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05 July 2012

This week in "Brussels"
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Articles from 28 June 2012 - 05 July 2012

Banking

Plenary Session: Basic banking services must be available to all
Basic banking services should be a legal right for the 10 per cent of EU citizens who currently do not have them, Parliament said on Wednesday. This includes homeless people, those on very low incomes, students, people with no credit record and expatriate workers.  View Article
S&D: Bank services for all citizens, regardless of social situation, resources or place of residence
All citizens should be able to have a bank account and carry out their banking transactions at a reasonable cost. As the EU has not made sufficient progress in this area, the EP has called for the Commission to legislate before the end of the year.  View Article
ECON Committee: Tougher rules needed on banker bonuses - MEP Karas
"There is no cap on bonuses, but I want a fixed ratio between the fixed salary and the bonus", said Karas, who is steering proposals on bonuses through the EP. "My suggestion is to limit the ratio of fixed salary to bonus at 1:1. Bonuses must not be a driver for short-sighted and risky action."  View Article
EIB President welcomes €10 billion capital increase proposal
Enhancing and strengthening the capital base of Europe's long-term lending institution will allow a significant increase in funding to projects that support jobs and growth in the European Union, said the European Investment Bank.  View Article
Dealing with domestic systemically important banks - Consultative document issued by the Basel Committee
The Basel Committee on Banking Supervision issued a consultative document on 'A framework for dealing with domestic systemically important banks'. Comments are requested by 1 August, 2012.  View Article
Basel Committee issues consultative document on monitoring intraday liquidity management
The Basel Committee on Banking Supervision issued for consultation its document: 'Monitoring indicators for intraday liquidity management'. Comments are requested by 14 September, 2012.  View Article
The internal audit function in banks - Final document issued by the Basel Committee
The Basel Committee on Banking Supervision issued its final document, 'The internal audit function in banks'.   View Article
CNBC Analysis: EBA bank watchdog faces own stress test from euro crisis
This time last year the European Banking Authority was fighting a losing battle with Germany's financial regulator, just seven months after it started work as the EU's new supranational watchdog. A year later and the EBA's very survival is in question.  View Article
Christian Noyer: Basel III and CRD IV - Impact and stakes
Mr Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the BIS, said that Basel and CRD IV represented "a quantitative and qualitative leap aimed at addressing the shortcomings highlighted by the current financial crisis".  View Article
Fitch: Banking union could support stability
The plan to give the European Central Bank a role in supervising eurozone banks could help reinforce financial stability in the sector, Fitch Ratings says.  View Article
Nicolas Véron: Europe’s banking union - Possible next steps on a bumpy path
Véron takes stock of the decisions of last week's Summit, and looks at what they mean in terms of options for the gradual creation of a European banking union.  View Article
CEPS: Eurozone as home country of banks
By moving banking supervision of the eurozone to the ECB, a huge step towards a more federal banking model has been taken, explains Karel Lannoo in this new Commentary. But will this move be enough to re-establish confidence, bolster the euro interbank market and further financial integration?  View Article
Bruegel/Vallée: Banking union vs fiscal union and capture
In a functionalist tradition, a banking union that pools contingent banking sector related liabilities would in fact force Europeans to launch a debate on the shape and form of a fiscal union and the pooling of actual and future sovereign liabilities, comments Vallée.  View Article
Daniel Gros: A banking union baby step
Writing for Project Syndicate, Gros observes that while putting the ECB in charge of banking supervision solves one problem, it creates another: can national authorities still be held responsible for saving banks that they no longer supervise?  View Article
EMF: Mortgage Info June 2012
The June 2012 edition of the European Mortgage Federation's monthly newsletter covers the following topics: CARRP Proposal - On The Right Track; Over-Indebtedness Questions Gathering Momentum; Covered Bond Market Dominated by Macro Topics.  View Article
Ernst & Young: Power in the banking relationship shifts dramatically to the consumer
Consumers are taking control of their banking relationships, are increasingly likely to change banks, and expect to be able to choose between a range of service levels and costs. This study highlights how customers also expect to be financially rewarded for their loyalty.  View Article
FSA to adjust bank liquidity guidance in light of improved Bank of England facilities
The Financial Services Authority emphasises that its liquidity guidance regime means that liquid asset buffers can be drawn down in the event of liquidity stress and used for the duration of the period of stress.  View Article
Paul N Goldschmidt: Transfers of risks between BNP and BNP-Fortis - Potential new “hot potato” between France and Belgium!
Rumours concerning the intention of a transfer to its Belgium affiliate of BNP's portfolio of Italian and Spanish credits are, deservedly, preoccupying given the current context.   View Article

