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21 June 2012

This week in "Brussels"
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Banking Securities Insurance
Asset Management Corporate Governance/Accounting Financial Services Policy
Financial Stability - Policy Analysis European Council/Parliament International/G20
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Articles from 14 June 2012 - 21 June 2012

Banking

Vice President Almunia presented the Annual Competition Report for 2011
In his overview of the year, Almunia stressed the need for a fully-fledged resolution and supervision system at EU level.  View Article
State aid: Commission invites comments on use of General Block Exemption Regulation (GBER)
In the context of its state aid modernisation initiative, the Commission has launched a review of the general block exemption regulation which exempts certain categories of aid from the obligation of prior notification to the Commission. Stakeholders' submissions are requested by 12 September, 2012.  View Article
EBA: Consultation paper on draft regulatory technical standards on capital requirements for CCPs
The European Banking Authority launched an open consultation on RTS on the capital requirements for central counterparties. These RTS are drafted according to the Regulation on OTC derivative transactions, central counterparties and trade repositories. The consultation runs until 31 July, 2012.  View Article
WSBI calls for strengthening of the financial system via financial inclusion
At the occasion of the G20 Summit in Los Cabos on 18 and 19 June, the World Savings Banks Institute (WSBI) called upon G20 Leaders to improve access to financial services for all layers of the population.   View Article
EurActiv: G20 backs EU banking overhaul to fight crisis
Europe won support from world leaders yesterday (19 June) for an ambitious but slow-moving overhaul of the eurozone, even as pressure built in financial markets for quicker solutions to its debt crisis that threatens the world economy.  View Article
HM Treasury: UK Government sets out plans to split retail and investment banking
The UK Government has published a White Paper setting out proposals to reform fundamentally the structure of banking in the UK.   View Article
BBA/Angela Knight: UK banking reform white paper balances safety with the needs of growth
The banking reform white paper balances the need to establish a banking system which is more certain and more secure with the ability of banks to continue to provide the full range of services to customers and support to the economy, said the BBA.  View Article
BBA: Lending and liquidity
Next month sees the crucial vote in the European Parliament to ratify finally the latest changes to the Capital Requirements Directive (CRD IV). Banks around the world are facing up to the related Basel III requirements to hold more capital and more liquidity.   View Article
EBF response to EBA Discussion Paper on a template for Recovery Plans
The EBF supports the concept of RRPs, and in general believes that the EBA template for a Recovery Plan is well-balanced and FSB-compliant. A Recovery Plan should encourage the planning process and at the same time ensure that banks are aligned to common supervisory practices in this area.   View Article
IIF calls for a new approach to 'shadow banking' debate
The Institute of International Finance (IIF) today issued a report, "Shadow Banking: A Forward-Looking Framework for Effective Policy", calling for a new policy approach to non-bank financial activities, sometimes described as 'shadow banking'.  View Article
Enrico Perotti: The roots of shadow banking
This column argues that despite its crucial role in the credit boom that preceded the global crisis, shadow banking does have its benefits – something that the regulators should be aware of.  View Article
Noss/Sowerbutts: The implicit subsidy of banks
Unprecedented amounts of public money have been used to avert bank failure. This column explains why the subsidy arises, why it is a public policy concern, and how it can be quantified.  View Article

