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07 January 2010

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Financial Services Policy Banking Securities
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Financial stability - policy analysis   About this email

  Articles from 18 December 2009 - 07 January 2010

  Financial Services Policy

ECB Papademos comments on ECB’s 2009 Financial Stability Report - risks still exist
Papademos provided an overview of the identified risks to the financial system's stability, such as the possibility of vulnerabilities of financial institutions associated with concentrations of lending exposures to commercial property markets and to central and eastern European countries.  View Article
Commission single market review - derivatives could entail significant risks to financial stability
The latest Single Market News includes an interview with Charlie McCreevy. He talks about his impressions of Europe, his achievements as a commissioner and the challenges he believes lie ahead for Europe’s new leaders. The review also pays special attention to derivatives.  View Article
Commission European Financial Integration Report 2009 – great policy achievements on financial supervision
This contains an annual analysis of integration in the EU financial sector and its impact on competition, efficiency, financial stability and global competitiveness of EU financial markets. It also includes EU financial services policy achievements including AIFMD and remuneration.  View Article
FT: Iceland refuses to approve the deal to reimburse Britain and the Netherlands - a referendum may take place
The Icelandic government agreed in June to reimburse £2.35bn to the UK and £1.3bn to the Netherlands, but has struggled to secure domestic backing. Fitch downgraded Iceland’s main sovereign rating to “junk” status in response and Standard & Poor’s said it could follow suit.   View Article
IFSL reports considerable drop of trade surplus and employment in financial services sector
The 2009 trade surplus in UK financial services is expected to reach around £35bn, 20% down on the 2008 total. At the same time, employment in financial services has fallen by 63,000 from the June 2007 high of 1.064m.  View Article
Bernanke calls for better execution of financial regulation and supervision
The best response to the housing bubble would have been regulatory, not monetary, the Fed chairman said. Not that financial regulation and supervision are ineffective, but their execution must be better and smarter, he added.  View Article
FSA Japan issues Blueprint for Financial Services Regulation
The FSA intends to introduce a mandatory clearing of OTC derivatives on CCPs. Also, securities clearing and settlement systems will be under scrutiny. Further plans include introducing consolidated regulation and supervision of securities companies and reporting requirements for Hedge Funds.  View Article


European banks consider the Basel Committee proposals on capital requirement a starting point for discussion
EBF welcomes the convergence to a single, internationally accepted set of rules; however, it reiterates its concerns about the potential adverse consequences of significantly higher capital requirements for the financing of the economy.   View Article
EBF economic outlook for 2010: a bumpy road to recovery
Banks will have to adjust to the cumulative effect on their business of new capital requirements which are being introduced as part of the policy response to the crisis. They will also need to adapt balance sheets and business strategies to their own institution’s experience of the crisis.  View Article
NVB's reaction to the Basel proposals on crisis management – more focus on early intervention mechanism needed
The Netherlands Bankers’ Association believes closer and better cooperation between supervisors and other national authorities is essential, both on a national and international level, as it will raise awareness of the supervisors involved with supervision on cross-border banks.   View Article
CEBS consults on draft guidelines on the management of operational risk in market-related activities
With these guidelines, CEBS is now introducing more specific principles and implementation measures for the identification, assessment, control and monitoring of operational risk in market-related activities.  View Article
CEBS publishes guidelines on operational risk mitigation techniques
The paper covers the general conditions that need to be fulfilled for the recognition of operational risk mitigation instruments, both insurance contracts and Other Risk Transferred Mechanisms. It also analyses the specific conditions for the use of insurance and ORTM.  View Article
CEBS amends guidelines on common reporting for Capital Requirement Directive - COREP
The COREP templates have been amended to incorporate changes of the CRD and CRD II amendments and will be applicable by end 2010. Changes include amendments on the definition of capital and the provisions concerning the exposure value.   View Article


