Graham Bishop.com

Reuters: Europe considers new agency to shut failing banks
Banks under the watch of the ECB that run into difficulty could be shut by a European agency, under a proposal that is set to rouse opposition in eurozone capitals View Article

FT: Brussels bank resolution blueprint sets up clash with Germany
Brussels is to propose giving itself powers to wind up failing eurozone banks, in an uncompromising banking union plan that pays little heed to Germany's legal and political concerns. View Article

Bundesbank/Lautenschläger: Regulation and institution-building in Europe - Where do we stand and what still needs to be done?
Speaking at the Bundesbank symposium, Lautenschläger said that a European-directed resolution mechanism with burden-sharing and a clear set of rules was exactly what was needed to reduce the problem of "too big to fail" or "too complex to fail". View Article

Bundesbank/Weidmann: Challenges for banking supervision in the monetary union
Weidmann said that given the current degree of integration among Member States and financial systems, a single Europe-wide deposit guarantee scheme 'would not be practical'. View Article

EBA publishes near-final draft RTS on own funds
EBA published near-final draft RTS covering all areas of own funds, from features for instruments of the highest quality (CET1 instruments) to instruments of a lower quality (Tier 2 instruments). View Article

BIS: June 2013 Quarterly Review - Markets under the spell of monetary easing
The Quarterly Review contains chapters on i.a. 'A template for recapitalising too-big-to-fail banks' and 'Total credit as an early warning indicator for systemic banking crises'. View Article

BIS: International Journal of Central Banking (IJCB) - June 2013 issue
The quarterly journal features articles on central bank theory and practice, with a special emphasis on research relating to monetary and financial stability. View Article

BIS/Caruana: Global liquidity - Where do we stand?
In his speech, Caruana underscored the importance, both for market participants and for the authorities, of being prepared for eventual exit from the 'extraordinarily accommodative global monetary conditions'. View Article

BIS: Agustín Carstens to chair the ECC and the GEM; Mario Draghi to chair the GHOS
Agustín Carstens has been appointed to chair the BIS Economic Consultative Committee and the BIS Global Economy Meeting. Mario Draghi has been appointed to chair the Group of Governors and Heads of Supervision. The appointments take effect from 1 July and are for a three-year term. View Article

FT: ECB backs away from use of 'big bazooka' to boost credit
The European Central Bank is backing away from any "big bazooka" style intervention to revive lending within the eurozone, delivering a blow to some market hopes of ambitious action. View Article

BoE/Bailey: Challenges of prudential regulation
In his speech, the PRA chief said that work on mapping out how Britain's banks must plug a £25 billion capital hole would not be hurried but should be done within weeks. View Article

EPC: Public Consultation 2013 - SEPA Cards Standardisation Volume
This document defines a standard set of requirements to ensure an interoperable and scalable card and terminal infrastructure across SEPA, based on open international card standards. All market participants and interested parties are invited to provide feedback by 14 July, 2013. View Article

Bruegel/Véron: Bank versus non-bank credit in the United States, Europe and China
This paper tentatively explores the relationship between the development of non-bank credit channels and financial system stability - partly in the context of policy debates which have tended to equate "shadow banking" with non-bank credit, a misguided and potentially damaging analytical shortcut. View Article

Lev Ratnovski: New challenges for bank competition policy
Although the traditional policy tools are rules on entry/exit and the consolidation of banks, there are other, newer ways in which competition policy can support financial stability: dealing with too-big-to fail and other structural issues in banking, as well as facilitating crisis management. View Article

ESMA and the EBA publish final principles on benchmarks
ESMA and the EBA have published their final report setting out their Principles for Benchmark-Setting Processes in the EU. View Article

FT: London should hand Libor supervision to EU, says Brussels
Brussels is proposing to put the scandal-ridden Libor lending rate under the watch of a European supervisor based in Paris, as part of an overhaul of regulation of pricing benchmarks for an array of markets. View Article

EBF: Euribor and Eonia panels to be differentiated
As of 1 June 2013, the Eonia and Euribor respective panels of contributing banks will be differentiated. Concretely, this means that the panel banks reporting to Eonia will not necessarily be the same panel banks as those contributing to Euribor any more. (Includes ECB response.) View Article

