This week in "Brussels"

14 April 2011



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Banking Securities Asset Management
Corporate Governance/Accounting Financial Services Policy Financial Stability - Policy Analysis
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Articles from 07 April 2011 - 14 April 2011

Banking

EBA announces the benchmark to be used in the 2011 EU-wide stress test
The EBA agreed to adopt a benchmark of Core Tier 1 against which to assess banks in the 2011 EU-wide stress test. The CT1 benchmark will be set at 5% of risk-weighted assets.  View Article
EBF warns that new financial reforms should not endanger European economies
The European Banking Federation (EBF) have stated that they will continue to support relevant authorities on the G20 reform process, but are concerned that the impact of the measures may adversely affect the financing of European economies due to their multiplicity and cumulative overall effect.  View Article
UK ICB: Interim report and consultation on reform options
The main focus of the ICB's work is how to make the UK financial system safer. Making the banking system safer requires a combined and inter-related approach that is a matter of design and policy.  View Article
AFME comment on the interim report from the ICB
AFME welcomed the ICB's recognition that the universal banking model brings benefits that would be lost through a splitting of retail and investment banking into separate entities. Clearly, the “ring fencing” proposal will have cost implications for the affected banks.  View Article
BBA responded to the interim report of the ICB
The BBA stressed that the ICB's interim report contains a number of very significant options and it will take time to consider carefully the costs involved and the economic impact on the wider economy.  View Article
FSB published a background note on shadow banking
The “shadow banking system” can be broadly described as “credit intermediation involving entities and activities outside the regular banking system". This note informs on the work of the FSB with developing recommendations to strengthen the regulation of the shadow banking system.  View Article

Securities

ESMA Steven Maijoor: Avoiding regulatory competition in the future is essential
Speaking at the ISDA 26th Annual General Meeting, ESMA chairman Maijoor mentioned that ESMA has started with a preliminary analysis of EMIR’s technical standards. He also said that a key part of ESMA’s rulemaking process will continue to be stakeholder consultation.  View Article
AFME: Global FX Division publishes trade repository ‘request for proposal’
The move comes in response to Dodd Frank requirements in the US, which call for certain FX trades to be reported to a swap data repository, and also in response to equivalent requirements in potential European legislation on OTC derivatives, central counterparties and trade repositories.  View Article
SIFMA called margin requirements for derivatives users significant to both financial and commercial companies
SIFMA said that the CFTC’s proposal will have a significant impact on the future operations of the derivatives markets, and on the financial and commercial companies that use these products to hedge their risks.  View Article

Asset Management

BIS Paper: Market structures and systemic risks of exchange-traded funds
This paper examines the operational frameworks of exchange-traded funds and identifies potential channels through which risks to financial stability can materialise.  View Article
FSB published a note on financial stability issues from Exchange-Traded Funds (ETFs)
The note highlights recent developments in the ETF market, which has experienced strong growth and rapid innovation. Although most of the ETF market remains 'plain-vanilla', there has been an increase in product variety and, in some cases, complexity.  View Article
FN: Private equity firms fear bribery bill liability
Private equity firms have criticised the lack of government guidance on proposed new bribery laws, on fears that buyout firms may be liable for offences carried out by portfolio companies.  View Article

Corporate Governance/Accounting

IFRS Foundation's budget and financing update
The International Financial Reporting Standards Foundation informs on financial position, financial plans, the progress being made to close the previously discussed financing gap and potential risks, and also compares 2010 results and 2011 budget.  View Article
IFRS Foundation published XBRL illustrative examples
The IFRS Foundation has published a set of 12 illustrative examples in XBRL for the IFRS Taxonomy 2011, in order to help preparers understand how to apply XBRL to IFRS financial statements.  View Article
IFRS Foundation will add common-practice tags for the IFRS Taxonomy
The IFRS Foundation announced that it will publish supplementary tags for the IFRS Taxonomy that reflect disclosures that are commonly reported by entities in their IFRS financial statements.  View Article
Summary of April 2011 EFRAG TEG meeting
EFRAG published the edition of EFRAG Update in April 2011 that summarises the discussions held at the recent EFRAG Technical Expert Group meeting.  View Article
FEE discussion paper on combined financial statements
FEE published 'Combined Financial Statements - A Discussion Paper'. The deadline for comments is 30 September 2011.  View Article
FASB: FAF Annual Report 2010
The Financial Accounting Foundation released its 2010 annual report. The report highlights the values of integrity, transparency and objectivity in financial reporting. 2010 was certainly a year full of activity and change at the FASB.  View Article

