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18 October 2017

May’s Florence speech momentum stalled over the Brexit bill - 134th Brussels for Breakfast – CPD Notes

The Prime Minister's golden vision of Britain after Brexit that she painted in Florence provided momentum in the separation talks as it gave a softer tone that was welcomed in the EU, but Europeans 'want their money' too and talks soon reached a blockage over the sum needed to exit the bloc.

Paula Martín/Graham Bishop


Organised by the Centre for the Study of Financial Innovation (CSFI) with co-presenterMichael Sholem (Davis Polk) and sponsored by PWC

This blog covers the key subjects since our last meeting that I hoped to cover but, as always, we ran out of time to deal with them all. As a Friend, you can watch the 26th `structured’ CPD web-cast with CISI. These Notes may be read to record a further 30 minutes of `structured CPD’, including a dipping into the links to the underlying stories.

Highlights from the “Brussels for Breakfast” meeting

“528 days until we go over the cliff” dominated the discussion… do we actually go over an economic (rather than legal) cliff or will it be more of ever-steepening slope? No-one contested the gravity of the situation and we reviewed various official warnings about the latest time when UK firms would have to hit the “re-locate” button. It will vary by a particular firm’s business profile but the consensus was that irrevocable change would have to begin by the end of 1Q 2018 if no acceptable agreement was in sight. My outline of the timetable for the legal steps to agree a “transition” – see my post-Florence speech blog - seemed to be accepted as plausible. My timeline is 9-11 years before the transition would be in force… though some shortening may be possible – unless the transition is effectively to stay as we are.

However, the regulatory framework for EU financial systems is not standing still. Indeed Brexit may even be accelerating change. The Commission’s paper on completing Banking Union by 2018 raised political issues as much as economic – would the EU agree on the November 2016 banking package fast enough to lower banking risk so that agreement on the European Deposit Insurance Scheme (EDIS) could be foreseen? A straw in the wind was the EBA’s Risk Dashboard that reported CET1 up to 14.3% with NPLs declining to 4.5% of assets.

The Commission proposal on greater integration of European financial supervision for CMU led to a heated discussion about whether this was a “power grab by ESMA” or the logical outcome of the EU’s drive for an effective CMU? For the moment, ESMA’s direct powers are planned to be extended to cover market infrastructures (such as CCPs), some prospectuses, benchmarks and co-ordinate market abuse investigations that have cross-border implications.

3 January 2018 is only 80 days away – with MiFID II, PRIIPS and the Benchmark Directive coming into force. Much remains to be done for MiFID and attention focussed on the new CPD requirements as well as research payments. There seems to be a sudden, late conversion by asset managers to paying for research from their own resources but the feeling was that – for the biggest players - these costs were not likely to be so large that they would seriously damage profitability. For smaller managers and smaller companies, the results could be quite different.

We noted the unusually strong criticisms by Accountancy Europe of the Parliament’s PANA Committee report about steps that should follow on from the Panama papers episode – they may bring little or no practical impact as auditors were not seen to have failed.


These Notes for the Friends of Graham Bishop will be supplemented by our full Workbook for our CPD clients (link) – in conjunction with the 30-minute CISI webcast. We have launched our new “CPD Weekly – 10 Minute Read ‘n Verify” (link) to comply with ESMA Guidelines


Full article available for consultancy clients here

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