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11 January 2018

This week in "Brussels"
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  Articles from 21 December 2017 - 11 January 2018

  Banking Union
 
 
EBA publishes full impact assessment of Basel reforms on EU banks
This exercise presents aggregate data on EU banks assuming full implementation of the final Basel III framework, as endorsed by the Group of Central Bank GHoS, and reflects all the revisions to the credit and operational risk approaches, as well as to the process for the estimation of the leverage ratio (LR).   View Article
Basel Committee issues proposed technical amendment to the Net Stable Funding Ratio
At its meeting in December 2017, the BCBS established a procedure for issuing technical amendments to its standards. The Committee published its first proposed technical amendment, which is related to the treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio.  View Article
Progress report on supervisory colleges published by the Basel Committee
The Basel Committee on Banking Supervision has issued a Progress report on the implementation of principles for effective supervisory colleges. Supervisory colleges play an important part in the effective supervisory oversight of international banking groups.  View Article
The Bank of England’s approach to the authorisation and supervision of international banks, insurers and central counterparties
As discussions on the UK’s future relationship with the EU continue the Bank of England announced that it is consulting on an updated approach to authorising and supervising international banks and insurers, and it issued guidance on its approach to international central counterparties (CCPs).  View Article
EBA updates its quantitative analysis on MREL
The EBA updated its estimates of capacity and funding needs of a representative sample of European banks to meet MREL under alternative scenarios. In this exercise, the EBA highlighted a modest improvement in the stack of MREL eligible instruments in 2016.  View Article
EBA advises the Commission to disallow the application of the 180 day past due exemption for material exposures
Based on an analysis of data submitted by the institutions still using the 180 day past due (DPD) criterion, the EBA recommends that this exemption be disallowed and all institutions should consequently rely on the 90 DPD regime for all exposures.   View Article
Andrew Gracie: Making banks resolvable - the key to making resolution work
The Executive Director of Resolution of the Bank of England, reviews what has been done and what is left to do to make resolution work.  View Article
BIS: François Villeroy de Galhau: Monitoring large and complex institutions
The Governor of the Bank of France gave an overview of the strong regulatory and supervisory actions undertaken to reduce inefficient levels of the complexity of the global banking system. He also mentioned two important challenges faced in shaping the global European banking system.  View Article
Financial Times: Banking union is not enough to save the eurozone
Economic recovery should not obscure the need for reform of Europe’s financial system, writes Euclid Tsakalotos.  View Article
European Commission: Public consultation on EU funds in the area of investment, research & innovation, SMEs and single market
The Commission launched a consultation on EU funds in the area of investment, research & innovation, SMEs and single market.  View Article
ECB's Cœuré: Interview with Caixin Global
The Member of the Executive Board of the ECB gave the bank's approach to digital currencies, payment systems and Fintech.  View Article
 
  Capital Markets Union
 
 
Eurex Clearing AG: BaFin grants request for transitional arrangement for exchange-traded derivatives
With effect from 3 January 2018, Article 35 of the Markets in Financial Instruments Regulation provides, in principle, that a trading venue has the right to non-discriminatory access to a CCP if certain conditions are met.  View Article
AFME comments on the coming into effect of MiFID II
Commenting on the implementation of the MiFID II and MiFIR, Simon Lewis, Chief Executive at AFME, said that will fundamentally affect the way investment firms trade and interact with their clients, as well as how the European securities market ecosystem works.  View Article
Financial Times: City reprieve on MiFID II rules more practical than farcical
ICE Futures Europe and the London Metal Exchange were granted a further two and half years by the Financial Conduct Authority to comply with some of them. It was not so much a last-minute reprieve as a first-minute one.  View Article
Financial Times: Ashmore to absorb costs of research under MiFID II
Ashmore, the only major asset manager that had not publicly announced how it will pay for investment research under sweeping rules that just came into force, has finally made a decision.  View Article
Financial Times: Big asset managers set to benefit from MiFID II legislation
Large asset managers are set to benefit from new European rules around payment for research at the expense of smaller rivals, creating an “uneven playing field” that could have far-reaching consequences for the industry.  View Article
ESMA publishes first MiFID II position management controls for commodity derivatives
The European Securities and Markets Authority issued a first badge of position management controls under the Markets in Financial Instruments Directive.   View Article
FCA response to ESMA's public statement on LEIs
The FCA recognises the importance of LEIs to deliver safer and cleaner markets, but also the need that ESMA has identified for a smooth introduction to the new regime.  View Article
IPE: MiFID II to spur greater ETF usage in securities lending - Moody's
According to Moody’s, the rollout of MiFID II could encourage institutional investors to make greater use of exchange-traded funds for securities lending and collateral purposes.  View Article
FCA: Statement on transitional arrangements for trading venues under MiFIR Article 54
Under Article 54(2) of the MiFIR, an EU Central Counterparty or trading venue may apply to its Competent Authority for a transitional arrangement in relation to exchange-traded derivatives, under which the open access requirements would not apply until July 2020.  View Article
ESMA issues list of trading venues temporarily exempted from open access under MiFIR
ESMA published a list of those trading venues for which a temporary exemption from the open access provisions under 36(5) of the Markets in Financial Instruments Regulation exists.  View Article
ESMA consults on CCP anti-procyclicality margin measures
ESMA opened a public consultation on draft guidelines which aim to clarify the implementation of anti-procyclicality provisions for central counterparties under the European Markets Infrastructure Regulation.   View Article
ESMA publishes register of derivatives to be traded on-venue under MiFIR
ESMA published a public register of those derivative contracts that are subject to the trading obligation under the Markets in Financial Instruments Regulation.  View Article
Financial Times: MiFID II risks drowning in its ambition
MiFID II was billed as the biggest shake-up to European markets for a decade, but as it arrived, bankers and investors warned it will take several years before its effects are fully felt.  View Article
Financial Times: MiFID II can succeed if it encourages competition
It is widely understood that the Mifid II rules represent the biggest regulatory overhaul to affect global financial markets since 2010, when the Dodd-Frank Act went into effect in the US.  View Article
ESMA delays publication of double volume cap data
ESMA decided to delay the publication of the data on the double volume cap (DVC) mechanism for January 2018.  View Article
FSB publishes governance arrangements and implementation plan for the unique transaction identifier
The UTI is a key global harmonised identifier for reporting over-the-counter (OTC) derivative transactions, in particular designed to facilitate effective aggregation of transaction reports.   View Article
ECMI: Recent Developments in European Capital Markets – Key findings from the 2017 ECMI Statistical Package
This report presents the key findings of the 2017 ECMI Statistical Package, a comprehensive database, compiled annually, of developments in European and global capital markets.  View Article
PCS: Welcome to 2018…oh, and by the way, the clock is ticking
One can be forgiven for missing it in the post-holiday lethargy but, on 28th December 2017, the new securitisation rules were published in the Official Journal. This saw the final stage of the entire legislative process. The STS text and the CRR text are now European law.  View Article
 
