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01 May 2014

This week in "Brussels"

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Articles from 24 April 2014 - 01 May 2014


ECB: Banks have six to nine months to cover capital shortfalls following comprehensive assessment
The ECB has today informed banks how capital shortfalls must be addressed following the comprehensive assessment. This announcement follows today's release by the European Banking Authority of the methodology and scenarios for the EU-wide stress test.   View Article
EBA publishes common methodology and scenario for 2014 EU-banks stress test
While the extensive process of banks' balance sheet repair is already underway, the test, designed to assess banks' resilience to hypothetical external shocks, will identify remaining vulnerabilities in the EU banking sector and will provide a high level of transparency into EU banks' exposures.  View Article
EBA publishes action plan for colleges of supervisors
The plan identifies key activities, necessary in 2014 for the effective oversight of Europe's cross border banking groups, and is issued alongside a report providing an assessment on the colleges functioning during 2013.  View Article
ECB publishes SSM Framework Regulation
The ECB has published the SSM Framework Regulation for the Single Supervisory Mechanism (SSM). The SSM Framework Regulation lays the basis for the work of the SSM when it takes over as supervisor of euro area banks in November 2014.   View Article
Bloomberg: ECB proposes aligning upper limit for penalties imposed on banks
The ECB says the upper limit for fines that has been in place since the central bank was created in 1998 should match that applicable to the lenders it will start supervising in November. The proposed changes to European law were posted on the ECB’s website.  View Article
Reuters: ECB's Liikanen says regulation could be extended to shadow banks
Major organisations that carry out banking activities, but are not banks, may become so important to the financial system that they need to be regulated like traditional banks, an ECB governing council member said.  View Article
ECB/Constâncio: Banking Union - Meaning and implications for the future of banking
Vítor Constâncio, Vice-President of the ECB, spoke on the future implications of the Banking Union, saying that the sovereignty-sharing that monetary union represented implies further progress towards more political union.   View Article
ECB: SEPA for cards - Efforts to create truly European payments area
Following the near completion of the migration of the first two payment instruments, SCTs and SDDs, to the SEPA, the Eurosystem is now turning its attention to the harmonisation of the largest electronic retail payment instrument: card payments.  View Article
EPC: SEPA 2014 and beyond
The April 2014 edition of the European Payments Council Newsletter offers food for thought on how to realise the potential of the Single Euro Payments Area (SEPA), which remains thus far a work in progress.  View Article
EBA launches data collection exercise on CVA
The EBA has launched a data collection exercise to advise the European Commission on appropriate amendments to the European Credit Valuation Adjustment (CVA) framework and inform discussions on the CVA risk charge in Basel.   View Article


EU financial services reform gets approved by Council
The EU Council concluded for MiFID II, the SRM and BRRD that the Parliament’s position reflects what has previously been agreed with the Council.  View Article
DRS: ESMA gets MiFID II/MiFIR green light
The European Commission has published its formal request to ESMA, asking for technical advice on the delegated and implementing acts of MiFIR and MiFID II.  View Article
IOSCO: Final paper on point of sale disclosure in insurance, banking and securities sectors
The Joint Forum released a report that identifies and assesses differences in regulatory approaches to point of sale (POS) disclosure for investment and savings products across the insurance, banking and securities sectors, and considers the need for further alignment across sectors of the latter.  View Article
DRS: EMIR risk mitigation - compliance deadline expired
The FCA’s deadline for compliance with EMIR risk-mitigation regulations expired on 30th April 2014. Firms must be in a position to demonstrate compliance after this date or face a possible fine and public disclosure of the penalty.  View Article Frontloading rule due in weeks according to ESMA chief
ESMA will publish rules on frontloading within weeks, according to ESMA chairman, Steven Maijoor, who adds that the regulator is aware of the pricing headaches the provisions are causing.   View Article
Responses to ESMA's consultation paper on CRA 3 implementation
ESMA has published the Securities and Markets Stakeholder Group (SMSG)'s and European Association of credit rating agencies (EACRA)'s responses to its consultation paper on CRA 3 implementation, published on 11 February.  View Article
Reuters: EU watchdog to clarify sovereign debt ratings rules
ESMA, the European Union's regulator for credit rating agencies will clarify new rules on publishing changes to sovereign debt ratings to help investors confused by firms' differing approaches.  View Article
FT/Kaminska: Financial intermediation and shadow banking through commodities
Writing for the FT Alphaville Blog, Izabella Kaminska reviews Craig Pirrong's white paper on the economics of CFTs, concluding that commodity trading firms are not systemically risky because they do not engage in the sort of maturity transformation that banks do.  View Article
Commission: CRAs equivalent to EU rules in five countries
The Commission has adopted five implementing decisions which confirm that the rules in place on credit rating agencies in Argentina, Brazil, Hong Kong, Mexico and Singapore are equivalent to the EU rules on credit rating agencies.   View Article


EIOPA: Insurance stress test 2014
The aim of the exercise in 2014 is to test the resilience of insurers regarding market risk under a combination of historical and hypothetical scenarios. Additionally, insurance risk will be tested and EIOPA will also include a low yield element in the exercise.   View Article
EIOPA: Solvency II technical specifications
Technical specifications are divided into 2 parts. The first one covers valuation, standard formula, minimum capital requirement and own funds. The second part covers determination of the risk free interest rate term structure and transitional measure on technical provisions.  View Article PRA pushes on with recovery plans for domestic insurers
The UK prudential regulator has asked complex insurance groups to carry out resolvability assessments and put in place elements of recovery plans – the first move by a supervisor to extend global recovery and resolution requirements to domestic insurers.  View Article

Asset Management

EFAMA: Industry welcomes European Parliament’s vote on European long-term investment funds
The European Fund and Asset Management Association (EFAMA), the European Private Equity and Venture Capital Association (EVCA) and the Federation of European Securities Exchanges (FESE) welcome the adoption of European Parliament's report on European Long-term Investment Funds (ELTIFs) on 17 April.  View Article
Reuters: ABS industry pins hopes on ECB repo criteria for rules relief
Policy-makers should boil down a standard definition of high-quality securitisation pivoting around the ECB collateral-eligibility criteria to boost the recovery of the asset class, market participants say.  View Article
FSB-IOSCO: Responses to consultation on the assessment methodology for identifying NB-NI SIFIs
IOSCO jointly with the FSB published 47 comment letters to the FSB-IOSCO consultative document on Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions, which was posted on 8 January 2014.   View Article
AIMA releases educational guide to understanding hedge fund performance
The Alternative Investment Management Association (AIMA) published a new educational guide to understanding hedge fund performance. It says comparing hedge fund performance to the S&P 500 can be an "apples and oranges" comparison.  View Article

Corporate Governance/Accounting

ECIIA/FERMA: Working party on company law reforms
ECIIA and FERMA have launched a joint initiative to help companies get to grips with the issues that recent amendments to the 8th EU Company Law Directive pose to business.  View Article
IFAC's comment letter on the future governance of the IPSASB
IFAC commented on the IPSASB Review Group's proposed governance arrangements for the IPSASB detailed in the consultation paper. IFAC believes that this review represents an opportunity to enhance the governance arrangements of the IPSASB in a timely manner.  View Article

© Graham Bishop

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