Securities

Commission adopts delegated act detailing rules on ban on uncovered sovereign CDS and short sales of shares and sovereign debt
The European Commission has today adopted a Delegated Act which sets out important technical rules needed to ensure the uniform application and enforcement of the Short Selling Regulation.   View Article
Short selling: Commission adopts technical standards
The European Commission has set out the detailed rules aimed at reducing the risk of settlement failures linked to naked short selling, as well as the means by which market participants should disclose significant short positions to the market.  View Article
European Council adopts rules on derivatives
The Council adopted a regulation aimed at increasing transparency in derivatives and reducing risk in the over-the-counter (OTC) derivatives market.  View Article
FSA/Lawton: Derivatives reform – Regulatory update
Lawton's speech covered outstanding issues in the field of derivatives reform - bilateral collateralisation of uncleared trades, tools to assist the recovery of CCPs, application of requirements cross border, and readiness of firms, both financial and non-financial, not currently clearing.  View Article
ESMA publishes an update to the Q&A in the area of Prospectuses
The update published today contains new guidance on the format of summaries.  View Article
Hedgeweek: MiFID II proposals will impact liquidity, trading costs and ability to raise capital
TABB Group believes that current proposals to reform pricing practices in the fixed income market will seriously undermine trading firms' ability to provide liquidity, increase trading costs for investors, and make it more difficult and expensive for governments and companies to raise capital.  View Article
EuropeanIssuers comments on ESMA discussion paper on proxy advisory industry
Any regulatory intervention taken at EU level should fit within a broader strategy of encouraging long-term investment, promoting dialogue between issuers and investors, and making the activities of all financial intermediaries more transparent to their end users.  View Article
Fifteen additional Central Securities Depositories sign the T2S Framework Agreement

These signings bring to a total of 24 the number of CSDs participating in T2S, including almost all CSDs based in the euro area, as well as six CSDs based outside the euro area.  View Article
ECMI: The Takeover Bids Directive Assessment Report
This study considers the application of Directive 2004/25/EC on takeover bids from a legal and economic perspective.  View Article
IOSCO organises round table discussion on securitisation
The International Organisation of Securities Commissions has held a round table discussion on issues arising from its work on securitisation, in the context of its work on shadow banking and as part of the ongoing effort to facilitate the sustained recovery of sound securitisation markets globally.  View Article