  Clients Union
 
 
EFAMA alerts that the new PRIIPs rules will confuse and mislead investors
The new rules are threatening to cause serious investor detriment by mandating figures, particularly in relation to performance and costs, that will at best confuse investors and at worst mislead them. EFAMA calls for urgent action.  View Article
Commercial Risk Europe: Munich Re readies GDPR compliance tool as experts warn many firms not ready for new rules
Help is at hand for businesses struggling to be ready for the EU’s General Data Protection Regulation (GDPR), which comes into force in May 2018. Munich Re is putting the finishing touches to a tool it says will help companies understand how their business stores and uses personal data.  View Article
François Villeroy de Galhau: Economic and financial regulation in the era of big data
In his speech, the Governor of the Banque of France focuses on the consequences of Big Data for the economy in general and for central banks in particular.   View Article
 
  Insurance
 
 
EIOPA calls for Consistent Supervisory Practises on Internal Models
The EIOPA issued an Opinion on the supervisory assessment of internal models including a dynamic volatility adjustment (DVA). The Opinion is addressed to national supervisory authorities and stresses the importance of common supervisory practices and approaches throughout the European Union as regards the use of internal models.   View Article
EIOPA highlights financial stability risks
The European Insurance and Occupational Pensions Authority published its December 2017 Financial Stability Report of the (re)insurance and occupational pensions sectors in the European Economic Area.   View Article
EIOPA publishes its annual analysis on the use of long-term guarantees measures and measures on equity risk
The European Insurance and Occupational Pensions Authority submitted to the European Parliament, the Council of the European Union and the European Commission, its annual Report 2017 on Long-Term Guarantees Measures (LTG) and Measures on Equity Risk.  View Article
IAIS: Request for stakeholder input in first stages of development of next strategic plan
The IAIS is in the early stages of crafting its next five-year strategic plan, with the current one set to conclude in 2019. As part of its commitment to broad stakeholder engagement, IAIS invited and encouraged to participate in this process by sharing thoughts and perspectives on two topics.   View Article
Commercial Risk Europe: Airmic says buyers will inform UK regulator’s study into broking practices
Risk management association Airmic and its members are working with the UK’s Financial Conduct Authority (FCA) on its market study into competition in wholesale insurance broking, which was announced late last year.  View Article
 
  Asset Management
 
 
Investment & Pensions Europe: ‘Status quo not an option’: PEPP rapporteur sets out views
The proposal for a pan-European personal pension product (PEPP) is “timely and appropriate”, according to the European Parliament’s lead on the project.  View Article
EFAMA welcomes the EC’s proposal for a Directive and a Regulation establishing a self-standing prudential regime for investment firms
The association supports the regulation’s objectives to establish a clear demarcation between a prudential regime that would be designed around credit institutions (CRD/CRR), and a more proportionate one aimed for a myriad of non-bank actors.   View Article
Investment & Pensions Europe: EU member states endorse new clearing delay for pension funds
European Union member states have endorsed another extension of the exemption from central clearing for pension funds. The European Council adopted this position in the week of 18 December, going along with the proposal made by the European Commission in May.  View Article
Hedgeweek: Hedge funds are optimistic about 2018
In particular, 2018 looks set to be a year of continued investment in innovation, leading to new strategies, vehicles and bespoke products. Managers are investing heavily to enhance the use of data and robotics, and are embracing automation to improve their investment processes.  View Article
Investment & Pensions Europe: BNP Paribas experiments with blockchain for fund trading
BNP Paribas Asset Management has announced a successful test of a blockchain-based system for fund distribution. The test, conducted late last year in Luxembourg, involved a “full end-to-end fund transaction” using sister company BNP Paribas Securities Services’ blockchain programme Fund Link.  View Article
 