Securities

ECON Committee: Credit rating agency reform - sovereign debt ratings to be regulated
Draft credit rating agency reform legislation, designed to regulate sovereign debt ratings, reduce reliance on agency ratings and restrict the scope for conflicts of interest, was voted in the Economic and Monetary Committee.  View Article
EPP/Gauzès: Credit rating agencies - We need to reduce over-reliance on ratings
The European Parliament is looking to reduce over-reliance on rating agencies by proposing to remove the reference to ratings in banking and insurance companies' regulations.   View Article
S&D: "Credit rating agencies should provide a service, not political opinions"
Stricter rules could soon be applied to credit rating agencies to regulate their activities, according to a deal negotiated by S&D Euro MP, Leonardo Domenici, and adopted today by the economic and monetary affairs committee in the European Parliament.  View Article
ESMA publishes updated statistical data on credit rating agencies
ESMA made available the updated set of semi-annual statistical data on the performance of credit ratings, including transition matrices and default rates. This new set of statistics covers ratings data up to 31 December 2011, and is available through the Central Rating Repository (CEREP).  View Article
Regulatory Technical Standards (CEREP) for presentation of information that CRAs shall make available in a central repository
This Regulation specifies the rules for the presentation of the information, including structure, format, method and period of reporting, that credit rating agencies are required to make available in a central repository.  View Article
EurActiv: Credit rating rotation diluted by MEPs
The European Parliament yesterday (19 June) diluted moves to rein in credit rating agencies, bowing to pressure from banks and companies that argued that proposals were unworkable or counterproductive.  View Article
ALFI comments on European Commission Green Paper Shadow Banking
ALFI agrees with the need to ensure that all aspects of the financial system are properly regulated. ALFI fully supports a level playing field of appropriate regulation covering such activities, and believes it is important to ensure any such regulation is proportionate to risks being addressed.   View Article
ICMA AMIC responds to EC Green Paper on Shadow Banking
The ICMA Asset Management and Investors Council (AMIC) has responded to the EC on its Green Paper on shadow banking, and shared its concerns regarding the definitions of the term 'shadow banking' and its potential effects on the asset management industry.  View Article
Sharon Bowles MEP: "MiFID II has to ensure open and fair access if the EU is serious about growth and competition"
ECON chair, Sharon Bowles MEP, today called for 'open and fair access to trading venues and CCPs'. Some areas of industry have lobbied heavily to delete the provisions in the European Commission's MiFID proposal which would ensure this open access.  View Article
IOSCO publishes report for G20 on credit default swap market
The International Organisation of Securities Commissions has published a report on the Credit Default Swap Market, which seeks to inform the ongoing regulatory debate on CDS and highlight some of the key policy issues involving these financial swap agreements.  View Article
Euroclear Belgium, Euroclear France and Euroclear Nederland to sign up to TARGET2-Securities
Three Euroclear central securities depositories (CSDs) operating in the eurozone, namely Euroclear Belgium, Euroclear France and Euroclear Nederland, have agreed to sign up to the Eurosystem's TARGET2-Securities (T2S) project.  View Article
Transatlantic trade associations call for urgent re-engagement on the pre-crisis dialogue on regulatory recognition and accreditation
Regulators on both sides of the Atlantic must come together with real intent to establish a framework of inter-jurisdictional regulatory recognition and accreditation in order to address concerns over extra-territoriality and protectionism.  View Article
Bank of Canada/Agathe Côté: Strengthening financial infrastructure - the new Canadian central counterparty
The Deputy Governor of the Bank of Canada talked about the launch of the new central counterparty service for repo transactions.  View Article

Insurance

Barnier: Revision of the Insurance Mediation Directive (IMD)
Barnier said the new regulatory framework would allow insurers and insurance intermediaries to remain a pole of stability and continuity in the financial markets, helping to put the European economy on a path of sustainable growth.  View Article
FERMA launches pan-European risk management certification project
The Federation of European Risk Management Associations is taking the first steps towards a pan-European certificate of professional competence for risk managers.  View Article
Fitch: Insurers less exposed than banks to Greek euro exit
Insurance companies are less exposed than banks to contagion risk triggered by a Greek exit from the eurozone, because of insurers' ability to share losses with policyholders and their lower reliance on short-term funding.  View Article
Risk.net: Member States call for delay to Solvency II
European policy-makers are facing pressure from some Member States to postpone the implementation date of Solvency II because of delays in the legislative process.  View Article
Insurance Insight: Insurers change approach to calculating capital ahead of Solvency II
As European insurers continue their Solvency II preparations, many are changing their approach to calculating capital adequacy requirements, according to Deloitte.  View Article
Insurance Journal: Economic crisis challenges harmonisation of US regulations, EU's Solvency II
The EU's Solvency II regulations get most of the headlines, but there are other regulatory bodies which are trying to modernise and harmonise the regulations for global insurance companies. Their task has been made even more difficult by the prolonged economic crisis.  View Article
Insurance Insight: Insurers starting to embrace change but still a way to go, says PwC
PwC's global insurance leader outlined what successful insurers of the future could look like, and discussed the forces re-shaping the insurance sector, when he spoke at the 2012 International Insurance Society Seminar in Rio de Janeiro today.  View Article
IAIS Cayman Islands conference discussed Solvency II and financial stability
This year's programme included panels on financial stability, ComFrame, recent revisions to the IAIS's Insurance Core Principles (ICPs), and access to insurance.  View Article

