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13 February 2014

This week in "Brussels"

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Articles from 06 February 2014 - 13 February 2014


ECB publishes draft paper with details of new supervisory powers
The ECB will attain far-reaching powers - relating mainly to issues of capital adequacy and financial stability - over the eurozone's commercial banks later this year, including withdrawing bank licences and assessing acquisitions.  View Article
ECB launches public consultation on draft ECB SSM Framework Regulation
The draft Framework Regulation lays the basis for the work of the SSM when it takes over as supervisor of euro area banks in November 2014. The consultation is open until 7 March, 2014.  View Article
FT interview with Danièle Nouy, Chair of the Supervisory Board of the SSM
The eurozone's new chief banking regulator has warned that some of the region's lenders have no future and should be allowed to die, heralding a far tougher approach to the supervision across the currency bloc.  View Article
ECB/Draghi: Banking Union will create more sustainable financial integration
Efforts to streamline the resolution of failing financial institutions at the European level go in the right direction but could be improved, Draghi said, adding that current plans to have a resolution fund in place in 10 years were not ambitious enough.  View Article
Bloomberg: EBF president Clausen says EU regulatory goals ignore reality
Efforts to harmonise banking standards across borders create challenges for some markets, said Clausen, citing as an example the EBA proposal that would force some Scandinavian banks to cut their holdings of covered bonds to make room for sovereign debt.  View Article
Reuters: SocGen chief sees EU move to ban prop trades foundering
Frederic Oudea said the current EU executive would not have time to put in place a proposed ban on proprietary trading before the end of its mandate, and doubted such a move would be high on the agenda of the incoming Commission and EP.  View Article
CEPS/Lannoo: A European Glass-Steagall to preserve the single market
Assessing the EU proposal on banking structural reform, Lannoo observes that the Commission must perform a delicate balancing act between preserving the single market and at the same time accommodating existing EU measures covering resolution and trading activities.  View Article
Fitch: Investors don't expect senior bail-in from ECB bank tests
European investors believe senior bank debt is unlikely to suffer default as a result of a eurozone bank failing the ECB's comprehensive assessment, according to a Fitch Ratings quarterly investor survey conducted in January.   View Article
WSJ: European banks parry US rules
European banks are considering new ways to cushion the blow of US financial safety rules set to kick in as early as next year. The moves are a reaction to planned Fed rules that will require the US arms of foreign banks to be better capitalised and subject them to annual stress tests.  View Article
ECB supports new European Directive for electronic payments
The ECB published its legal opinion on a new Directive regulating the development of the European Market for electronic payments, taking into account developments in e-commerce and the introduction of new solutions. (Includes link to opinion on interchange fees for card-based payment transactions.)  View Article
EBF publishes response to Basel Fundamental Review of the Trading Book: A revised market risk framework
EBF especially welcomes the increased risk sensitivity, the greater recognition of the effect of diversification and hedging in the Standardised approach.   View Article
Responses to ESMA/EBA consultation on complaints handling: EACB
On 6 November, ESMA and EBA launched a consultation on guidelines for complaints handling in the securities and banking sectors. The objective was to provide EU consumers with a single set of complaints handling arrangements, irrespective of the type of product or service, or of the location.  View Article


Statement by the CFTC and the European Commission on progress relating to the implementation of the 2013 Path Forward Statement
Acting Chairman Wetjen and Commissioner Barnier announced that CFTC and Commission staff had made significant progress towards harmonising a regulatory framework for CFTC-regulated SEFs and EU-regulated MTFs, as contemplated under the Path Forward statement issued in July 2013.  View Article
CFTC announces measures to promote trading on SEFs and support orderly transition to mandatory trading
The CFTC announced measures to promote trading on swap execution facilities and support an orderly transition to mandatory trading of swaps, which begins for certain interest rate swaps on February 15, 2014.  View Article
ESMA provides further details on trade reporting
On 11 February, one day before the commencement of reporting under EMIR, ESMA published an updated EMIR Q&A document. These Q&As clarify issues related to reporting to trade repositories, such as how to construct and generate UTIs, the reporting of empty/not available fields, and the UPI taxonomy.  View Article German debt office poised to collateralise swaps
Germany's debt office could start posting collateral on its swaps trades this year, pending a change of law included in the country's 2014 budget. This would be the latest in a series of European debt offices to change policy, and by far the most significant.  View Article
Reuters: US regulator tells banks to improve derivatives data
The US CFTC chided the industry for providing gappy data on the $630 trillion market, highlighting a rising concern for regulators around the world.  View Article Repo netting criteria in the revised leverage ratio may be less forgiving than banks first thought
Banks fear it will be impossible for them to use a safe harbour designed to protect repurchase agreements from the worst impacts of the BCBS's new leverage ratio. That could drive up transaction costs and hurt the liquidity of government bond markets, some claim.  View Article
FT: Clearing houses criticise push for more transparency
Clearing houses have pushed back against plans by global securities regulators to force more transparency into the industry, arguing that their operations and market confidence could be damaged by publication of sensitive data.  View Article
Responses to CPSS-IOSCO consultation on quantitative disclosure: DTCC, EACH, Eurex Clearing, ISDA et al
On 15 October, CPSS-IOSCO issued a consultative document on the Public quantitative disclosure standards for central counterparties. Eurex Clearing highlighted that comparing CCPs on singular pieces of data without full knowledge of the inherent risk management methodology can be very misleading.  View Article
ESMA consults on new CRA transparency requirements
The draft RTS cover: disclosure requirements on SFIs; the European Rating Platform; and the periodic reporting on fees charged by CRAs. Comments are requested by April 11, 2014. (Includes link to ESMA 2014 Regulatory Work Programme.)  View Article
IOSCO consults on Code of Conduct Fundamentals for CRAs
IOSCO published a consultation report on Code of Conduct Fundamentals for Credit Rating Agencies, which proposes significant revisions and updates to the current IOSCO CRA Code. Comments should be submitted by March 28, 2014.  View Article
IMF: EU - Detailed assessment of implementation of ECB observance of the CPSS-IOSCO responsibilities of authorities for FMI
This assessment finds i.a. that the ECB should be entrusted to coordinate the Eurosystem oversight function, in order to ensure that international principles for FMIs are consistently enforced throughout the euro area.  View Article