  Corporate Governance/Accounting
 
 
IASB: IFRS 9 and IFRS 15 are now effective
The IASB published information about the effectiveness of IFRS 9 Financial instruments and IFRS 15 Revenue from Contracts with Customers.  View Article
EIOPA publishes information on the use of exemptions and limitations from regular supervisory reporting and on the use of capital add-ons
EIOPA's report on Capital Add-Ons (CAOs) was published for the first time. The report on exemptions and limitations covers reporting on exemptions for the whole of 2016 and on limitations for the first quarter of 2017.  View Article
EFRAG commented on the IASB's ED on accounting policies and accounting estimates
EFRAG has issued its comment letter and feedback statement on the IASB's ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8).  View Article
Accountancy Europe: EFRAG’s discussion paper on improving the Goodwill Impairment Test
Accountancy Europe welcomed EFRAG’s discussion paper, saying that it appreciates the advisory group's aim to influence future standard-setting developments by engaging with European constituents and providing timely and effective input to early phases of the IASBis related work.  View Article
IIA releases new practice guide on liquidity risk
Recognizing that financial services auditors face unique challenges that require tailored guidance, the IIA has released Auditing Liquidity Risk, An Overview, the first IPPF practice guide specifically for financial auditors.  View Article
FRC stakeholder survey
The FRC has published the results of the survey which focused on stakeholder views on all aspects of its work, including corporate governance and reporting as well as its effectiveness as a regulator.   View Article
 
  Financial Services Policy
 
 
EBA issues guidance for the use of cloud service providers by financial institutions
The EBA Recommendations clarify the EU-wide supervisory expectations if institutions intend to adopt cloud computing, so as to allow them to leverage the benefits of using cloud services, while ensuring that any related risks are adequately identified and managed.   View Article
Hedgeweek: Sophisticated cyber threats and being ready for GDPR are major concerns for finance sector IT pros
Concerns about data and system security, and ensuring systems will be equipped for compliance with GDPR are among the key technology concerns for IT professionals in the finance sector, according to a new study from digital workplace provider Invotra.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
2018: the year of the make-or-break for the Brexit talks - 137th Brussels for Breakfast – CPD Notes
The start of the New Year marked the entry into force of the EU's revamped rules for financial services, MiFID II, and re-set in motion a big headache for European regulators and firms: Brussels and London will have less than 10 months to ink a trade deal and the terms of their new relationship.  View Article
 
  Friends Services
 
 
2018: the year of the make-or-break for the Brexit talks - 137th Brussels for Breakfast – CPD Notes
The start of the New Year marked the entry into force of the EU's revamped rules for financial services, MiFID II, and re-set in motion a big headache for European regulators and firms: Brussels and London will have less than 10 months to ink a trade deal and the terms of their new relationship.  View Article
 
  Political
 
 
ACCA welcomes the start of the Bulgarian presidency
ACCA welcomed the start of the mandate of Bulgaria at the helm of the Council of the EU. The global accountancy body notes Bulgaria’s priorities while acknowledging the significant challenges ahead, including Brexit negotiations.  View Article
 
  Financial
 
 
PIIE: A New Roadmap for EU Reform in 2018
The recent publication of the European Commission's new roadmap for completing the Economic and Monetary Union signals that progress toward economic reform in Europe is on track for 2018. Jacob Funk Kirkegaard analyses the Commission's four main proposals.   View Article
 
  Economic
 
 
EurActiv: A three-step plan for a better European Monetary Fund
The European Commission’s ESM reform plans are so one-sided that they can only exacerbate the Eurozone’s existing problems and deepen the gulf between creditor and debtor states, writes Clemens Fuest.  View Article
EurActiv: Financial instruments: A paradigm shift in the next EU budget
The (much) higher use of loans and guarantees foreseen in the MFF post-2020 will produce significant changes in the management model of EU funding, and could even herald a structural evolution in the European project as a whole, write Francesco Molica and Nikos Lampropoulos.  View Article
ACCA: Fair taxation of the digital economy is a global concern
The taxation of the EU’s digital economy needs to be clear, comprehensive and consistent and cannot be separated from global tax policy, says ACCA in its response to the EC’s public consultation on ‘Fair taxation of the digital economy’.  View Article
Euro area unemployment at 8.7%
The euro area (EA19) seasonally-adjusted unemployment rate was 8.7% in November 2017, down from 8.8% in October 2017 and from 9.8% in November 2016. This is the lowest rate recorded in the euro area since January 2009.   View Article
Volume of retail trade up by 1.5% in both euro area and EU28
In November 2017 compared with October 2017, the seasonally adjusted volume of retail trade increased by 1.5% in both the euro area (EA19) and the EU28.  View Article
 

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