Welcome to our Gold Friends weekly e-mail.
My highlights of the week: President Putin may yet succeed in reminding Europeans why the EU exists – with eventual spill-overs into many aspects of finance. Covid seems to be receding and Europe’s banks emerge remarkably unscathed. The fragments of the CMU edifice continue to drop into place – revisions to the Listing Act, consolidated tape, resilient MMFs, and stronger protection for investors – especially retail. The devil’s details are also being slotted into the Taxonomy and how to operate it in practice.
The Brexit battlelines are drawn ever more sharply in the CCP debate while political leaders move in the opposite direction to their electors’ opinions. Labour’s Starmer ruled out ever rejoining the EU – while polls show an increasing lead for “re-join”. But no leader is telling the British people that their only option is actually to join “EU 2025 onwards” as EU2016 has gone.
Graham Bishop
PS do enjoy the video of my 180th Brussels 4 Breakfast
Articles from 11-17 February 2022
General Financial Policy
Project Syndicate: Will Putin Unite Europe? : Attitudes toward the Russian threat against Ukraine reflect a broad array of concerns and historical experiences, inviting criticism that the European Union will remain hapless and divided. Yet underlying Europeans' differences are key shared interests that they are increasingly willing to defend. View Article
FT: Top finance watchdog urges west to ‘think twice’ about Russia sanctions : Chair of Financial Stability Board warns of ‘severe disruption’ if country cut off from payments system View Article
Rule of Law conditionality: MEPs call on the Commission to act immediately : Following the Court of Justice ruling on the “rule of law conditionality” mechanism, MEPs demand that the Commission applies it and protects EU values. View Article
ESMA warns consumers of risk of significant market corrections : Going forward, we continue to see high risks to investors of further – possibly significant – marketcorrections as markets remain nervous and geopolitical tensions are rising. View Article
ECB: How healthy are Europe’s banks two years into the pandemic? : Each year we look at the risks banks face and how well-equipped they are to deal with them. What are our latest findings? And what are supervisors most concerned about?In this episode of The ECB Podcast, our host Katie Ranger explores these questions with Supervisory Board Chair Andrea Enria and Vice-Chair Frank Elderson. View Article
Interview with Ana Botín, President of the EBF and Chair of Santander Group:“The banks are not complacent” : European banks have weathered the pandemic storm quite well. There have been no significant signs of a deterioration in asset quality so far, although this is in large part due to the stimulus and government support measures. View Article
SUERF: The COVID Non-Performing Loan ’Tsunami’ that Never Happened and How to Avoid it Now : Initial fears of rapidly worsening bank asset quality and an ensuing ‘Non-Performing Loan (NPL) tsunami’ from the COVID-19 pandemic have not materialised so far. In Europe, this is mainly due to the unprecedented mix of policy support measures that European governments have implemented... View Article
Banking Union
Speech by Andrea Enria, Chair of the Supervisory Board of the ECB, at the press conference on the results of the 2021 SREP cycle : For the 2020 SREP cycle, we adopted a pragmatic approach given the outbreak of the coronavirus (COVID-19) pandemic. We focused on how banks were handling the challenges arising from the crisis and kept most Pillar 2 requirements (P2R) and Pillar 2 guidance (P2G) stable. View Article
Finextra: EU Commission to legislate for full EU-wide coverage of instant payments : The European Commission is set to introduce legislation covering a digital euro and full EU-wide coverage of instant payments through Sepa Instant early next year. View Article
GBIC comments on machine learning for IRB Models : The German Banking Industry Committee has commented on a consultation of the EBA on machine learning for IRB models. In general, the GBIC would like to note that the algorithms underlying ML models and the data used are not per se more complex than in traditional methods. View Article
Capital Markets Union
ESMA response to the Commission consultation on the Listings Act : ESMA welcomes the Commission’s targeted consultation on the Listings Act and would like to take this opportunity to share our views on adjusting different parts of the regulatory framework to facilitate better access to capital for Small and Medium-sized Enterprises (SMEs) and making public capital markets more attractive for EU companies, while also ensuring strong investor protection. View Article
ICMA response to European Commission targeted consultation on the Listing Act : The consultation posed a wide range of questions relating to the state of public capital markets in the EU and the associated regulatory regimes, namely the EU’s Prospectus Regulation (PR), Market Abuse Regulation (MAR), MiFID, Transparency Directive and Listing Directive. View Article
ESMA proposes reforms to improve resilience of Money Market Funds : The proposals will improve the resilience of MMFs by addressing in particular liquidity issues and the threshold effects for constant net asset value (CNAV) MMFs. View Article
ESMA: Guidelines on certain aspects of the MiFID II suitability requirements : By helping to ensure that firms comply with regulatory standards, ESMA anticipates a corresponding strengthening of investor protection. View Article
EFAMA – the urgency behind a consolidated tape for Europe | A buy-side view on consolidated tape and market structure reforms : EFAMA has strong reservations on the charges associated with a consolidated tape. The EC's proposal suggests a tender process will be set up so that the winning bidder for the Consolidated Data Provider (CTP) is the one who can guarantee the highest revenue amounts back to data contributors. View Article
InsuranceEurope: The Retail Investment Strategy: a chance to empower consumers and achieve CMU goals : The European Commission’s work on a Retail Investment Strategy is an important opportunity to empower consumers and stimulate their participation in financial markets, while making the regulatory framework simpler and more consistent. View Article
InsuranceEurope: Solvency II review must remove barriers against insurers protecting and investing for customers, the economy and the EU gre : Insurance Europe has published its key messages on the EC’s proposals for the review of the Solvency II prudential framework and the proposed Insurance Recovery & Resolution Directive (IRRD). View Article
