussed the effects of high frequency trading in equity markets and how this market is organised in the US and in Europe.   View Article
CEPS paper on reforms for the credit rating industry
Karel Lannoo, Chief Executive Officer of CEPS, argues that despite having singled out CRAs early on in the financial crisis as needing more regulation, policy-makers in the EU seem not to be reassured by the measures that have been adopted in the meantime and want to go further.  View Article
ISDA survey: end-users give high marks to transparency, liquidity and pricing in interest rate swaps market
The International Swaps and Derivatives Association, Inc. (ISDA) released the results of a survey of end-users in the interest rate swaps (IRS) market on such key issues as pre-trade price transparency, market liquidity, price competitiveness and trading practices.  View Article
AFME publishes a briefing note on short selling
AFME strongly believes that some of the specific proposals are disproportionate to the actual risks being addressed and will have negative consequences for the financial markets and its users.  View Article


Implementing Solvency II: myths and challenges
At the ABI Solvency II Conference, Paul Sharma, FSA Director of Prudential Policy, emphasised that QIS5 is a key milestone in the road towards Solvency II which is as much about firms’ transition work towards Solvency II as it is about informing the final calibrations.   View Article

  Asset Management

EU finance ministers back AIFM Directive
The deal achieved would give the European Securities and Markets Authority greater powers to ensure that national regulators are upholding the requirements of the law on foreign funds and managers.  View Article
Barnier on the AIFM Directive: "A good compromise has been reached"
Barnier highlighted that, on the very sensitive question of the third country passport, the agreement foresees a passport based on merit, founded on a solid basis and providing strong controls in terms of risk management.   View Article
French Finance Minister Lagarde welcomed the compromise reached between finance ministers on AIFMD
She said that France now expects the European Commission, ESMA and the European national supervisors to be extremely vigilant in assessing the fulfilment of these obligations in order to obtain the third country passport.  View Article
AIMA concerned about the potential abolition of private placement regimes at a later date under AIFMD
AIMA argues that private placement works well and it is regrettable that this Council agreement does not contain the indefinite continuation of private placement that was agreed in May.  View Article

  Corporate Governance/Accounting

Efective dates for convergence IFRSs and US GAAP
The IASB and the US FASB published documents seeking views on when new financial reporting standards, resulting primarily from their work to improve and achieve convergence of International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP), should become effective.  View Article
The second edition of IFAC SMP Committee Guide to Using International Standards on Auditing in the Audits of Small- & Medium-sized Entities
The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) issued the second edition of its Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (ISA Guide).   View Article

  Brief Opinions/Commentaries

Nicolas Véron: "The European Union has not yet solved its banking problem"
Véron argues that what is needed remains unchanged: a triage process that credibly identifies capital gaps among Europe’s most important financial institutions and leads to adequate recapitalisation and restructuring.   View Article

  Financial Stability - Policy Analysis

Bruegel paper on the reform of the global financial architecture
The paper examines the implications of the global financial crisis of 2007-10 for reform of the global financial architecture and identifies institutional and substantive reforms by organisations such as the IMF and Financial Stability Board.   View Article



© Graham Bishop

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