Welcome to our Gold Friends weekly e-mail.
My highlights of the week: In a light week of other news, the realities of Brexit are beginning to surface: BoE Governor Bailey said the UK should not be a “rule-taker”; the Minister (not Parliament) “took back control” of applying IFRS in the UK with a first wave of UK-adopted IAS – either a pointless exercise or the beginning of a wedge between UK and EU accounting standards; some in the City still cling to hopes of a rapid, wide-raging equivalence decision by the Commission – even as IPOs begin to follow share trading by leaving the UK.
The LIBORs now have less than a year of remaining life so AFME issued a “call for action” on securitisations. Green finance passed another milestone as EFAMA reported that ESG-linked ETFs passed €1 trillion outstanding. The ECB glimpsed the future as it was flooded with a record 8000 responses to its digital euro survey – analysis will now follow in “the spring”.
Graham Bishop
Articles from 7-14 January 2021
General Financial Policy
Vox: An early view on euro area risk-sharing during the COVID-19 crisis : The economic fallout from the COVID-19 crisis has been asymmetric across euro area countries, leaving room for risk-sharing channels to operate. This column studies income risk-sharing in the euro area and finds that while it has so far been low, it was resilient throughout the crisis. View Article
Veron: An optimistic take on NextGenerationEU : The Paris-based think tank Groupe d'Etudes Géopolitiques kindly invited me to contribute to a collection of short takes on whether the EU improved its "strategic autonomy" in 2020. View Article
Banking Union
EBA points to a further rise in capital and leverage ratios, whereas profitability remains strongly subdued : Capital and leverage ratios increased quarter-on-quarter (QoQ); Forborne loans were further on the rise while non-performing loans declined; Share of stage 2 exposures kept on growing for loans under moratoria. View Article
ECB finalises guide on supervisory approach to consolidation : Final guide clarifies use of supervisory tools to facilitate sustainable consolidation projects; Credible integration plans will not be penalised with higher capital requirements; ECB expects profits from badwill to be used as capital of new bank View Article
SRB: A new year, a new impetus for the goal of financial stability : Our focus is always on making banks resolvable so that we can promote financial stability and protect the taxpayer. View Article
ECON: Review of the bank crisis management and deposit insurance frameworks Banking Union Working Group: This briefing summarises key elements of the intended initiative, based on the information that the Commission provided on 10 November 2020 in its related public consultation and additional public sources. View Article
Capital Markets Union
EFAMA’s Response to the European Commission Roadmap on the review of EU rules on alternative investment fund managers : The AIFMD is one of the pillars of EU regulation for asset managers and investment funds, which have a crucial role to play in the development of the Capital Markets Union (CMU) and the post Covid-19 economic recovery in the EU. View Article
EFAMA’s REPLY TO ESMA’s CONSULTATION PAPER ON THE GUIDELINES ON THE MIFID II/ MIFIR OBLIGATIONS ON MARKET DATA : EFAMA welcomes this ESMA initiative and we agree with the conclusions in the ESMA Report that there is an overall need to strengthen the laws applicable to data in connection with the MiFIDII/MiFIR Review, aside the implementation of a Consolidated Tape View Article
Insurance Europe: Work to improve PRIIPs KID must prioritise insurance consumers, instead of self-imposed deadlines : It is frustrating that PRIIPs are treated as if they are only applicable to asset managers, when 75% of PRIIPs are in fact insurance-based investment products. View Article
Insurance Europe: Insurers call for regulatory clarity on outsourcing and third-party relationships : Insurance Europe has today published its views on a discussion paper by the Financial Stability Board (FSB) on regulatory and supervisory issues relating to outsourcing and third-party relationships. View Article
CFTC and ESMA Sign Enhanced MOU Related to Certain Recognized Central Counterparties : The Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA) today announced the signing of a new Memorandum of Understanding (MOU) regarding cooperation and the exchange of information with respect to certain registered derivatives clearing organizations established in the United States that are central counterparties (CCPs) recognized by ESMA under the European Market Infrastructure Regulation (EMIR). View Article
AFME “call to action” for active transition of LIBOR linked securitisations : Less than 12 months now remain before the continuation of panel-based LIBOR can no longer be guaranteed. View Article
FCA: The final countdown: Completing sterling LIBOR transition by end-2021 : After many years of preparation, 2021 is the critical year for firms to complete their transition away from LIBOR. The LIBOR administrator, ICE Benchmark Administration, is consulting on ceasing publication of all sterling LIBOR settings at the end of 2021, leaving just one year for firms to remove their remaining reliance on these benchmarks. View Article
ICMA Quarterly Report First Quarter 2021 : The International Capital Market Association's Assessment of Market Practice and Regulatory PolicyThis Quarterly Report is produced by the Market Practice and Regulatory Policy team at ICMA. View Article
ICMA: The European repo market at 2020 year-end : This is the 5th in the series of annual reports, which began with an analysis of the unprecedented dislocations in the euro denominated repo market. View Article
Environmental, Social, Governance (ESG)
Funds Europe: European ETFs surpass €1trn as ESG leads the way : European ETFs closed the fourth quarter of 2020 by passing the €1 trillion milestone, with ESG-focused funds drawing the lion’s share of net inflows. View Article
Investment Association: Pension funds and investment managers join forces to better embed stewardship into the investment process : The new group, which held its inaugural meeting earlier this week, brings together asset owners, investment managers and other relevant stakeholders to consider a range of issues aimed at strengthening the relationship between asset owners and investment managers View Article