Insurance

Eurofinas: EC proposal for the IMD II - Avoiding a one-size-fits-all approach is key
Eurofinas regrets that the Commission has opted for a minimum harmonisation approach. Indeed, allowing Member States to adopt more stringent measures (gold-plating) will generate regulatory inconsistencies and gaps across the EU which is contrary to the original objective of IMD II.  View Article
Deloitte comments on European insurance and investment regulations
The EC proposals for a revision of the Insurance Mediation Directive (IMD II) aim to improve consumer protection and rebuild trust in the financial services sector. However, they will pose significant challenges for providers and distributors in the insurance and retail investment markets.  View Article
EIOPA's updated survey of the competences of national competent authorities in the field of Consumer Protection
The European Insurance and Occupational Pensions Authority published a survey, the main purpose of which is to define and delineate the competences of national competent authorities with regard to the area of consumer protection.  View Article
EU insurance rule phase-in impractical - Towers Watson
A European Parliament plan to give life insurers more time to adapt to Europe's tough new Solvency II capital rules would create a raft of new problems and is impractical, risk management consultancy Towers Watson said.  View Article
FSA: The impact of changing regulation on the insurance industry
Julian Adams focuses on what has happened in both the general insurance market and life market, and how prudential regulation has had to respond to these developments in considering the UK's regulatory response to some of the new challenges presented by Solvency II and ongoing developments.  View Article
FSA: Solvency II and linked long-term insurance business
This paper sets out the responses the FSA received to its Consultation Paper (CP) 11/23: Solvency II and linked long-term insurance business.  View Article
Citywire: Solvency II sword has already fallen and slashed annuity rates
Solvency II has been cast as the sword of Damocles hanging over UK life companies, ready to fall and cut annuity rates to ribbons. But there is much to suggest that, contrary to the fears of many, its effects will be negligible.  View Article
Fitch: UK life insurers to take gender ruling in stride
Fitch Ratings expects UK life insurers to face no serious impacts to their business when they adapt their pricing to comply with the European Court of Justice ruling on gender-neutral insurance premiums.   View Article
Risk.net: Insurers' remuneration will become more risk-sensitive, says incoming Bupa finance chief
Risk management will become an increasingly important factor in determining insurance executives' remuneration, the incoming chief financial officer of healthcare giant Bupa has said.  View Article
OpRisk Europe - Doubt over reforms at flagship conference
At the busy OpRisk Europe 2012 conference in London in June, leaders of the operational risk management industry expressed doubt over the outcome of regulatory reform efforts, and called on banks to make their own operational improvements.  View Article
Fitch: Bermuda (re)insurers weather sovereign downgrade
While insurance industry concerns factored into Tuesday's downgrade of Bermuda, Fitch Ratings does not expect Bermuda (re)insurers to be affected, as all Fitch ratings of Bermuda (re)insurers remain below the new sovereign rating, which also has a Stable Rating Outlook.  View Article

Asset Management

EBF: Europe's banks focus on UCITS Depositary functions
The European Banking Federation (EBF) broadly welcomes the so-called UCITS V proposal published today by the European Commission, which - amongst other things - sets out rules on depositary eligibility, delegation of custody and depositary liability.  View Article
IMA: New KIID and ongoing charges figure provide clarity for investors
According to the Investment Management Association, all UCITS funds must provide a Key Investor Information Document (KIID) to investors as of yesterday, replacing the Simplified Prospectus.   View Article
IPE: Investors 'remarkably' worried over volatility, regulation
European institutional investors continue to voice strong concerns over volatility in financial markets, at a time when confidence in the euro wanes.  View Article
IPE: Consultation paper on HBS study fails to assess real impact on pensions
The EIOPA stakeholders group has claimed that the consultation paper on the quantitative impact study (QIS) for the revised IORP Directive seems more "tailored" for valuation than designed to assess the true impact of using the holistic balance sheet framework.  View Article
IPE: Looking to IORP III?
This article argues that there is a much stronger case for a Directive that promotes improvements in risk management and monitoring within European pension funds.  View Article
IPE: Pensions industry calls on Brussels to improve disclosure for proxy services
Institutional investors and pension fund associations have called on Brussels to introduce a European framework for proxy services, and warned that asset owners must ensure the suitability of third-party services.  View Article
IPE: LIBOR scandal could hit pension funds depending on derivatives trades
A number of consultants have said Barclay's attempts to manipulate the LIBOR rate between 2005 and 2009 could affect UK pension funds "negatively", depending on their derivatives trades, but it is still too early to assess the full impact of the scandal.  View Article
IPE: Hedge funds not big herders
An academic study of the holdings of hedge funds that file so-called '13f reports' with the US Securities and Exchange Commission has found that they herd into the same positions less than other investment institutions, have less portfolio overlap, and are less likely to engage in momentum trading.  View Article

