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13 January 2011

This week in "Brussels"
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Banking Securities Insurance
Corporate Governance/Accounting Commentaries Financial Services Policy
Financial Stability - Policy Analysis European Council/Parliament International/G20
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Articles from 22 December 2010 - 13 January 2011

Banking

European Commission consults on technical details of a possible European crisis management framework
Currently, there are very few rules at EU level which determine which actions can and should be taken by authorities when banks fail and, for reasons of financial stability, cannot be wound up under ordinary insolvency rules.   View Article
CEBS published its final guidelines on the application of Article 122a of the CRD
Article 122a of the CRD provides new requirements to be fulfilled by credit institutions when acting in a particular capacity, such as originator or sponsor, and also when investing in securitisations.   View Article
The Basel Committee on Banking Supervision consults on Pillar 3 disclosure requirements for remuneration
The objective of these additional Pillar 3 requirements on remuneration is to support an effective market discipline and to allow market participants to assess the quality of the compensation practices.   View Article

Securities

Commission consults on common rules for Central Securities Depositories (CSDs) and securities settlement
Due to an increase in cross border investment over the last few years, the European Commission considers that the time has come to install a common and binding regulatory framework for CSDs on a European level.  View Article
EP Committee on Legal Affairs publishes opinion on OTC derivatives regulation
The opinion offers a series of amendments designed to promote the resilience and transparency of derivatives markets and maintain the efficiency of these markets for hedging by financial and non-financial end users.  View Article
ESMA publishes explanatory guide
The guide outlines new powers that include: monitoring systemic risk of cross border financial institutions; a new supervisory role (in particular for credit rating agencies); the ability to draft technical standards that are legally binding in EU Member States.  View Article
Joint response of AFME and BBA to the European Commission's Public Consultation on Credit Rating Agencies
The letter states that it is essential that public policy supports and encourages free and transparent funding markets governed by evidence-based, well-calibrated regulation, rather than wholesale actions which drive investors away, increase funding costs and delay economic recovery.  View Article
EACT response to EU’s CRA consultation
Among other issues, EACT doubts how the creation of a new, independent European Credit Rating Agency can contribute to fairer competition. It is also opposed to the introduction of a common EU level principle of civil liability for credit rating agencies.   View Article
Steven Maijoor is selected as ESMA’s first Chair
The European Securities and Markets Authority (ESMA) announces the selection of Steven Maijoor as the proposed first Chair of ESMA. Before taking up his duties, the selected Chairperson will be heard by the European Parliament who then have up to one month to object to his designation.  View Article
Carlos Tavares elected ESMA Vice-Chairman
Tavares, the Chairman of the Portuguese CMVM, who already chaired CESR from July to December 2010 and has served as Vice-Chairman since February 2009, will be acting as Chair of ESMA until the elected Chair of ESMA takes office.   View Article
NYSE Euronext assesses 2010 in global derivatives business
NYSE Euronext’s global derivatives business achieved a record year in 2010, final volume data released by the company showed. Overall average daily volume of 8.43 million contracts represented an increase of 24% on 2009.  View Article

Insurance

EIOPA to launch second Europe-wide insurance stress test
The test is targeted towards the European insurance sector and will include a minimum of 50% of insurance companies per country measured by gross premium income.  View Article
IAIS: Global reinsurers remain strong despite challenges
Reinsurers proved profitable in 2009, benefiting from both sound management of asset portfolios and diversification of insurance risks, as well as from a 'moderate catastrophe year'.  View Article
CEA report: Making Solvency II workable for all
The CEA believes that significantly more needs to be done to help make the implementation of the EU’s new Solvency II regulatory regime workable for all (re)insurers. Small and medium-sized insurers in particular are concerned about undue complexity and administrative burdens.  View Article
CEIOPS published its second bi-annual 2010 Financial Stability Report
According to CEIOPS assessment, most insurers have solvency margins that allow for additional shock absorption capacity. However, underwriting performance in the insurance industry will be challenged if the current low yield environment is to continue.  View Article

Corporate Governance/Accounting

ESBG response to the FATF consultation on recommendations on money laundering and terrorist financing
ESBG welcomes the ultimate objectives of the revision of the standards and agrees that the review of the standards has to be conducted in an open and transparent manner, in order to ensure adequate consideration of all the views of the various stakeholder groups.  View Article
IASB: Africa embraces IFRSs
Robert Bruce, a financial journalist, reported on African plans for adoption of IFRSs. His views are his own and may not represent those of the IFRS Foundation or the IASB.  View Article
IASB: Trustees updated timetable for Strategy Review
The Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), have updated the timetable for completing the ongoing Strategy Review.   View Article
3L3 Committees' Joint Letter on the European Commission’s Green Paper on Audit: Lessons learnt from the crisis
3L3 Committees agree that a high level of audit quality is a key element in ensuring market confidence and contributing to investor protection. They believe that audit quality across the EU could be enhanced by further harmonisation in areas such as auditing standards.  View Article
FRC: UK and US regulators agreed on arrangements for sharing information and cooperation on audit inspections
Regulators in the UK and US have signed an information sharing agreement aimed at increasing the level of cooperation on the oversight and inspection of audit firms.  View Article
APB issued Revised Guidance on The Audit of Insurers
The APB of the FRC published a revision of Practice Note (PN) 20: “The Audit of Insurers in the United Kingdom”. A consultation draft of the revised PN was issued in May 2010 for public comment.  View Article
IAASB´s Proposed Strategy and Work Program for 2012 - 2014
The IAASB released for comment its Proposed Strategy and Work Program for 2012-2014. The Consultation Paper was developed with input from the IAASB’s April 2010 Strategy Survey. It highlights issues facing the accounting profession and suggests priority activities for the IAASB during 2012–2014.  View Article
FRC proposed enhancements to Company Reporting and Audit to deliver greater value to investors
The FRC published recommendations aimed at improving the dialogue between company boards and their shareholders.  View Article

