This week in "Brussels"
07 January 2016
EBA, BCBS, ECB, ESMA, MiFID II, EMIR, MIFIR, IOSCO, Solvency II, UCTIS and more.
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Articles from 17 December 2015 - 07 January 2016 |
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Banking |
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EBA publishes final Guidelines on sound remuneration policies and its Opinion on the application of proportionality
The guidelines ensure that institutions calculate correctly and consistently the so called ‘bonus cap' by setting out specific criteria for mapping all remuneration components into either fixed or variable pay and detailing how specific remuneration elements are to be recognised over time. View Article |
EBA consults on draft guidelines on remuneration requirements for sales staff
The EBA has identified poor remuneration policies and practices as a key driver of miss-selling of financial products and services. The Guidelines are aimed at protecting consumers and reducing conduct costs of firms. View Article |
EBA calls for more certainty and consistency in the application of restrictions to profits pay-outs to restore capital adequacy
The Opinion clarifies that the MDA should be calculated taking into account both minimum (Pillar 1) and additional (Pillar 2) capital requirements which should be met at all times, as well as the combined buffer requirement. View Article |
Recommendation of the ECB on dividend distribution policies
Based on the European Central Bank recommendation, credit institutions should establish dividend policies using conservative and prudent assumptions in order, after any distribution, to satisfy the applicable capital requirements. View Article |
Bruegel: Getting eurozone deposit insurance right promises benefits
EU-wide security of savings must be considered in order to take banking union seriously. Banks' holdings of government bonds must be limited. View Article |
European Commission: Single Resolution Mechanism comes into effect for the Banking Union
The SRM became fully operational on 1 January 2016. The SRM implements the EU-wide Bank Recovery and Resolution Directive in the euro area. The full resolution powers of the Single Resolution Board (SRB) also apply as of 1 January 2016 (IP/14/2784). View Article |
CEPS: Will the Single Resolution Fund be a ‘baby tiger’ during the transition?
Authors find that, even during its early years, the SRF should be sufficient to deal with almost any crisis scenario imaginable. View Article |
BCBS: Guidance on the application of the core principles for effective banking supervision to the regulation and supervision of institutions
The Basel Committee on Banking Supervision has today issued for public consultation proposed guidance for the regulation and supervision of institutions relevant to financial inclusion. View Article |
EBA delivers guidance for business reorganisation plans under the BRRD
The EBA published its final draft Regulatory Technical Standards (RTS) on the content of business reorganisation plans and progress reports, as well as guidelines defining how to assess plans. View Article |
EBA issues methodology for valuation of liabilities arising from derivatives
These standards provide EU resolution authorities with a methodology for the valuation of derivative liabilities of credit institutions placed under resolution and ensure that the discipline brought in by the new bail-in tool can effectively be extended to these liabilities too. View Article |
EBA updates on risks and vulnerabilities in the EU banking sector
The EBA’s report shows that EU banks have continued to strengthen their capital position and to improve asset quality. However, the level of non-performing exposures remains high and profitability is still weak. View Article |
BCBS: Guidance on credit risk and accounting for expected credit losses
The BCBS' document sets out supervisory guidance on sound credit risk practices associated with the implementation and ongoing application of expected credit loss accounting framework. View Article |
BCBS: Identification and measurement of step-in risk released by the Basel Committee
The objective of the consultative document is to mitigate potential spillover effects from the shadow banking system to banks. View Article |
EBA recommends introducing the NSFR in the EU
The EBA’s analysis did not find strong statistical evidence of significant negative impacts of the NSFR on bank lending, financial assets markets or trading book positions. The EBA also explained that certain EU specificities should be taken into account. View Article |
EBA consults on draft Guidelines on stress testing
The Guidelines set out expectations for institutions' stress testing programmes and seek improvements by drawing on lessons from previous stress test exercises. In addition, they aim at promoting convergence of the use of stress testing in the context of the SREP. View Article |
Fitch: Global shadow banking growth to begin to slow in 2016
Shadow banks are increasingly likely to become victims of their own success, which will translate into incrementally slower growth, increased operating costs and the beginning of a gradual convergence with the very banks they are aiming to disintermediate. View Article |
Financial Times: Eurozone bank bond issuance to stagnate
European banks are expected to seek little additional funding from the bond market in 2016, suggesting continued subdued demand for loans from businesses and consumers. The lacklustre outlook follows a disappointing year for sales of bonds by eurozone banks. View Article |
EBA updates on the status of its final Implementing Technical Standards on benchmarking portfolios