Financial Services Policy

JURI Committee: MEPs want swift EU measures for freezing and disclosure of debtors' assets
Parliament's Legal Affairs Committee wants the EU to take steps to improve debt recovery across EU borders. To this end, it is asking the Commission to bring forward new legislation laying down measures for the freezing and disclosure of debtors' assets in cross-border cases.   View Article

Financial Stability - Policy Analysis

Andrew Haldane: Public policy questions on potential future international capital flows
Haldane said that that there is a tension between the speed with which emerging market economies’ capital markets are widening and deepening, and the extent to which international investors are seeking to diversify their portfolios to spread risk and boost returns.  View Article

Economic Crisis

IMF: Despite new risks, global recovery seen gaining strength
The IMF stressed that high commodity prices present new policy challenges, while old challenges – fiscal and financial repair and reform and the rebalancing of global demand – remain work in progress.  View Article
IMF: Governments need to tackle fiscal risks
The outlook for government debts and deficits in 2011 is a mixed bag, with most advanced economies reining in fiscal deficits, but not fast enough to keep their debt from rising.  View Article
ECOFIN: Portugal requires financial support
The programme, subject to strict conditions, will rest on three pillars: an ambitious fiscal adjustment to restore fiscal sustainability, structural reforms to enhance growth and competitiveness, and measures to maintain the liquidity of the financial sector.  View Article
Van Rompuy’s speech: "Greece and Europe: building a better future in difficult times"
Speaking in Athens, the President of the European Council expressed his confidence, based on his experience as former Prime Minister in a debt-stricken country, that Greece would emerge stronger from the current difficulties.  View Article
Bruegel: Debt default by EU governments?
Research Fellow, Zsolt Darvas, concludes that the eurozone has a lot of homework to do, including efforts to improve the integration and flexibility of its single market(s) for labour, goods and services. Furthermore, the eurozone needs to shore up its banking system.  View Article
Iceland rejected debt deal to repay UK and the Netherlands
Voters rejected a government-backed deal to repay the UK and the Netherlands for their citizens' $5 billion worth of deposits in a failed online bank - sending the dispute to an international court and plunging the economically fragile country into new uncertainty.   View Article

European Council/Parliament

CRIS committee: US financial crisis was "avoidable", US Inquiry Commission tells MEPs
The US report stressed that causes included "widespread failures" in financial regulation and supervision, as well as in corporate governance and management, which allowed the formation of an "explosive brew of excessive borrowing, risky investments and lack of transparency".   View Article

International/G20

FSB meeting in Rome: Assessment of vulnerabilities affecting the financial system
The FSB made decisions needed to progress major initiatives to strengthen the resiliency of the financial system. The meeting also progressed work on a framework to establish Regional Consultative Groups to broaden the range of countries involved in the FSB’s work.   View Article

Graham Bishop’s Articles

Bank stress tests - Graham's blog for 8 April
Is there a basic flaw at the heart of the bank stress tests?   View Article

Commentaries

Ruben Lee: "Running the World's Markets: The Governance of Financial Infrastructure"
The efficiency, safety and soundness of financial markets depend on the operation of core infrastructure - exchanges, central counter-parties and central securities depositories. Despite their importance, there is little certainty, still less a global consensus, about their governance.  View Article



© Graham Bishop