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17 December 2009

This week in "Brussels" - with Podcast

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© 2009Jump directly to articles on:-
Financial Services Policy Banking Asset Management Corporate Governance
Competition: Financial Services Financial Services Month in Brussels - Report Edited Minutes of key legislative Bodies Financial stability - policy analysis
Brief Opinions      
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Articles from 10 December 2009 - 17 December 2009
Financial Services Policy Back to top 

European Council Conclusions 10 – 11 December: the new supervisory framework to be operational during 2010
Government heads welcome the Council's adoption of a general approach to CRD. They believe that remuneration policies within the financial sector will promote sound and effective risk management and contribute to future financial stability.  View Article

Trichet: proposed establishment of European Systemic Risk Board is a very important initiative for containing systemic risks
At a Cambridge University conference he set out the new challenges for macro-economic supervision, including controlling the very fast growth of innovative financial instruments and new intermediaries, in particular, off-balance sheet vehicles.  View Article

Commission issues European Financial Integration Report 2009
The report maps out the current state of play on integration, efficiency, competition and stability of the European financial services sector. Key issues addressed include the future financial integration in the EU and its efficiency towards the US. A summary of the financial services policy achievements in 2009 is also attached.   View Article

Basel Committee consults on liquidity risk measurement, standards and monitoring
The Basel Committee consults on proposals to strengthen global capital and liquidity regulations. Issues include the Tier 1 capital base, capital buffers, capital requirements for counterparty credit risk, and minimum liquidity standards for internationally active banks.  View Article

UK Treasury consults on plans to manage investment bank failures
The consultation contains a set of measures to enable the managed wind-down of an investment firm. These include the development of resolution plans for firms, a set of special administration objectives and new responsibilities for the board.  View Article

FT: France to follow UK on bonus tax - bonuses exceeding €27000 to be taxed
Germany is unlikely to follow the UK example. Neither is the US, which will control bonuses only where banks have received state aid and not yet given it back. Bank bonuses remain a hot issue since the G20 tackled remuneration policies at global level.  View Article

FT: Tobin tax remains UK Treasury ambition
Following the September G20 summit, in which Gordon Brown's suggestion to introduce a financial transaction tax (FTT) met with a sceptical response from global finance ministers, the UK government is still pushing for a global tax on financial transactions.   View Article

Myners speech: 'What’s next for UK banking?' – It is vital to end the risk-taking and excessive rewards culture that is damaging the system
'It is right that public opinion has undertaken a vigorous public debate on the causes of the crisis. A prosperous, sound, responsible banking system is an international asset that the Government wants to promote and it needs to succeed', Myners said.  View Article

FSA strengthens stress-testing regime – key element in building up effective risk management
An integrated approach comprises 3 main elements: firms' own stress-testing, FSA stress-testing of specific firms and simultaneous system-wide stress testing. The aim is to ensure a firm's senior management knows how long it can survive during a long crisis.  View Article

House approves new rules on US Financial System
The Wall Street Reform and Consumer Protection Act will create a Financial Stability Oversight Council for systemic risks, establish reforms for the OTC Derivative Markets, introduce a 5% retention rate and address the too-big-to-fail issue by introducing a Systemic Dissolution Fund.  View Article

Japan Round Table Committee: report on Japan's future financial system
The Committee stressed the urgency of reforming the financial intermediary function of the Japanese banking sector, deemed to have relied on credit security based on collateral. It is also calling for a more proactive role when it comes to international rule-making.   View Article


Banking Back to top 

CEBS consults on its draft revised guidelines on stress testing
The revised guidelines draw on the experience supervisors have obtained by reviewing institutions’ stress tests. They are supplemented by a number of annexes focusing on the stress testing of specific risks as market risk, securitisation or credit risk.   View Article

FSA consults on strengthening firms' capital standards - changes required following amendments to EU CRD
Changes include strengthening capital requirements for the trading book in order to ensure that a firm’s assessment of the risks connected with its trading book better reflects potential losses from adverse market movements in stressed conditions.  View Article

CEBS publishes its guidelines on the revised large exposures regime – part of the amended Capital Requirements Directive
They cover two areas: the definition of 'connected clients', referring to the concepts of 'control' and 'economic interconnection'. On large exposures of schemes with exposures to underlying assets, CEBS leaves the decision of the approach to the institution.   View Article

CEBS publishes its guidelines on common reporting of large exposures
CEBS has developed common reporting templates and guidelines for reporting large exposures. They will be included in the COREP framework to ensure a unified European reporting system and eventually be based on the same standards as the other COREP data.  View Article