The EBA, following requests from stakeholders, published an update on the application date of its final draft Implementing Technical Standards (ITS) on benchmarking portfolios. View Article |
EBA defines the minimum set of information on financial contracts for detailed records
The EBA’s RTS further specify the minimum set of the information on financial contracts that should be contained in detailed records and the circumstances under which the requirement to maintain such detailed records should be imposed. View Article |
Bank of England: CCP resolution and the ending Too Big to Fail agenda - speech by Andrew Gracie
BoE's Gracie says that one of the goals of global reform since the financial crisis has been ending Too Big to Fail. This is the resolution agenda – aiming to ensure that in the event that a G-SIFI fails there is minimal interruption of the activities of a firm. View Article |
Reuters: UK bank stress tests do not clear fog over China risk
British banks survived the Bank of England’s 2015 stress tests largely unscathed, but the assessment published earlier this month also underscored the vulnerability of the UK banking system to China. View Article |
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Securities |
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ICMA ERCC Ops Group publishes overview on SFT reporting regulations and impact analysis
The ICMA ERCC Operations Group is actively working towards a better understanding of the regulatory requirements, their impact on the post-trade processing of repo transactions as well as solutions to help firms establish an efficient operating model to manage the changes. View Article |
EBA issues advice on synthetic securitisation for SMEs
The EBA published a report summarising the findings of its analysis and market practice assessment of the synthetic securitisation market. View Article |
ESMA consults on transaction reporting, reference data, record-keeping and clock synchronisation under MiFIR
The CP specifies individual scenarios applicable to a given transaction or order activity. Each of the scenarios is accompanied with the sample of XML ISO 20022 format to be used by firms to represent the values to be reported. View Article |
ESMA publishes MiFID II guidelines on cross-selling practices
ESMA published its Guidelines on Cross-Selling Practices under MiFID II to ensure investors are treated fairly when an investment firm offers two or more financial products or services as part of a package. View Article |
ESMA publishes Final Report on MiFID II Guidelines on assessment and knowledge of competence
These guidelines are intended to enhance investor protection by increasing the knowledge and competence of natural persons giving investment advice or providing information about financial instruments, investment services or ancillary services to clients on behalf of investment firms. View Article |
ESMA assesses regulators’ compliance with market maker exemption under Short-Selling Regulation
The review focused on those markets with the highest number of market makers benefiting from the exemption, and the markets in which market makers have notified the highest number of instruments. View Article |
CFTC staff issues request for comment on draft technical specifications for certain swap data elements
CFTC Division of Market Oversight and Office of Data and Technology staff issued a request for comment on the draft technical specifications for certain prioritized swap data elements and associated questions. View Article |
ESMA issues favourable opinion extending Greek HCMC short selling ban
ESMA considers that adverse developments which constitute a serious threat to market confidence in the Greek market still persist and that the proposed measure is appropriate and proportionate to address those threats. View Article |
ESMA publishes responses to its consultation on indirect clearing under EMIR and MiFIR
ESMA published the responses received to its consultation on indirect clearing under EMIR and MiFIR. View Article |
ESMA publishes results of second Market Abuse Directive peer review
This review was limited to the areas where shortcomings were noted previously, and covered seven NCAs where some shortcomings had been noted in the previous peer review – namely those of Bulgaria, Iceland, Liechtenstein, Poland, Romania, Slovakia and Slovenia. View Article |
IOSCO issues Sound Practices at Large Intermediaries Relating to the Assessment of Creditworthiness and the Use of External Credit Ratings
IOSCO believes that identifying sound practices regarding suitable alternatives to credit ratings should reduce the overreliance on CRAs for credit risk assessment. Such a development would help increase investor protection, while contributing to market integrity and financial stability. View Article |
ESMA publishes its CRA market share calculation
This calculation is required by Article 8d of the CRA Regulation, which aims to stimulate competition in the credit rating industry by encouraging issuers and related third parties to appoint smaller CRAs. View Article |
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Insurance |
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EIOPA: Solvency II is going live
As of 1 January 2016 the new risk-based European supervisory framework for insurance – Solvency II – has become applicable. View Article |
EIOPA is ready to provide the Solvency II risk-free interest rate term structures
The EIOPA published the updated coding used to produce the Solvency II relevant risk-free interest rate (RFR) term structures. As of 1 January 2016 the new supervisory framework will be applicable and this code will be used for the monthly RFR publications. View Article |
Insurance Europe: Insurers confirm readiness for Solvency II, despite “gold plating” almost tripling