ESMA publishes review on impact of short selling regulation
ESMA published its technical advice on the evaluation of the Regulation of the European Parliament and of the Council on short selling and certain aspects of credit default swaps. View Article

ESMA: Final report—Technical advice on CRA regulatory equivalence on Argentina, Brazil, Mexico, Hong Kong and Singapore
ESMA has provided advice to the European Commission in respect of the equivalence between the EU regulatory regime for credit rating agencies and the respective legal and supervisory frameworks of Argentina, Brazil, Mexico, Hong Kong and Singapore. View Article

FCA to ban the promotion of UCIS and certain close substitutes to ordinary retail investors
The Financial Conduct Authority has published final rules to ban the promotion of Unregulated Collective Investment Schemes (UCIS) and certain close substitutes (together to be known as Non-Mainstream Pooled Investments (NMPIs)) to the vast majority of retail investors in the UK. View Article

FCA: Financial Conglomerates Directive – Technical Review Amendments
The new rules will ensure that consumers can find information about financial conglomerates, which helps the FCA in its objective to secure an appropriate degree of protection of consumers. The new rules will also improve how the markets used by financial conglomerates and financial groups function. View Article

IntercontinentalExchange stockholders approve acquisition of NYSE Euronext
IntercontinentalExchange, a leading operator of global markets and clearing houses, announced the results of the special meeting of stockholders today to approve ICE's acquisition of NYSE Euronext. View Article

LME Clear and LCH.Clearnet agree migration date for LME clearing services
The London Metal Exchange and LCH.Clearnet Ltd have reached an agreement to migrate LME contracts currently cleared by LCH.Clearnet to LME Clear. View Article

CFTC Division of Clearing & Risk provides no-action relief from clearing requirement for swaps entered into by eligible treasury affiliates
The Division of Clearing and Risk issued a no-action letter providing eligible treasury affiliates that enter into swaps that are subject to the clearing requirement in section 2(h)(1) of the CEA and part 50 of the CFTC's regulations with relief from the clearing requirement. View Article

EIOPA/Bernardino: "This year will be a crucial year for Solvency II"
In an interview with WirtschaftsForum (Germany), Bernardino said: "It is important to note that we are not anticipating Solvency II, but preparing supervisors and undertakings for the new regime in a consistent way". View Article

Insurance Europe: Better recognition of reinsurance in standard formula
Insurance Europe and the Reinsurance Advisory Board (RAB) have written to the European Commission setting out proposals for the treatment of non-proportional reinsurance in the Solvency II Level 2 implementing measures. View Article

Risk.net: EIOPA developing early-warning indicators to monitor internal models
Indicators are needed to identify situations where a firm's model no longer meets Solvency II calibrations, says EIOPA. View Article

FN: Insurers fail to diversify from fixed income
Despite the hunt for yield, European insurers are struggling to diversify their portfolios away from core fixed income holdings to new alternative investments. View Article

FERMA: Restrictions to co(re)insurance could be damaging to businesses
FERMA warned the European Commission that any restriction to the operation of the subscription insurance market could work to the disadvantage of business by reducing market capacity or making access to that capacity more difficult. View Article

FERMA: Insurance law can be an enterprise issue
"Insurance law can be an enterprise-wide issue, so it's essential that legal experts and risk managers understand what happens when the law is applied in business", said FERMA president Jorge Luzzi. View Article

Airmic: Global insurance compliance database on schedule for 2014 launch
Airmic's planned database of international insurance requirements is on course, with an announcement on who will provide the service likely to be made in the autumn. The association has whittled down the number of potential service providers to two firms, Axco and Zurich. View Article

aiCIO: Why infrastructure is back on the menu for insurers
Solvency II concerns are taking a back seat as insurers seek strong returns to repair their balance sheets. There is more evidence that insurers are putting risk back on the table: almost three-quarters of active fund managers expect them to increase their exposure to infrastructure. View Article

ESMA promotes global supervisory cooperation on alternative funds
ESMA has approved cooperation arrangements between EU securities regulators with responsibility for the supervision of alternative investment funds (AIFs), including hedge funds, private equity and real estate funds. View Article

Hedgeweek: ESMA approves Jersey AIFMD cooperation agreement
ESMA has approved a cooperation agreement with Jersey to ensure it can continue to deliver alternative investment funds business into Europe after the introduction of the EU's AIFMD in July. View Article