Environmental, Social, Governance (ESG)
ESMA prioritises the fight against greenwashing in its new Sustainable Finance Roadmap : ESMA is actively contributing to the development of the sustainable finance rulebook and to its consistent application and supervision by taking the necessary measures to promote investor protection across the EU. ESMA also engages in risk assessment and market monitoring activities focusing on potential financial stability risks stemming from ESG factors. View Article
Jacques Delors Centre: Turning green into gold - How to make the European green bond standard fit for purpose : The European Commission’s proposal for a European green bond standard (EuGBS) does little to fight greenwashing and foster investor confidence. View Article
ICMA makes proposals to address usability concerns over the EU Taxonomy : ICMA has published a paper which identifies challenges for the financial and corporate sector in providing information on the alignment of their activities with the EU Taxonomy as required by existing and proposed future regulatory reporting. View Article
UNEP FI: One year on from commitments on adaptation: lack of risk data and standards delaying progress : The review is based on publicly available information, though given that physical risk disclosures are still in their early stages, full assessments are not yet possible. View Article
EBF response to BCBS Consultation ‘Principles for the effective management and supervision of climate-related financial risks’ : Where material risks exist, it must be up to the institution to cover or mitigate them in line with their own business strategy and risk appetite. View Article
EBF and UNEP FI outline practical approaches to applying EU Taxonomy to bank lending : This initiative, supported by EY, developed based on discussions with 24 banks, 12 banking associations and six observing organizations, follows a joint project that tested the application of the EU Taxonomy to core banking products. View Article
FESE + 9 associations: Letter ‘The Importance of Protecting the EU ETS from Damaging Interventions’ : FESE together with other nine industry associations co-signed a letter urging the European Commission not to intervene in the ETS ahead of the publication of ESMA’s final report on the EU Carbon Market. View Article
GRI: Make the content index the starting point for effective reporting : Updates to GRI services for companies using the revised Universal Standards to ensure better reports View Article
Fin Tech Regulation
FSB warns of emerging risks from crypto-assets to global financial stability : Crypto-asset markets are fast evolving and could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system. View Article
Vox: The Digital Markets Act: An economic perspective on the final negotiations : This column covers five key sets of issues that remain under debate and provides an economic perspective. The authors support several of the proposed amendments, such as extending the prohibition on parity clauses and introducing new rules to address the anti-competitive use of default settings. View Article
Friends' Standard Services
CSFI: 180th Brussels 4 Breakfast with Graham Bishop, Adrian Whelan (BBH), Simona Amati (Kreab) and Frank van Lerven (NEF) : There's the Commission's 'time-limited' equivalence ruling for CCPs (and its notional 2025 end-date); there's the House of Lords inquiry into the impact of Brexit on UK financial services and more! View Article
Economic Policies Impacting EU Finance
European Commission: Winter 2022 Economic Forecast: Growth expected to regain traction after winter slowdown : The EU as a whole reached its pre-pandemic level of GDP in the third quarter of 2021 and all Member States are projected to have passed this milestone by the end of 2022. View Article
MEPs adopt proposals for addressing harmful tax schemes and reducing the EU VAT gap : MEPs adopted two reports on taxation, the first on the impact of national tax schemes on the EU economy and the second on reducing the EU VAT gap. View Article
Brexit and the City
Reuters: No EU access for UK clearing houses after June 2025, McGuinness says : There will be no access to the European Union for Britain's derivatives clearing houses after June 2025, the bloc's financial services chief Mairead McGuinness said on Friday. Britain's departure from the EU has largely severed the country's financial services ties with the bloc. View Article
FT: BoE Governor Andrew Bailey calls for indefinite waiver on EU lenders’ access to London clearing : BoE governor sees no need for time limit to temporary extensions on intermediary rules View Article
IRSG Narrative – EU Corporate Sustainability Reporting Directive (CSRD) : The IRSG believes that it is essential to implement a balanced application of CSRD requirements to EU and non-EU headquartered internationally active companies and their international activities, in particular to ensure proportionality between EU and non-EU activities. View Article
Brexit
Evening Standard Labour leader Keir Starmer rules out UK rejoining European Union : View Article
UK TPO: The UK-EU Trade and Cooperation Agreement (TCA) one year on: trade in goods : In the first year of the TCA, imports from the EU fell by -32%... Exports experienced a moderate fall of -3% for the whole of 2021, relative to what exports would have been without the agreement. View Article
CITY AM: Three in four UK exporters say Brexit trade deal is stopping growth : Just under three in four British exporters believe the UK-EU post-Brexit trade deal is not helping them increase sales, according to a new survey from the British Chambers of Commerce (BCC). View Article
Institute for Government: The reaction to John Major’s speech suggests standards are the next Brexit battlefield: John Major's speech on the breakdown of trust and the erosion of standards in public life has been dismissed by many as being fuelled by a decades-long loathing of Boris Johnson or the bitter rantings of a frustrated Remainer. But, argues Jill Rutter, his critics should engage with the substance View Article
EURACTIV: Most Brits would rejoin EU if new vote held, survey shows : Five years on from the Brexit referendum and nearly two years after leaving the bloc, most Britons would vote to rejoin the EU if a plebiscite were held, according to a new survey. View Article
Chatham House: The UK must not dismiss European ‘strategic autonomy’ : Although the current Ukraine crisis has been a reality check for the EU, the UK still needs to engage with the debate about a greater European capacity to act. View Article
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