Over two thirds of respondents (68%) to an Insurance Europe survey have indicated that Solvency II has been gold plated in their market as supervisors impose additional last minute requirements, according to the European insurance and reinsurance federation. View Article |
EIOPA's Zweimueller interviewed by AMICE
Manuela Zweimueller, EIOPA’s Head of Regulations, talked to the Newsletter of the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE) about Solvency II, regulation and supervision, reporting package and a new set of Delegated Acts. View Article |
ECB: Statistics on euro area insurance corporations and pension funds
In the third quarter of 2015, the total financial assets of euro area insurance corporations and pension funds decreased to €9,037 billion. The amount outstanding of insurance technical reserves, which are the main liabilities of insurance corporations and pension funds, increased to €7,524 billion. View Article |
Insurance Europe: Response to the FSB consultation on effective resolution strategies for G-SIIs
Insurance Europe responded to a consultation by the Financial Stability Board on effective resolution strategies for Global Systemically Important Insurers. View Article |
Insurance Europe: Response to general data protection regulation agreement
Mr. William Vidonja, head of conduct of business at Insurance Europe, commented on the announcement that a political agreement has been reached on the General Data Protection Regulation by the European institutions. View Article |
Insurance Europe: Online tool provides insight into initiatives by insurers that provide value to European consumers
Insurance Europe has developed an online tool to highlight the continuous efforts being made across Europe’s various insurance markets to innovate and to enhance products and services for consumers. View Article |
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Asset Management |
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Commission publishes Delegated Regulation supplementing UCITS Directive with regard to obligations of depositaries
The Delegated Regulation ensures the direct applicability of detailed uniform rules concerning the operation of undertakings for collective investment in transferable securities and depositaries. View Article |
IPE: Dutch pensions industry challenges EIOPA approach to stress tests
The Dutch pensions industry has criticised recent European stress tests, arguing that the approach taken by the European Insurance and Occupational Pensions Authority will fail to provide any useful insights. View Article |
EIOPA consults on improving communication with occupational pension scheme members
EIOPA published a consultation paper on Good Practices on Communication Tools and Channels for communicating to occupational pension scheme members. View Article |
ESMA publishes report on proxy advisors’ best practice principles
In the report, ESMA finds that the industry is moving in the right direction but sees room for improvement in some areas. View Article |
IOSCO reports on business continuity plans for trading venues and intermediaries
IOSCO published two reports that seek to enhance the ability of financial markets and intermediaries to manage risks, withstand catastrophic events, and swiftly resume their services in the event of disruption. View Article |
IPE: Bernardino confirmed for further five-year term at EIOPA
The European Parliament has endorsed Gabriel Bernardino for a second term as chairman of the European Insurance and Occupational Pensions Authority. View Article |
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Corporate Governance/Accounting |
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EFRAG’s Draft Comment letter to the IASB's ED/2015/11 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
EFRAG has published its draft comment letter on the IASB’s Exposure Draft ED/2015/11 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts and seeks constituents’ views on the proposals. View Article |
EFRAG’s comment letters in response to the IASB EDs on the Conceptual Framework for Financial Reporting
EFRAG has submitted its comment letters on the IASB EDs ED/2015/3 Conceptual Framework for Financial Reporting and ED/2015/4 Updating References to the Conceptual Framework. View Article |
EFRAG’s response to the Trustees’ review of structure and effectiveness
EFRAG has published its response to the Request for Views Trustees’ Review of Structure and Effectiveness: Issues for Review and the related feedback statement addressing the comment letters EFRAG received. View Article |
EFRAG/EFFAS/AIAF/IASB´s summary report on profit or loss and other comprehensive income
EFRAG, EFFAS, AIAF and the IASB published a summary report of their investor outreach event in which participants discussed the role of profit or loss (P&L) and other comprehensive income (OCI). View Article |
EBA/ FEE: Comments on the IASB’s consultation paper Request for Views - 2015 Agenda Consultation
The EBA and FEE overall welcome the IASB’s agenda consultation and its analysis of the major and research projects currently on its agenda. View Article |
FEE´s discussion paper on the future of audit and assurance
The new FEE discussion paper Pursuing a strategic debate follows up on Opening a discussion: the future of audit and assurance from 2014. It is based on the responses received to the 2014 paper and on the debate at the FEE Audit Conference Long Term Vision and Short Term Challenges in June 2015. View Article |
IFAC: IAASB seeks feedback on standard-setting activities to enhance audit quality
The IAASB released its Invitation to Comment, Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits. It highlights the board’s discussions on these three topic areas and indicates potential standard-setting activities. View Article |