Monica Gogna: AIFMD will increase costs and create regulatory uncertainty
An EU Directive that will regulate fund managers in the wake of the financial crisis will create regulatory uncertainty and increase the costs of doing business, writes Gogna for Pinsent Masons' Out-Law.com. A failure to provide enough clarity and definition risks damaging the fund management sector. View Article

FN: UK and German MEPs central to EU's fund manager bonus cap delay
Opposition from German and UK Conservative MEPs lies behind a month-long delay to a vote on capping fund managers' bonuses in the European Parliament, which had been due next week. But the German Green MEP leading the initiative has vowed to press on. View Article

FT: US hedge funds threaten to flee Europe
A number of large US hedge funds have scrapped plans to enter Europe and have put existing operations under review, in response to the arrival of the AIFM Directive which was drawn up by European lawmakers to rein in the hedge fund, private equity fund and real estate fund industries. View Article

Risk.net: Economic woes and regulation add to VA hedging challenge
This article claims that with benign market and economic conditions still appearing to be a long way off, it is likely that consumer demand for VAs will remain high. Turning this demand into a profit is very much a challenge of running effective hedging programmes. View Article

EVCA: Research finds private equity boosts innovation, productivity and attracts investment to Europe
This report brings together the results of over 60 academic studies and uncovers new findings on how private equity drives innovation, productivity and competitiveness in Europe. It finds that private equity-backed companies are more innovative. View Article

IOSCO publishes responses to Financial Benchmark Consultation
The report sought public comment on a set of high-level principles for benchmarks used in global financial markets. View Article

IPE: Brussels must preserve framework for individual pension systems
According to Gerry Dietvorst, an outgoing senior manager at Dutch insurer Achmea, the European Commission must establish a framework for individual Member States' pension systems and only regulate on the "main issues" to keep the EU from exploding. View Article

IPE: Outside experts should deal with pension complaints
The Dutch ombudsman for pensions, Piet Keizer, has called for the involvement of independent experts in the handling of complaints filed by participants. View Article

IPE: Inquiry into Swedish PPM system produces opposing recommendations
The results of an inquiry into Sweden's defined contribution pension system, the PPM, recommend either leaving it intact or cutting the number of funds within it dramatically. View Article

FT: US funds left bruised by heavy bond losses
Bond yields around the world soared from some of the lowest levels in decades last month, as investors anticipated an end to the extraordinary measures the Federal Reserve has used to stimulate the US economy. View Article

Sharon Bowles: Speech on Council Conclusions (Country by Country Reporting)
"The promise... of 'Country by Country Reporting by large companies and groups' from the Council is welcome. It is a shame it comes just as the Accounting and Transparency Directives have been agreed, in the face of massive resistance from Council on broad scope Country by Country Reporting." View Article

IASB: IFRS Foundation's initiative towards adoption of IFRS worldwide
The IFRS Foundation has completed the first phase of an important initiative to assess the progress towards global adoption of IFRSs. The G20 has called for global adoption of a single set of high quality financial reporting standards. View Article

ACCA welcomes Global Reporting Initiative Guidelines
ACCA commended the new accessible guidelines for organisations to report on material sustainability information, saying the G4 guidelines strengthened sustainability reporting. View Article

FASB responds to post-implementation review on business combinations
The FASB released its response to the Post-Implementation Review (PIR) of its business combinations reporting standard. View Article

FASB/Golden outlines priorities for the FASB
Russell G Golden, who will take on the role of FASB chairman from 1 July, gave a speech at the 32nd Annual SEC and Financial Reporting Institute Conference in Pasadena. He presented his views on the FASB's current and future tasks. View Article

FEE: Council split on EC's Proposals on audit policy
It appears that Member States are still significantly split on the proposals made by the European Commission and on the compromise proposed by the Presidency. FEE calls on all parties to find solutions that support audit quality and are compatible with international standards. View Article

FRC: Revised auditing standard on making auditors' work more transparent to investors
The FRC has made a significant change to the UK's corporate governance regime with the issue of its revised auditing standard enhancing the transparency of the auditor's report with the aim of better communication to investors. View Article