Asset Management

EFAMA discusses current key issues for the industry at its AGM in Vienna
Discussion at the AGM focused on the unprecedented wave of regulatory initiatives affecting the European asset management industry, coming both from an EU level and a national level but also from other parts of the world, principally FATCA, Dodd-Frank and the Volcker Rule.   View Article
EIOPA launches consultation on the Quantitative Impact Study
The consultation's aim is to help IORPs to perform the necessary calculations if the Holistic Balance Sheet were to be implemented under the revised IORP Directive. The deadline for the consultation is 31 July, 2012.  View Article
IPE: EIOPA starts consultation process on 'holistic balance sheet' study
The European Insurance and Occupational Pensions Authority (EIOPA) has launched a consultation on the quantitative impact study (QIS) for the 'holistic balance sheet' (HBS) approach, stressing that it would assess only the financial impact such measures would have on IORPs.  View Article
IPE: UK pensions industry blasts 'holistic balance sheet' approach
The UK pensions industry continues to oppose the 'holistic balance sheet' (HBS) approach within the revised IORP Directive, and has called on stakeholders to make their voices heard in the consultation paper launched by the European Insurance and Occupational Pensions Authority (EIOPA) last week.  View Article
Europe consults on Pensions Directive study - NAPF comment
NAPF chief executive, Joanne Segars, said that these rules would damage final salary pensions in the UK and elsewhere across Europe. The NAPF has calculated that these rules could cost UK pension funds at least an extra £300 billion.  View Article
ALFI annual report 2011-2012
According to ALFI's 2011 Annual Report, 2011 was characterised by strong caution on the part of investors. Despite net inflows of €5 billion, Luxembourg funds finished the year €102 billion down on the previous year, with €2,096 billion under management.  View Article
Europe's high growth SMEs need better access to finance - EVCA
EVCA has sent an open letter to the EU detailing its concerns around the inclusion of a depositary requirement in the proposed European Venture Capital Funds Regulation, and saying that the proposed Venture Capital regime should not be destroyed by an unjustified and disproportionate burden.  View Article
Statement from IMA chief executive on CPS report, ‘Put the saver first’
Mr Saunders said: "While the report rightly focuses on some important issues, it contains a worrying number of inaccuracies. These sorts of errors don't help the debate and risk misleading investors, causing unnecessary concern and potentially undermining the long-term savings culture that we need."  View Article

