Graham Bishop.com

Council published state of play on the Deposit Guarantee Schemes Directive
An agreement has still to be confirmed on issues concerning the financing of Deposit Guarantee Schemes. The Presidency suggests fixing the level of ex-ante financing at 0.5% of covered deposits, and the deadline by which the target level has to be reached at 2027. View Article

French bank ratings under review
Ratings agency Moody's has warned it may downgrade the credit rating of three French banks because of their exposure to Greek debt. Crédit Agricole, BNP Paribas and Société Générale all face a possible downgrade because they could face losses on a Greek default. View Article

FSA published Annual Report for the year 2010/11
The FSA has achieved a continued progress in developing new global standards for the prudential regulation of banks, encompassing greatly-enhanced requirements for capital and liquidity, standards to ensure that all banks are resolvable, and special prudential requirements for SIFIs. View Article

Bank of England working paper: Exploring central banks’ role in the payment system
Focusing particularly on the lender of last resort function, a key characteristic of a central bank, the paper explores whether institutions at the centre of clearing and settlement arrangements developed central bank-like characteristics. View Article

Commissioner Barnier: More transparency and regulations on commodities and raw materials is needed
Barnier highlighted that the level of transparency in the derivatives markets and the physical markets must be improved. Only such transparency will help to understand the phenomenon of financialisation better, along with its effects on volatility and commodity prices. View Article

ECON committee: Beefing up credit rating agency rules
MEPs advocated making credit rating agencies liable in civil law for their ratings, and creating a European credit rating foundation. They also called for special attention to be paid to sovereign debt ratings. View Article

ESMA launched consultation on the Prospectus Directive
ESMA consultation covers, among other issues, the format of the final terms to the base prospectus, proportionate disclosure regime, and the equivalence of third-country financial markets. View Article

ESMA published 13th updated version of its FAQs on Prospectuses
The Prospectus Directive establishes a harmonised format for prospectuses in Europe and allows companies to use the same prospectus prepared for admitting securities to trading on their home market to admit securities to any number of further European markets without having to re-apply for approval. View Article

AFME: Europe needs an expanded securitisation market
"Europe's funding needs in the coming years will be considerable so it is crucial that a stronger and reinforced securitisation market plays its part in this, alongside other funding tools such as bank lending, covered bonds and retail deposits", said Simon Lewis, AFME chief executive. View Article

FT: Financial reform - Conduits of contention
Jeremy Grant writes in the FT that regulators are anxious to ensure that clearing houses are robust enough to withstand the default of one or two big members, without triggering a domino effect that could bring down not only the CCP itself but the rest of the financial system as well. View Article

ISDA published note on the impossibility of correctly calibrating the current exposure method (CEM) for large OTC derivatives portfolios
The note shows that the use of the CEM to estimate the riskiness of CCP default fund contributions leads to a significant overstatement of risk. Furthermore, the CEM cannot be simply recalibrated to provide a more risk sensitive approach. View Article

CFTC voted to delay for six months key regulations under the derivatives title of the Dodd-Frank act
According to Gensler, the order approved by the commission would provide relief until December 2011 - or when the definitional rulemakings become effective, whichever is sooner - from certain provisions that would otherwise apply to swaps or swap dealers on July 16. View Article

FT: Credit Suisse warns over dark pool reform
A study by Credit Suisse states that MiFID II could significantly concentrate business among a few brokers in the market, penalise small broker firms and consumers, and stifle innovation. View Article

US House Judiciary Committee hearing on Competition and Consolidation in Financial Markets: The NYSE-Deutsche Börse Merger
Participants included Chief Operating Officer Leibowitz of NYSE Euronext, and President Katz of the International Securities Exchange. Lawmakers expressed concern about the merger, focusing on how the deal will result in one entity controlling a large share of the American equity options market. View Article

Barnier responded to a Parliamentary question on Solvency II Regime
Barnier stressed that the insurance industry is rather well-positioned to meet the new solvency requirements, and overall has approximately €360 billion more eligible own funds than the Solvency Capital Requirement (SCR), the higher of the two capital requirements to which insurers will be subject. View Article

Insurers called on G20 to separate banking and insurance systemic risk identification
In a letter co-signed by the CEA, the insurers call for the timetables of the two workstreams to be delinked. The Financial Stability Board has been working for some time on identifying systemic risk in banking but a similar process has not yet been conducted in insurance. View Article

IAIS establishes Supervisory Forum
The new Forum will focus on large insurers and will promote, among other things, discussion of existing and emerging trends and the evaluation of the potential impact of macroeconomic scenarios on large or complex insurers. View Article

Commission launched consultation on a new European regime for venture capital
The consultation outlines what could be the broad contours of a European passport that would be made available to venture capital funds so that they would be able to raise capital freely throughout the EU from professional investors and invest in innovative SMEs. View Article

Eddy Wymeersch: The regulatory regime of exchange traded funds in the European Union
The introduction of ETFs constitutes one of the more important innovations in the fund business for the last 10 years, and not only for cost reasons. The AIFMD opens new interesting avenues that may meet some of the wider concerns in the post-crisis period. View Article

IASB and FASB to re-expose ED on revenue recognition
The IASB and the FASB agreed to re-expose their revised proposals for a common revenue recognition standard. The comment period will take 120 days because the boards intend to re-expose their work in the third quarter of 2011. View Article

FASB launches new Taxonomy Online Review and Comment System
The FASB recently launched a new system that provides greater transparency for users of eXtensible Business Reporting Language (XBRL), and makes it easier for stakeholders to submit comments on the US GAAP Financial Reporting Taxonomy. View Article