ECB consults on ABS loan-by-loan information
The consultation includes the use of standardised loan-level reporting templates for European ABS transactions and for each asset class. However, loan-by-loan information would not be required for all asset classes.   View Article
LSE to take control of pan-European trading platform Turquoise
The merger of the businesses of Turquoise and Baikal Global Limited will expand LSE Group services across Europe in both lit and dark trading, and liquidity aggregation, with the objective of driving European trading volume growth and promoting venue choice.   View Article

  Asset Management

CESR advice on mergers, master-feeder structures and cross-border notification of UCITS
For fund mergers, CESR focuses on the information provided to unitholders of both the merging and receiving UCITS in the case of a merger. With master-feeders, parties should be free to choose the law of jurisdiction in which the feeder or master UCITS is located.  View Article
Hedge Week: report shows increased competition for raising hedge fund capital in 2010
The report by Agecroft Partners reveals that the past 16 months witnessed unprecedented changes in the hedge fund industry, with assets 40% down from their peak levels and industry revenues down approximately 70%. Fund raising suffered even more.  View Article
World Economic Forum report on globalization of alternative investments
This study aims to determine whether private equity investments in an industry affect aggregate growth and cyclicality. Key findings include that industries where private equity funds have been active grow more rapidly than other sectors in terms of total production, value added or employment.  View Article

  Corporate Governance/Accounting

ACCA calls for improved dialogue between regulators and businesses in 2010
In its policy paper The Future of Financial Regulation - an Update, ACCA calls for better ethics training for all directors, the implementation of a US-style Consumer Financial Protection Agency in Europe and for company boards to urgently upgrade their risk functions.   View Article
3 Level 3 Committees publish a call for evidence on cross-sectoral internal governance issues
The 3L3 Committees have conducted a stock-take on, and analysis of, existing internal governance requirements applicable in the areas of banking, insurance and securities, and identified some areas for potential further harmonization.   View Article
IASB revises proposals on measuring liabilities for asset decommissioning, legal disputes and similar items
The requirements in IAS 37 for measuring liabilities are unclear. As a result, entities use different measures, making it difficult for analysts and investors to compare their financial statements. IASB is revising it and simplifying the standard in order to achieve global converge.  View Article
IPSASB achieves its goal of substantial convergence with new or improved IFRSs
The new International Public Sector Accounting Standards include dealing with financial instruments - in terms of presentation, recognition and measurement and disclosures. Another new standard covers intangible assets.   View Article
IAASB issues new assurance standard on controls at service organizations
This new standard sets a global benchmark for reporting on controls at service organizations, thereby helping to fulfil the needs of those who use such services and their auditors under International Standards on Auditing (ISAs).  View Article

  Competition: Financial Services

Commission approves temporary rescue of BayernLB’s subsidiary Hypo Group Alpe Adria
The Commission is implementing an in-depth investigation of Hypo Group Alpe Adria. HGAA will have to provide a detailed restructuring plan by end-March 2010 while BayernLB has to revise the restructuring plan already submitted.  View Article

  Financial stability - policy analysis

ECB financial stability review - banks will need to ensure that they have adequate capital and liquidity buffers
Despite the recovery in financial markets, there are several grounds for caution in assessing the outlook for financial stability in the euro area, including vulnerabilities being revealed in non-financial corporations’ balance sheets, government indebtedness raising and leverage ratio.  View Article
Bank of England Financial Stability report 2009 - many banks will need to reduce leverage
The report identifies that the financial system has been significantly more stable over the past six months, underpinned by the authorities’ sustained support for the banking system and monetary policy measures. It is inevitable that some banks around the world have overstretched balance sheets.  View Article
ECB report on recent advances in modelling systemic risk using network analysis
This is the summary of an ECB workshop hosted in October 2009. It highlights the potential of network theory to enhance the tools for macro-prudential analysis, market infrastructure oversight and counterparty risk management. It also proposes several avenues for future research.   View Article




© Graham Bishop

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