Commentaries

Malcolm Levitt: Getting Brussels Right - ‘Best Practice’ for City firms in handling EU institutions
This report – the product of 68 interviews with key players in Brussels and London – reflects a concern that too many UK firms in the financial services field are missing a trick when it comes to Europe: they are not handling the Brussels bureaucracy as well as they should.  View Article
Wolfgang Münchau: Why the crisis is spreading?
Münchau says in his FT column that it is wrong to think of this as a crisis of small countries in the eurozone’s distant periphery. He argues that it is a crisis of the core eurozone as well, and it is spreading fast.  View Article

Financial Services Policy

Barnier: A turning point for the European financial sector
Commissioner Barnier stressed that the supervisory framework demonstrates that Europe is leading the way and upholding its international commitments. These new authorities will work with others across the world to ensure better global supervision.   View Article
ECON Committee: Commissioner Šemeta presents key options for innovative financing in the EU
Taxation Commissioner Šemeta said that the Financial Activities Tax appears to be a promising option within the EU. It could ensure that the financial sector is taxed fairly and generates much-needed revenues.   View Article
Patrick Honohan: Restoring Ireland’s credit by reducing uncertainty
Speaking at the Institute of International and European Affairs, the Governor of the Central Bank of Ireland stressed that banks have made substantial underwriting errors, across a wide range of their portfolios, that started to become evident in late 2008 and early 2009.  View Article
ECB: Estonia joins the Euro Area
The number of EU Member States using the single European currency has increased to 17, thereby raising the number of Europeans sharing the currency to some 331 million people.   View Article
FT: Brussels to target bondholders on bail-outs
The FT reports that Michel Barnier is proposing a bail-in regime for banks, but makes the point that any such changes involve enormous and complex changes to national legislation on bankruptcy and shareholder rights.   View Article

Financial Stability - Policy Analysis

Bruegel: Beyond the crisis - Prospects for emerging Europe
This Policy Contribution by Zsolt Darvas assesses the impact of the 2008-09 global financial and economic crisis on the medium-term growth prospects of CEES countries, the Caucasus and Central Asia, which started their economic transition about twenty years ago.   View Article

European Council/Parliament

EP CRIS Committee visits Portugal and Spain to assess the impact of the debt crisis
A delegation of the EP committee will meet political representatives and citizens to gather facts for the Committee's report on the Financial, Economic and Social Crisis (CRIS), to be completed in July 2011.  View Article

International/G20

SIFMA released a study on the Volcker rule: Considerations for implementation of proprietary trading regulations
The study finds that permitted activities under the Volcker Rule, such as market making, hedging and maintaining an inventory, provide and maintain liquidity in a range of asset classes and allow for the effective functioning of U.S. markets and ongoing access to capital.   View Article

Economic Crisis

Rehn: New reforms can break Europe’s debt cycle
Commissioner Olli Rehn wrote an article in the FT stressing that the Commission's most pressing priority is to break the vicious circle of unsustainable debt, financial turbulence and sub-optimal growth.   View Article
FT: Issing warns debt crisis threatens euro
Europe’s monetary union will be put in danger by the misguided response of eurozone governments to the sovereign debt crisis, according to Otmar Issing, the European Central Bank’s former chief economist.  View Article
Barroso: The European semester is at the heart of the reformed economic strategy
The three Commissions' priorities on economic governance are macro-economic stability, namely fiscal consolidation; structural reform, namely in the labour markets; and growth-enhancing measures, from the Single Market to trade and common energy policy.  View Article
EU economic governance: Commission launches the European Semester
The Annual Growth Survey charts a clear direction on where Europe should be heading in the next year, with ten pressing actions focused on macro-economic stability and fiscal consolidation, structural reforms and growth-enhancing measures.   View Article
Sharon Bowles MEP called for rescue package windfalls to be refunded
Ms Bowles repeated her concerns that the matter of interest rates for Member States accessing the EU stabilisation mechanisms could be dealt with in a way more helpful to the struggle with deficits.   View Article
€5 billion bond issue for Ireland
The European Commission placed a €5 billion bond issue on behalf of the European Union under the European Financial Stability Mechanism to finance the first tranche of the EU/IMF financial support agreed for Ireland last December.  View Article




© Graham Bishop

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