ISDA: Overview of ESG-related Derivatives Products and Transactions : The transition to a sustainable economy will take a massive amount of long-term funding. The financial services sector will be an essential partner in providing this funding and managing the risks associated with sustainable investments, including project risk and interest rate and currency risks. View Article
Accountancy Europe: EFRAG’s consultation document on the ad personam mandate on potential need for changes to the governance and funding : Accountancy Europe welcomes the governance and funding proposals if EFRAG were to be entrusted with a standard-setting mandate for non-financial information (NFI) reporting, while the current advisory activities and respective processes in EFRAG for financial reporting remain unchanged. View Article
Insurance Europe: Supervisors should support insurers in helping to facilitate the transition towards sustainability : Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) regarding the supervision of climate-related risks. View Article
Bloomberg: Swiss Set to Toughen Financial Disclosure Rules on Climate : Switzerland is preparing to draw up a law that could toughen the rules for companies’ financial disclosures in regards to climate change. View Article
Protecting Customers
AFME: Governance of Market Abuse Surveillance Controls: An industry perspective : The introduction of the Market Abuse Regulation in 2016, saw financial institutions implement a series of systems and controls to mitigate the risk of insider dealing, market manipulation and unlawful disclosure of inside information. View Article
EDPB consultation on supplementary measures: EBF response : The European Banking Federation (EBF) welcomes the opportunity to respond to the European Data Protection Board’s (EDPB) consultation on its Recommendations on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data. View Article
Fin Tech Regulation
ECB digital euro consultation ends with record level of public feedback : Over 8,000 responses received in online survey; Privacy, security and pan-European reach ranked highest in European citizens’ preferences; Detailed analysis to be published in spring, ahead of decision on project launch View Article
Digital euro: EBF presents its views to ECB : The European Banking Federation has submitted its views on the introduction of a digital euro as a central bank digital currency to the European Central Bank, which closed its public consultation on this topic last night. View Article
EPC: Programmable instant payments in DLT networks and distribution of digital money : In July 2020, five Spanish banks successfully completed a proof of concept (POC) for an interbank smart payments’ platform managed by Iberpay. View Article
Brexit: The realities are begining to appear
EURACTIV: Brexit ‘big bang’ to trigger tectonic trading rift in Europe : Europe will see its biggest transfer of share trading in more than two decades as stock exchanges opened for business in 2021, with Brexit shifting its centre of gravity away from London. View Article
POLITICO: The next Brexit battle: Financial services : Hopes a promised post-Brexit memorandum of understanding will settle finance’s fate are misplaced, experts warn. View Article
Bloomberg: London Finance Clings to Hope for Some Post-Brexit EU Access : EY polls finds bankers, money managers expect equivalence; Few executives say their firms plan to move more staff to EU View Article
FT: Amsterdam vies for IPO spotlight as Brexit dents London’s allure : InPost’s plans for Dutch listing underscore mounting competition to UK as trading hub View Article
CRE: BoE governor says UK should not ‘take’ EU financial services rules for access : BOE Governor Bailey said the UK’s financial services sector should not pay too high a price for access to the European Union’s markets now that the country has formally left the trading bloc without a deal that covered financial services. The bank said Solvency II rules need reforming in the UK. View Article
MEP Giegold: We need to ensure a level playing-field on financial services post-Brexit: our letter to the Commission : View Article
Bloomberg: City of London Needs Brexit Limbo to End : The U.K. and Europe busted one Brexit deadline after another hatching a trade deal. March’s target for a finance accord can’t be the next to slip. View Article
FT: City of London to bring back Swiss stock trading following EU exit : Move marks first regulatory break from Brussels for UK financial services View Article
FRC: UK-adoption of Amendments for IBOR Phase 2 and Amendments to IFRS 4 : The Secretary of State for BEIS, in exercise of the powers conferred by statutory instrument 2019/685*, adopted on 5 January 2021, the following amendments to international accounting standards for use within the United Kingdom: View Article
EIOPA: MoUs with UK authorities in the area of insurance and pensions : On 5 March 2019, the European Insurance and Occupational Pensions Authority (EIOPA) and all national competent authorities (NCAs) of the European Economic Area (EEA) with competencies in insurance agreed memoranda of understanding (MoUs) with the Bank of England in its capacity as the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) of the United Kingdom (UK). View Article
ESMA: MiFID II framework on supervisory cooperation, authorisation... : ESMA/UK Contact points of national supervisory authorities for communication in the MiFID II framework on supervisory cooperation, authorisation, acquisitions and passporting View Article
Bruegel: The double irony of the new UK-EU trade relationship : The Trade and Cooperation Agreement signed between the European Union and the United Kingdom goes against six decades of UK efforts to avoid being economically disadvantaged in Europe. Tracking the evolution of the EU-UK relationship over the last 60 years can help in understanding this. View Article
Federal Trust: Brexit as Tragedy of Errors : In hindsight, Brexit bears all the hallmarks of a tragedy of errors. As from Thatcher’s Bruges speech in 1988, British politicians have been fighting against the phantom of a European super-state, while the EU was actually evolving towards a democratic regional organisation. View Article
EURACTIV: : Ireland has ramped up direct shipping routes to mainland Europe since the end of the Brexit transition period, seeking new passages to the EU bypassing freight jams feared at UK borders. View Article
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