Graham Bishop.com

Michel Barnier: A new year’s banking union
EU countries have to stick to the commitment that they made in June and strike a deal in time for a gradual entry into force in January 2013, writes Barnier in an article for Project Syndicate. View Article

Bundesbank/Dombret: "Let's move forward decisively and with commitment"
Dombret agreed that progress needed to be made on the European supervisory and resolution mechanisms, but emphasised that a banking union should not be used to mutualise legacy risks that have built up under previous national supervision. View Article

Bruegel/Véron: The first step in Europe's banking union is difficult but achievable
Creating Europe's single supervisory mechanism is only one step on a much longer path towards crisis resolution and banking union. Compromise on it will be difficult but possible. View Article

VoxEU eBook: 'Banking Union for Europe - Risks and Challenges'
While a banking union for Europe has been discussed by economists since even before the 2007 crisis, the issue has now moved up to the top of the eurozone agenda. But what kind of banking union? For whom? Financed how? And managed by whom? This new Vox eBook comprises 15 papers on the topic by leading economists. View Article

Charles Goodhart: Funding arrangements and burden sharing in banking resolution
This column argues that if banking supervision is to be shifted to the European level, so too should resolution and recapitalisation. It outlines how the costs of resolving and recapitalising failing banks might best be handled. View Article

BIS: Dealing with domestic systemically important banks - Framework issued by Basel Committee
The Basel Committee on Banking Supervision issued its Framework for dealing with domestic systemically important banks (D-SIBs). View Article

EBA publishes follow-up review of banks' transparency in their 2011 Pillar 3 reports
The European Banking Authority (EBA) published a follow-up review aimed at assessing the disclosures European banks made in response to the Pillar 3 requirements set out in the Capital Requirements Directive (CRD). View Article

Stefan Ingves: Basel III is simpler and stronger
In an op-ed for the WSJ, Ingves writes that the economic cost of the global financial crisis during the past five years has been frighteningly large. One clear lesson from the crisis is that regulatory capital requirements for the banking system were too low, or in other words leverage was too high. View Article

Deloitte: European bank deleveraging to take at least a further five years
A new banking report from Deloitte highlights the huge challenges European banks face in deleveraging to improve their capital positions. View Article

Bonner/Eijffinger: Basel liquidity rules and their impact on the interbank money market
This column concludes that a liquidity rule does influence lending rates and volumes in the interbank money market. These effects, however, are at least partially intended and the overall effect of a binding liquidity rule is still positive. View Article

UK Government accepts recommendations from the Wheatley Review of Libor in full
Today the Government re-affirmed its commitment to reforming the submission and administration of the London Interbank Offered Rate (Libor) benchmark by accepting the recommendations of Martin Wheatley's independent review of Libor in full. View Article

HM Treasury: Government publishes draft Banking Reform Bill
On 12 October, the UK Government published draft legislation to implement key elements of the Independent Commission on Banking's recommendations. This marks the latest milestone in the UK Government's reforms of the banking system. View Article

BoE/Tucker: Competition, the pressure for returns, and stability
Paul Tucker considers the factors driving excessive risk-taking in the financial system leading up the crisis, and outlines some of the key aspects of the reform of banking. View Article

ESBG Retail Banking Conference - Strength in our roots
"We face challenges and opportunities that we have never before encountered", ESBG Managing Director Chris De Noose declared in his closing speech. These challenges are "making us rethink the future, while maintaining our diversity, which is a strength rather than a weakness". View Article

FSA/Lord Turner: Regulatory reform and deleveraging risks
In his speech, Turner talked about developing a reformed regulatory framework – what has already been achieved, what is left, and what risks and realities need to be considered in future. View Article

DW interview with Gerhard Hofmann: 'Banking reform politically motivated'
More supervision, more capital and the possibility of splitting up risky investments - that's how the EU banking sector is meant to be stabilised. But the German bank representative Gerhard Hofmann is sceptical of the plans. View Article

BNE: Maximalism vs minimalism? – Financial sector reform, banking union and the internal market
This article focuses on the EU's financial services sector and how the latest reforms to promote stability in the banking sector, at both the UK and EU level, balance with the legal status of the single market. View Article

Open Europe: Safeguarding the Single Market - How to achieve a balanced European Banking Authority
Open Europe proposes a revised voting system within the EU's banking regulator, the EBA, which would see eurozone members and non-eurozone members voting separately – with both groups having to endorse a proposal by qualified majority before it can be implemented. View Article

Commission publishes rules enabling ESMA to impose fines on credit rating agencies (CRAs)
The European Commission today published a Delegated Regulation establishing the rules within which ESMA will operate when imposing fines on credit rating agencies when they breach EU legislation. View Article