Corporate Governance/Accounting

ECIIA: Current status in the EU on corporate governance codes on internal audit
The ECIIA conducted a review of the Corporate Governance Codes currently in place in its Member States, in order to determine the extent to which internal audit is considered in the governance structure of listed companies under the typical "comply or explain" regulations.  View Article
Sharon Bowles: MEPs vote through tough new rules on corporate transparency
The European Parliament's Economic and Monetary Affairs Committee has today voted through amendments to the EU's Transparency and Accounting Directives, making it harder for big multinational companies to hide profits made in the developing world.  View Article
FRC deals with executive remuneration
The FRC will consult on whether to amend the UK Corporate Governance Code to address a number of issues relating to executive remuneration. The consultation will be carried out after the Government's legislation on voting and reporting on executive remuneration has been finalised.  View Article
DBIS: UK Government announces far-reaching reforms of directors' pay
The Business Secretary, Vince Cable, has announced the most comprehensive reforms of the framework for directors' remuneration in a decade. This package of measures will address failures in corporate governance by empowering shareholders to engage effectively with companies on pay.  View Article
IASB Chairman Hans Hoogervorst: The imprecise world of accounting
At the International Association for Accounting Education & Research conference in Amsterdam, Hans Hoogervorst spoke about accounting policy being one of the most difficult and controversial topics. He also sketched an outline of IASB's future work, based on principles, pragmatism and persistence.  View Article
FEE recommends improvements to the functioning of audit committees
FEE's discussion paper recommends various improvements in relation to establishment, composition, competences and responsibilities as well as reporting to and from the audit committee, with the overall aim of improving the quality of financial information provided by companies.  View Article
FRC: Audit inspection reports on Deloitte, Ernst & Young, KPMG and PwC
The Professional Oversight Board (POB), part of the Financial Reporting Council (FRC), published the findings of the Audit Inspection Unit's inspections of Deloitte LLP, Ernst & Young LLP, KPMG LLP and KPMG Audit Plc, and PricewaterhouseCoopers LLP.  View Article
ACCA: Sharman Inquiry calls for new roles for auditors and audit committees on going concern
ACCA welcomes the long-awaited recommendations of the Sharman Inquiry, prepared for the FRC. Sharman's final report contains significant recommendations for instilling new discipline into the assessments of going concern by boards and auditors.   View Article
FRC: Update for directors of listed companies in the UK responding to interim financial reports
The purpose of the FRC's further Update for Directors of Listed Companies is to draw directors' attention to the importance of conveying in their Interim Reports a balanced and understandable assessment of a company's position and prospects in the context of heightened country and currency risk.  View Article

Financial Services Policy

FSA publishes annual report for 2011/12
Commenting on the report, Hector Sants, FSA chief executive, said that despite a challenging environment, the FSA had successfully moved to an internal twin peaks model within the FSA from April 2012, maintaining the momentum required to deliver the new regulatory structure from early 2013.  View Article
Risk.net: Latest EC PRIPs draft shifts burden further towards structured product creators
Europe's laws on the key information document (KID) and packaged retail investment products (PRIPs) are scheduled for implementation in early July. The latest draft suggests more onerous responsibility for product providers.  View Article
Bruegel/Marzinotto: European Semester - Scope for democratic oversight
By providing early guidance and exercising full integrated monitoring of all economic policy decisions taken at the national level, the EU uses the Semester with the aim of strengthening economic policy coordination in the EU. However, there are some weak points in the process, writes Marzinotto.  View Article
Regulating in a new era of professionalism: What does the FSA want to see from the industry?
Clive Adamson gave a speech at the Marketforce and IEA's 15th annual conference, focusing on the changes taking place in UK regulation, the RDR, and how the FSA expected professionalism to play a part in this.  View Article

Financial Stability - Policy Analysis

ECB/Constâncio: Financial stability – measurement and policy
Mr Constâncio provided a brief overview of the recent macro-prudential research and then focused on main analytical tools for financial stability analysis at the European Central Bank.  View Article

European Council/Parliament

ECON Committee: Eurobonds and other tools for debt solidarity
EU Member States' very short-term debt should be pooled immediately through eurobills, and in the longer run, the EU should consider not only eurobonds but also a form of federal debt on the US model, argues a non-legislative text presented to the Economic and Monetary Affairs Committee on Monday.  View Article

International/G20

Ignazio Angeloni: Some light in the fog [G20 summit]
The good news is that the G20 summit seems to have been more forceful in addressing the impending risks to the international economy than last minute expectations implied. A dubitative form is necessary, however, because the signs from Los Cabos are uncertain and partly contradictory, and also because a lot will depend on follow-ups.  View Article




© Graham Bishop

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