IAESB publishes guidance for standard on professional competence for audit engagement partners
The IAESB has issued support materials for the implementation of IES 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised). View Article |
FEE: Views on the role of practitioners in providing assurance on disclosure of non-financial information
The FEE Position Paper focusses on the role of practitioners in providing assurance on the requirements of the EU Directive on disclosure of non-financial and diversity information. Member States should have transposed this Directive into their national laws by 6 December 2016. View Article |
FRC promotes clear and concise reporting through strategic report
The FRC has identified that the introduction of the Strategic Report and the FRC's Guidance on the Strategic Report has had a positive effect on the quality of corporate reporting. View Article |
IASB: Procedure for receiving implementation issues on the IFRS for SMEs
The IASB has set up a procedure whereby small companies and other interested parties can submit implementation issues on the IFRS for SMEs for consideration View Article |
IPE: IASB explores issues to include in discount-rate research paper
The IASB has taken the first of its due-process steps toward the issue of a discussion paper on discounting practice, although it stressed the project was not about imposing a move to a fair-value or risk-free discounting approach under IFRSs. View Article |
IASB: IFRS Foundation publishes the 4th and 5th parts of its free Framework-based teaching material
The IFRS Foundation Education Initiative is developing a series of comprehensive Framework-based IFRS teaching materials to assist IFRS teachers to educate IFRS learners more effectively. View Article |
IASB postpones accounting changes for associates and joint ventures
The IASB has postponed the date when entities must change some aspects of how they account for transactions between investors and associates or joint ventures. View Article |
ECIIA to work with EC’s DG Connect Group
The ECIIA is to work with the EC’s DG Connect group to consult on the body’s emerging Digital Agenda for Europe Initiative. View Article |
IESBA makes progress on restructuring the Code of Ethics for professional accountants and proposes enhanced provisions related to safeguards
The IESBA released for public comment two EDs proposing key enhancements to fundamental aspects of the Code of Ethics for Professional Accountants. View Article |
FASB: New guidance on the recognition and measurement of financial instruments
The FASB issued an Accounting Standards Update (ASU) intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. View Article |
FASB: Final standard on financial instruments in early January 2016
The FASB announced that it plans to issue its final standard on the recognition and measurement of financial instruments during the first week of January 2016. View Article |
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Financial Services Policy |
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City AM: The FCA has dropped two more banking probes after shelving a major review into industry culture
Britain's financial watchdog has reportedly dropped two more probes into the banking industry, in the wake of its u-turn on a major review into the culture, pay and behaviour of those who work in the industry. View Article |
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Grahams Articles, Comments & Speeches |
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Commission Green Paper on Consumer Financial Services: This Time, `Fintech’ may make it happen!
The political imperative to answer the question “What has Europe done for me today?” has risen sharply – matching the rise of eurosceptic political parties around the EU. A component of the answer must include a demonstration that the single market delivers cheaper financial services. View Article |
The Importance of being `Equivalent’
The lessons learnt in the heat of the crisis are now hard-coded into the genetic structure of global financial regulations and cannot just be ignored if they happen to be an inconvenient truth. They may be particularly inconvenient for British advocates of leaving the EU. View Article |
Deepening EMU – Round-up of Key Events – December 2015
David Cameron took his proposals for EU reform to the ongoing European Council meeting, although he is not likely to reach an agreement until 2016. The launching of the Commission’s Green Paper on Consumer Finance was also a major event, along with the CRR and CRD IV impact in the economy. View Article |
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Friends Services |
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Deepening EMU – Round-up of Key Events – December 2015
David Cameron took his proposals for EU reform to the ongoing European Council meeting, although he is not likely to reach an agreement until 2016. The launching of the Commission’s Green Paper on Consumer Finance was also a major event, along with the CRR and CRD IV impact in the economy. View Article |
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CPD/Education and Learning |
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Brussels for Brunch Webinar December 2015
Topics covered included Brexit, European Deposit Insurance Scheme, Green Paper on retail financial services, FinTech payments, Prospectus Directive Proposal, and progress of the Securitisation Proposal. View Article |
Brussels for Brunch Workbook December 2015
This is the workbook that accompanies the December 2015 Brussels for Brunch Webcast View Article |
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Graham's tweets |
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© Graham Bishop