ESMA publishes updated statistics in the CEREP database
The CEREP database is updated with new statistical data on the performance of credit ratings, including transition matrices and default rates. The new set of statistics covers ratings data up to 30 June, 2012. View Article

ESMA publishes notification thresholds for sovereign issuers
According to Article 7(2) of the Short Selling Regulation, ESMA has to publish a list of the thresholds applicable to the sovereign issuers for the purpose of the notification to competent authorities of significant net short position in sovereign debt. View Article

EBF comments on BCBS-IOSCO consultation on "Margin requirements for non-centrally cleared derivatives"
The European Banking Federation (EBF) welcomes the objective of harmonising margin requirements globally in order to create a level playing field between different jurisdictions. It also wishes to stress that OTC derivatives are vital to the economy. View Article

FT: Credit derivatives to trade on exchange
Trading in credit default derivatives is to be offered on an exchange for the first time, following a tie-up by IntercontinentalExchange, the US futures bourse, and Markit, the data provider. View Article

AMF applies ESMA guidelines on suitability requirements for financial services and products provided to clients
The Autorité des Marchés Financiers incorporated the ESMA guidelines on the MiFID suitability requirements for financial services and products provided to clients (ESMA/2012/3871) in its position 2012-13. Provisions will apply as of December 22, 2012. View Article

EuropeanIssuers: Market abuse Article 12 - Delayed disclosure
EuropeanIssuers has written to rapporteurs in the European Parliament to highlight some confusion on article 12 §4 and §5 of the ECON compromise amendments on market abuse. View Article

WSJ: New European insurance rules could be delayed
In an interview, EIOPA chairman Gabriel Bernadino said that the currently envisaged starting date of January 1 2014 for fully implementing the detailed requirements on capital, risk and reporting in the EU was 'completely out of reach', suggesting it would now be either 2015 or 2016. View Article

FTAdviser: Solvency II deadline doubt as European vote delayed again
The European Parliament's vote on Omnibus II, due to take place in November, has been pushed back to March 2013, throwing doubt on the planned January 2014 implementation date for banks and insurers. View Article

Risk.net: Solvency II - Insurers and supervisors must work together to ensure consistency on model approvals
Further work needs to be done to ensure consistency between national supervisors in their approval of internal models. But insurance groups must also take steps to ensure they are following a consistent approach to submissions for model approval across the organisation, according to EIOPA. View Article

Risk.net: Insurers welcome EIOPA's review of capital charges on infrastructure and securitisations
Moves to review the impact of Solvency II on long-term financing of the real economy have been welcomed by the insurance industry. View Article

Risk.net: Solvency II - ORSA disclosure 'could boost insurers' ratings'
Disclosing elements of an insurer's Own Risk and Solvency Assessment (ORSA) could benefit the company and boost stock market valuations, according to speakers at Insurance Risk's Solvency II & Insurance Risk conference. View Article

Risk.net: Insurers 'must understand risk on non-traditional assets'
Insurers must carefully manage the risks of investing in non-traditional asset classes as they look for ways to increase yield on their investment portfolios, according to insurers and investment managers. View Article

Risk.net: Data challenges for catastrophe risk 'threatens standard formula usage'
The standard formula's calibration for catastrophe risk may be unworkable for some insurers, despite concessions made by policy-makers, insurance trade body Insurance Europe has warned. View Article

Risk.net: Webinar - Taking control of workflow for effective risk governance
By harnessing workflow, insurers can develop a more robust enterprise-wide risk management framework. This webinar, in conjunction with Second Floor, brings together industry experts to examine how to achieve this. View Article

Risk.net: Insurers push for new way to recognise equivalence of Canada
Insurers are urging European policy-makers to change the rules on third country equivalence to enable countries that do not want to undergo a formal assessment to be recognised as Solvency II equivalent. View Article

EIOPA launches first quantitative impact study for revised IORP
The European Insurance and Occupational Pensions Authority (EIOPA) has launched the first quantitative impact study (QIS) for the implementation of a holistic balance sheet (HBS) within the revised directive for occupational pensions. View Article

IPE: Brussels bows to pressure over IORP II confidence levels
The European Commission has recognised the importance of allowing pension schemes participating in the first quantitative impact study for the revised IORP Directive to submit results based on a Value-at-Risk below 99.5 per cent confidence levels, after the measures raised concerns in the industry. View Article

EIOPA's study on the impact of Solvency II type proposals on pensions - NAPF comment
NAPF Policy Director Darren Philp said that these proposals posed a major risk for UK pensions, but that NAPF welcomed the opportunity to test out how they would work in practice. View Article

Pension funds comment on Regulator's funding analysis
The National Association of Pension Funds (NAPF) commented on evidence published today by The Pensions Regulator of how flexibilities in the defined benefit (DB) funding regime have been used by pension schemes and sponsoring employers. View Article