Corporate Governance/Accounting

IFAC: Response to ACRA consultation on accountants act
The IFAC values the opportunity to provide a response to the Accounting and Corporate Regulatory Authority (ACRA) Consultation on the Accountants Act Review, May 2012.  View Article
IFAC: Definition of the public interest
The IFAC issued Position Paper 5, 'A Definition of the Public Interest'. The paper, which presents a practical definition of the public interest, was developed in the context of IFAC's mission, to enable IFAC to assess the extent to which its actions and decisions are made in the public interest.  View Article
IASB amended IFRS 10, IFRS 11 and IFRS 12
The IASB has issued 'Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)'. The amendments clarify the transition guidance in IFRS 10, 'Consolidated Financial Statements'.  View Article
IFAC's new guidance to help organisations improve internal control
The PAIB Committee of the IFAC issued new International Good Practice Guidance, Evaluating and Improving Internal Control in Organisations, highlighting areas where the practical application of existing internal control standards and frameworks often fails in many organisations.  View Article

Financial Services Policy

Commission proposes legislation to improve consumer protection in financial services
The package, solely dedicated to consumers, includes a proposal for a regulation on key information documents for packaged retail investment products (PRIPS), a revision of the Insurance Mediation Directive (IMD), and a proposal to boost protection for those who buy investment funds (UCITS).  View Article
PRIPs regulation must put the interests of investors first, say European industry bodies
CFA Institute, EuroFinuse, FECIF, EFAMA and AILO fully support the overall aim of the PRIPs regulation, but say it is essential that it covers the broadest range of investment products possible, otherwise it will miss its objective of enabling investors to compare one product easily with another.  View Article
EU investment fund and insurance rules (UCITS, IMD, PRIPs) - Commission tiptoes towards strengthened consumer protection
Sven Giegold MEP, who will be the EP's rapporteur on the UCITS proposals, said that the Commission had missed an opportunity to strengthen consumer protection thoroughly and address many of the current shortcomings in EU rules on financial products, such as investment funds and insurance policies.  View Article
EBF: Europe’s banks welcome PRIPs Regulation
The European Banking Federation (EBF) welcomes the proposal of the European Commission for a Regulation on key information documents for investment products (known as PRIPs).  View Article
S&D Euro MPs call for a swift introduction of a financial transaction tax
S&D Euro MPs today welcomed EU leaders' decision to introduce a financial transaction tax (FTT) among the Member States willing to do so.  View Article
FSA/Lord Turner: Chairman's speech at FSA's Annual Public Meeting
Lord Turner said that creating the two new regulatory bodies, the PRA and the FCA (due to be launched next year), represented "an opportunity to put behind us the damaged reputation which the FSA suffered as a result of pre-crisis failings".  View Article
FSA publishes June 2012 RDR newsletter
The latest issue focuses on: the FSA's Consultation Paper on platforms; gap-fill; the FSA's stance post-RDR on fund switches within pensions; and help with independent and restricted advice requirements.  View Article

European Council/Parliament

European Council: Euro area summit statement
In order to break the vicious circle between banks and sovereigns, the Commission will present proposals for a single supervisory mechanism soon, which the Council will consider as a matter of urgency. "We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area."  View Article
European Council Conclusions - 28/29 June 2012
"We are determined to take the measures required to ensure a financially stable, competitive and prosperous Europe, and thus enhance the welfare of citizens", states the report.  View Article
Plenary Session on the eurozone crisis: Not just roadmaps but legislation needed by September
The latest European Council conclusions go in the right direction in tackling the eurozone crisis but the situation is so urgent that the Commission must table legislation by September in order to implement the four concepts in the Van Rompuy policy paper rapidly.  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop's blogs on the European Council 28/29 June 2012
This article contains Graham's thoughts, in blog form, on the events of each of the days of the recent euro area summit.  View Article




© Graham Bishop

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