EBF comment letter on FASB Exposure Document, 'Financial Instruments: Credit losses'
EBF believes the new model should be principle-based, differentiating between performing assets and those which no longer perform or have suffered significant credit deterioration, and applicable to open portfolios. In this respect, EBF cannot support the proposed FASB approach. View Article

FT: Mark to market best to spot risky banks
An academic study, 'Fair Value Accounting for Financial Instruments: Does it Improve the Association Between Bank Leverage and Credit Risk?', has concluded that "mark to market" accounting is significantly more accurate than other accounting methods in predicting the risk of banks failing. View Article

FT: Miscalculation of the riskiness of banks' balance sheets
According to the results of Barclays' research, big global banks are miscalculating the riskiness of their balance sheets by an average of 13 per cent because they are so bad at predicting whether their borrowers will default. View Article

EFRAG: Feedback statement on the clarification of acceptable methods of depreciation and amortisation
EFRAG published its feedback statement for its final comment letter on the IASB's ED, 'Clarification of Acceptable Methods of Depreciation and Amortisation'. View Article

EFRAG: Fourth issue of the Conceptual Framework newsletter
EFRAG, ANC, ASCG, FRC and OIC have released the fourth issue of their Conceptual Framework newsletter, 'Keep up with getting a better framework', informing European constituents on the latest developments regarding the progress of the Conceptual Framework project with the IASB and other stakeholders. View Article

IIF calls for renewed efforts to promote greater international regulatory consistency
The IIF released a report encouraging national and global policymakers to promote greater consistency between national regulations. The report reviews current consistency efforts underway and contains 16 specific recommendations for action. View Article

City of London/Boleat: The future of the European Financial Services market
Mark Boleat, Chairman of the City of London Policy and Resources Committee, said that the European financial services market was of crucial importance to the City of London, and to the UK more generally. He stressed the need for cooperation in Europe. View Article

Reuters: Europe plans major scaling back of financial trading tax
European countries planning a tax on financial transactions are set to scale back the levy drastically, cutting the charge by as much as 90 per cent and delaying its full roll-out for years, in what would be a major victory for banks View Article

EUobserver: Reports of Tobin Tax death exaggerated, EU says
EU tax commissioner Algirdas Šemeta has cast doubt on reports that his Financial Transactions Tax (FTT), also known as the Tobin Tax, is being unravelled by Member States. View Article

TheCityUK responds to reports of 'scaling back' the Financial Transaction Tax (FTT)
CEO Chris Cummings said: "Even with a narrowed scope, we have significant concerns about the impact the tax will have on corporates' risk management and governments' ability to raise funds in bond markets". View Article

EACT/Raeburn's blog on the Financial Transaction Tax
"In my view the real argument against FTT still remains intact: this is a tax that will largely not be paid by the financial sector but will be borne by all of us – companies, individuals, pension funds – who must deal with that sector as it is now." View Article

UK's HMRC issues FATCA regulations and compliance
The UK Government took part in joint discussions with the US Government to explore an intergovernmental approach to FATCA, supporting the overall aim to combat tax evasion, while reducing risks and burdens on financial institutions. (Includes IMA response.) View Article

Federal Cabinet approves cross-border tax compliance agreement with the US
On 29 May 2013, the Federal Cabinet gave the go-ahead to the Agreement between the Federal Republic of Germany and the United States of America to Improve International Tax Compliance. View Article

IMF/Lagarde: Policy steps towards a full-speed global economy
Lagarde reiterated her core message of making policies stronger to stop the global economy getting weaker. She expanded on the emerging "three speed" global economy. View Article

Global economy advancing but pace of recovery varies, says OECD Economic Outlook
The global economy is moving forward, but divergence between countries and regions reflects the uneven progress made towards recovery from the economic crisis. Historically high unemployment remains the most serious challenge facing governments. View Article

Financial World: Moment of truth looms for the 'euro outs' (Graham Bishop article)
The banking union may herald a new step towards integration, says Graham Bishop View Article

May 2013 Financial Services Month in Brussels - Graham Bishop's personal overview
The process of deepening economic – and thus political – integration is proceeding apace. The Commission announced the last stages of the third iteration of the European Semester, coinciding with an intensification of the banking union debate. View Article

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This week in "Brussels"

06 June 2013

© Graham Bishop