NAPF: Pension funds need discount rate relief to cope with QE
The National Association of Pension Funds (NAPF) said that pension funds need more leeway if they are to survive the damaging effects of quantitative easing (QE) and free up billions of pounds for businesses to invest. View Article

IPE: Pension funds should consider dropping traditional hedging
According to a report by Russell Investments, pension funds looking to reduce funding-level volatility should consider substituting traditional hedging tools with some sub-classes of real estate and mature infrastructure assets. View Article

IPE: Innovative investments essential for pension funds
Ronald Wuijster from APG has spoken in support of the contribution that "innovative" investments make to pension funds' returns and diversification. View Article

IPE: MSCI warns ultimate forward rate poses risks to Dutch pension funds
The 4.2 per cent ultimate forward rate (UFR) recently adopted by the Dutch regulator may harbour potential risks for pension funds, according to Neil Gilfedder, managing director and head of analytic applied research group at MSCI in the US. View Article

IPE: UK companies using half of dividends to offset pensions deficits
Seeking to outline how UK defined benefit pension funds have used flexibility within the country's funding regime to address shortfalls, the Pensions Regulator said most schemes would still be able to continue with reduction plans as previously agreed, or increase payments in line with inflation. View Article

EFAMA and SWIFT report shows a steady increase in ISO standardisation rates for funds
EFAMA, in cooperation with SWIFT, published a mid-year report on the evolution of automation and standardisation rates of fund orders received by transfer agents (TAs) in the cross-border fund centres of Luxembourg and Ireland in the first half of 2012. View Article

IPE: Jenkins rallies investment industry in 'titanic tussle' over regulation
According to the former chief executive and chairman of F&C Asset Management, the investment management industry must join the "titanic tussle" over financial regulatory reform, as it is the only industry with the "credibility and clout" to shape the debate. View Article

IIF releases report on Governance for Strengthened Risk Management
At its Annual Membership Meeting in Tokyo, the Institute of International Finance published a new study on industry sound practices in risk management, entitled the 'Report on Governance for Strengthened Risk Management'. View Article

EFRAG: An EU perspective on the move towards global accounting standards
On 11 October, EFRAG and the Trustees of the IFRS Foundation held a joint conference to discuss an 'EU perspective on the move towards global accounting standards', involving a large range of prominent speakers. View Article

EFRAG: Final comment letter on the draft interpretation put options written on non-controlling interests
EFRAG published its final comment letter on the IFRS Interpretations Committee's Draft Interpretation DI/2012/2, 'Put Options Written on Non-controlling Interests'. View Article

FRC's discussion paper to enhance disclosure in financial reporting
The FRC published a discussion paper, 'Thinking about financial reporting disclosures in a broader context'. The paper aims to improve the quality of financial reporting disclosures. The consultation period closes on 31 January, 2013. View Article

IFAC: Memorandum of Understanding between IFAC and IIRC
The IFAC and the IIRC have signed a Memorandum of Understanding (MoU), in recognition of their shared vision for the evolution of corporate reporting, to promote cooperation, coordination and alignment. View Article

ECA: Selected EU agencies did not adequately manage conflict of interest situations
The ECA concluded that none of the audited Agencies adequately managed the conflict of interest situations. A number of shortcomings of varying degrees have been identified in Agency-specific policies and procedures as well as their implementation. View Article

Governance for Owners/ICSA: Improvement of engagement practices between companies and institutional investors
ICSA, a steering group of industry experts – companies, investors and other key stakeholders – has launched 'Improving Engagement Practices by Companies and Institutional Investors', a consultation document on stewardship. The deadline is 30 November, 2012. View Article

FSA/Wheatley sets out the 'Journey to the FCA'
The FSA has published the 'Journey to the FCA', a paper that sets out how the UK's new financial conduct regulator will operate. The Financial Conduct Authority (FCA) will start work next year with a remit to make financial markets work well so consumers get a fair deal. (Includes BBA response.) View Article

FSA: Changes to authorisations
The UK regulatory structure will be changing in 2013, when the FSA will split into two regulatory bodies the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). View Article

IIF releases initial report on the potential impact of regulatory change on end-users
The initial report is the first output of a Task Force set up by the IIF Board to look at ways in which financial regulatory change is currently impacting, and may in future impact, end-users of financial services. View Article

ECON Committee: Tomorrow's EMU needs all-round accountability
A start on future economic and monetary union can be made now by finalising laws already in the pipeline and making the most of what the current EU system already allows, said ECON Committee MEPs on Monday. View Article

Graham Bishop's comments on the Van Rompuy Interim Report 'Towards a Genuine EMU'
The October 18/19 Summit will be a decisive moment for Europe. Failure to agree a plausible path to the closer union that is now fully recognised as essential to preserve the euro will also spell the end of the European Union itself. View Article

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This week in "Brussels"

18 October 2012

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