CEBS publishes its guidelines on hybrid capital instruments
The guidelines are focused on areas where CEBS sees the need for further guidance. They are structured into five main parts covering permanence, flexibility of payments, loss absorbency, limits and Special Purpose Vehicles (SPVs).  View Article

CEBS guidelines on liquidity buffers – sufficient for at least one month
They will represent a significant enhancement of institutions’ liquidity positions and encourage a reinforcement of the management of liquidity risk given structural changes in some national regulatory regimes and international cooperation.   View Article


Asset Management Back to top 

Swedish Presidency progress report on AIFMD – discussions continue
The AIFMD is currently one of the most polemic proposals. It has already been discussed a dozen times in relevant Council Working Party meetings, but a number of issues still remain unsolved, including depositaries, remuneration and third-country passports.   View Article

House of Lords expresses concerns about EU AIFMD - coordination with US regulation essential in order not to lose competitiveness
House of Lords EU Committee is concerned the directive does not fulfil global regulatory arrangements. It also considers the Swedish compromise proposal a good agreement, moving towards a directive more compatible with emerging proposals in the US and the rest of the G20.  View Article


Corporate Governance Back to top 

ECGI newsletter - 'The New Role of Government in Corporate Governance'
In the US and the EU there is growing momentum in favour of a much expanded regulatory outlook extending well beyond the banking sector and into areas of corporate governance, especially executive pay. The newsletter asks about the future policy perspective of government interventions.   View Article

IFAC releases new framework and drafting conventions
The New Framework and Drafting Conventions enable the IAESB to deploy a more efficient and effective standard-setting process and to better demonstrate accountability for its decisions, said Mark Allison, Chair of the IAESB.   View Article

EFRAG consults on IFRIC 14 - prepayments of a minimum funding requirement
An unintended consequence of IFRIC 14 was identified when an entity subject to a minimum funding requirement made an early payment of contributions. Amendment to IFRIC 14 eliminates this unintended consequence and treats this prepayment, like any other prepayment, as an asset.  View Article

Nicolas Véron: IFRS sustainability requires further governance reform
Véron writes that a broader strategic readjustment on the part of the IASCF is necessary if the Foundation hopes to regain the support of the global investment community. The Foundation must make itself more responsive and accountable to the investment community.  View Article

IASB welcomes decision by Japanese FSA to permit domestic use of IFRSs for current financial year – a success for international cooperation
An encouraging decision for other countries on the path to embracing global standards, it establishes an operational framework for the voluntary application of IFRSs in Japan for the fiscal year ending 31 March 2010, and represents an important step towards the adoption of IFRSs in Japan.   View Article

EFRAG consults on draft study report on IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
Its assessment of the Interpretation against EU endorsement criteria and on its initial assessment of costs and benefits arising from its application in the EU. IFRIC 19 states equity instruments issued to extinguish a financial liability should be treated as ‘consideration paid’.   View Article


Competition: Financial Services Back to top 

Commission approves Royal Bank of Scotland’s impaired asset relief measure and restructuring plan – divestment targets to be reached by 2013
This has been one of the most complex cases of the financial crisis. The state will cover 90% of the losses arising from a £281bn asset portfolio. RBS will then pay a share of the restructuring costs. Divestments will include RBS insurance, transaction management and commodity trading operations.  View Article


Financial Services Month in Brussels - Report Back to top 

December 2009 - with Podcast
The EU is continuing to move with astonishing rapidity towards a new regulatory regime for financial services. The European Council formally welcomed ‘the rapid and determined action taken by’ ECOFIN. But the ‘general approach’ has yet to be agreed by the European Parliament.  View Article


Financial stability - policy analysis Back to top 

The New Economic Foundation Report: calculating the real value to society of different professions - top bankers destroy value
The financial crisis would not have happened without City bankers engaging in risky, opaque, complex transactions. The report estimates top city bankers destroy £7 of value for every £1 they are paid privately.   View Article


Brief Opinions Back to top 

Paul Goldschmidt: it is urgent to strengthen both national and international solidarity to overcome the crisis
Recent market volatility reflects the growing tensions between perceptions of the short and long-term consequences of policies being pursued by monetary and economic authorities. I have consistently drawn attention to the dilemma posed by the deflationary or inflationary outcomes of the current crisis, making it clear that the latter is the lesser of two evils.   View Article




© Graham Bishop

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