IASB's Investor Perspectives: Developing accounting standards consistent with the CFA Institute's vision
This Investor Perspective (Paul Pacter) comments on the consistency of recent standards issued by the IASB with the vision set out in July 2007 by the CFA Institute (CFAI) in its landmark policy paper 'A Comprehensive Financial Reporting Model: Financial Reporting for Investors (the CFAI Model)'. View Article

IASB summarised 5th IFRS International Forum
The IFRS Regional Policy Forum for the Asia-Oceania region was intended to bring together policy makers, regulators and national standards setters from jurisdictions in different stages of their IFRS adoption roadmap to share and learn from one another's experiences in adopting the global standards. View Article

EFRAG: European outreach on the IASBs main projects
EFRAG published an executive summary of the feedback expressed by European constituents during the outreach meetings on the Revenue Recognition and Leases projects organised jointly with the European National Standard Setters in May 2011. View Article

IASB and ASBJ closer cooperation
The IASB and the ASBJ announced their achievements under their August 2007 Memorandum of Understanding (MoU), known as the Tokyo Agreement, to improve IFRSs and Japanese generally accepted accounting principles (GAAP), and to bring about their convergence. View Article

ECIIA: EU recognises the importance of internal audit to corporate governance
Following the EU Green Paper on corporate governance in financial institutions, upon which ECIIA provided commentary in 2010, the European Parliament adopted a resolution on the 11th of May 2011. ECIIA presents the full version of resolution specifically regarding internal audit. View Article

ECON committee: Economic governance package explained
The plenary is expected to vote on the package in June, although much depends on whether an agreement has been reached with Member States by then. The Article outlines the key features of the package. View Article

ECON committee: Mario Draghi recommended as candidate for next ECB president
Mario Draghi was recommended to succeed Jean-Claude Trichet as ECB President in an ECON vote. The committee opinion - 33 in favour, 2 against and 4 abstentions - now needs to be confirmed by a vote of Parliament as a whole, scheduled for 23 June. View Article

ECB Vice-President Constâncio: The governance of financial stability in the euro area
Constâncio stressed that the crisis management and resolution scheme is a very challenging process. Public authorities must aim to preserve financial stability, while the competent authorities maintain national mandates reflecting their fiduciary responsibility to domestic taxpayers. View Article

ECB published Financial Stability Review June 2011 
Despite improving global economic and financial conditions, the overall outlook for financial stability has remained very challenging. Decisions to introduce policy measures at the EU level to strengthen backstop mechanisms aimed at mitigating financial vulnerabilities have not been sufficient. View Article

FN: UK MPs write a letter to Commissioner Barnier over European reforms
The UK Treasury Select Committee already expressed numerous concerns at a heated hearing with Barnier in December, asking questions on the power of the European authorities to overrule domestic regulators, and the justification for and impact of new rules on derivatives trading, hedge funds and HFT. View Article

Central Bank Governance Group published report on central bank governance and financial stability
Produced by a study group of central bankers chaired by Stefan Ingves, the report focuses on the governance arrangements needed for the effective and sustainable conduct of core monetary policy functions, in combination with an additional mandate to contribute to financial system stability. View Article

ECB Jean-Claude Trichet: Two continents compared
Trichet explained that the crisis has exposed in both continents the issue of heterogeneity. The economic fallout from the crisis has shown considerable variation among the US states and the same is true in the euro area, where some countries are a particular focus of attention. View Article

Eurozone ministers struggled to agree on new aid for Greece
At an informal Eurogroup meeting, Germany and the ECB kept its confrontation over how private banks should participate in this second aid plan, which has increased the nervousness in the markets. View Article

Kathimerini: Trichet rules out any form of restructuring of Greek debt
Athens must avoid any form of restructuring in tackling its debt crisis, European Central Bank President Jean-Claude Trichet said, as Moody's questioned how a possible rollover of Greek debt would work on a voluntary basis. View Article

WSJ: Banks are Greece's Achilles' heel
Even if Greece gets its second bailout and avoids default, its problems are far from over. The key vulnerability is the banking system; the immediate challenge is liquidity and whether the banks have sufficient funding to support a recovery. View Article

FED Daniel K Tarullo: Regulating systemically important financial firms
Tarullo stressed that a post-crisis regulatory regime must include a significant “macroprudential” component that addresses the high degree of risk correlation among large numbers of actors and the emergence of financial institutions whose failures could threaten the entire system. View Article

Guy Verhofstadt: Can the euro survive Merkel, Sarkozy and Barroso?
Verhofstadt stressed that the euro itself is reacting like a yoyo, rising and falling, its value fluctuating unpredictably. Meanwhile the tensions in the euro area are assuming unprecedented proportions. View Article

Nicolas Véron: Markets, politics and the euro
Véron argues that the euro crisis is as much institutional as it is financial or fiscal, and this makes its eventual resolution all the more difficult. View Article

Paul N Goldschmidt: Systemic Risk Prevention
Goldschmidt draws the attention of Authorities to the need to resist the temptation of a return to "business as usual", but rather, in light of the systemic risk posed by the Sovereign debt crisis, to consider it their duty to anticipate the responses that might become needed. View Article

Banking	Securities	Insurance
Asset Management	Corporate Governance/Accounting	Financial Services Policy
Financial Stability - Policy Analysis	Economic Crisis	European Council/Parliament
International/G20	Commentaries	About this email

This week in "Brussels"

16 June 2011

© Graham Bishop