EIOPA publishes Report on the Functioning of Colleges and the Accomplishments of the 2013 Action Plan
Colleges of Supervisors refer to multilateral groups of relevant supervisors that are formed for the collective purpose of enhancing efficient, effective and consistent supervision of financial institutions operating across borders. (Includes Action Plan 2014/15.)  View Article
Insurance Europe: Positive European Parliament vote on disaster cover
Insurance Europe welcomes the recognition by the EP that a "one size fits all" approach to insuring man-made and natural disasters across the EU is unfeasible.  View Article Insurers claim draft level 2 proposals could water down volatility adjustment
Insurers are calling for the European Commission to amend new proposals for calculating Solvency II's volatility adjustment, claiming they could reduce the benefit insurers can obtain from the mechanism.  View Article
German insurer capital needs may top €10 billion by 2016 - BaFin
Germany's insurers may need to build up more than €10 billion in extra regulatory capital by 2016 to meet requirements under Solvency II, the country's top insurance regulator said.  View Article

Asset Management

ESMA tells firms to improve their selling practices for complex financial products
ESMA published an Opinion on practices to be observed by investment firms when selling complex financial products to investors. This is to remind national supervisors and investment firms about the importance of requirements governing selling practices under MiFID.  View Article
Reuters: EU executive sees personal savings used to plug long-term financing gap
The savings of the EU's 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.  View Article
Reuters: EU lawmakers propose pay transparency for money market funds
Managers of the EU's trillion-euro money market funds, which give access to short-term finance at low interest rates, will need to show their pay packets do not encourage too much risk-taking under a proposal from the bloc's lawmakers.  View Article
GFMA: Legal Entity Identifiers come to life
A global standardised Legal Entity Identifier (LEI) will help enable organisations to measure and manage risk more effectively, while providing substantial operational efficiencies and customer service improvements to the industry.  View Article
Responses to FSB's Guidance on Supervisory Interaction with Financial Institutions: Deutsche Bank, Insurance Europe, US Chamber of Commerce
On 18 November 2013, the FSB published its consultative document, 'Guidance on Supervisory Interaction with Financial Institutions on Risk Culture'.  View Article

Corporate Governance/Accounting

FT: Big Four all set to ride the ECB audit gravy train
The ECB has made clear that none of the banks will be allowed to use the same accounting firm for the AQR that it uses for normal audits. That stipulation has created a scramble across Europe for the lucrative contracts, as the Big Four bid for the extra AQR work.  View Article
EFRAG: Bulletin on complexity as a part of the debate on the IFRS Conceptual Framework
EFRAG and the National Standard-Setters of France, Germany, Italy and the UK have published a Bulletin on complexity to promote discussion on this issue, and to help form European views that are influential in the debate on the IFRS Conceptual Framework.  View Article

Financial Services Policy

Commissioner Barnier: "I do not believe in deregulation"
After fighting for four years for new regulations, Internal Market Commissioner Michel Barnier took stock of the situation. "What is important today is that the entire financial market is transparent. Morals and a certain ethical standard must be observed", he said.  View Article
VP Almunia: Competition in financial markets / Fighting for the Single Market
Almunia highlighted that every player in the financial sector should recognise its corporate social responsibility. He addressed taxation from the perspective of State aid control, and said that anti-European messages should be tackled 'with great determination'.  View Article


OECD delivers new single global standard on automatic exchange of information
Responding to a mandate from G20 leaders, the OECD has unveiled a new single global standard for the automatic exchange of information between tax authorities worldwide. (Includes EBF response.)  View Article

Graham Bishop’s Articles and Speeches

Graham Bishop: Diluted 'Liikanen' - The Commission proposal on bank restructuring
Finally… the Commission came forward with plans to re-structure Europe's banking sector after taking "into account the useful report by the High Level [Liikanen] Group". Is that 'faint praise'?  View Article
Graham Bishop's Blog: The Karlsruhe decision on OMTs – Enhancing the case for eurobills
Before the ECB even starts to thinks about an intervention that is more political than economic, let alone monetary, perhaps a eurobill programme – such as the Temporary Eurobill Fund (TEF) advocated by this author – would be a better way of buying some time.  View Article
European Integration Monitor - January 2014
The driving forces of politics, finance, economics and budgets are a powerful cocktail that will intensify in the years ahead.  View Article

© Graham Bishop

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