This week in "Brussels"
24 January 2019
EBA guidance on high risk exposures, Basel Committee reviewed Principles for sound liquidity risk management and supervision, Draghi running out of time to sort ECB top jobs, MiFID II, equity finance and capital market integration in Europe, banks embrace Fintech, ECOFIN and more.
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Articles from 17 January 2019 - 24 January 2019 |
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Banking Union |
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EBA publishes final guidance regarding the exposures to be associated with high risk
Through these Guidelines, the EBA aims not only to enable a higher degree of comparability in terms of current practices in identifying exposures associated with high risk, but also to facilitate the transition to the upcoming regulatory revisions, noting that the forthcoming implementation of the revised Basel standards will only apply as of 2022. View Article |
BIS: Basel Committee completes review of Principles for sound liquidity risk management and supervision
The BCBS has completed a review of its 2008 Principles for sound liquidity risk management and supervision. The review confirmed that the Sound Principles remain fit for purpose, and the Committee advises banks and supervisors to remain vigilant of liquidity risks in financial markets. View Article |
Bloomberg: Draghi running out of time to sort ECB top jobs as Brexit looms
Mario Draghi is running out of time to say whether he’ll shake up the responsibilities of his top officials to ensure smooth leadership in the supervision of the region’s banks. View Article |
ECB: Results of the January 2019 euro area bank lending survey
Credit standards broadly unchanged for loans to enterprises and housing loans. Firms’ and households’ demand for loans higher, but banks expect some moderation in demand. Banks’ non-performing loans have tightening impact on credit standards. View Article |
ECB: Private sector working group publishes “Guiding principles for fallback provisions in new contracts for euro-denominated cash products”
The working group highlights the importance of market participants preparing for transition to risk-free rates. The paper proposes guiding principles promoting use of effective fallback provisions in new contracts for euro-denominated cash products. View Article |
BIS: Beyond the doomsday economics of "proof-of-work" in cryptocurrencies
The paper focuses on how Bitcoin and related cryptocurrencies verify that payments are final, ie irreversible once written into the blockchain. It points to the high costs of achieving such finality via "proof-of-work". It then weighs the outlook for cryptocurrencies based on this kind of algorithm, and looks at possible future avenues for progress. View Article |
EPC: Guidelines on cryptographic algorithms usage and key management
The EPC published a new version of the Guidelines on cryptographic algorithms usage and key management in order to provide guidance to the European payments industry, more precisely to security officers, risk managers, system engineers and systems designers. View Article |
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Capital Markets Union |
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EFAMA's reply to BCBS consultative document on revisions to leverage ratio disclosure requirements
EFAMA supports objectives to mitigate risks and make derivatives market safer. However, EFAMA would like to use the opportunity presented by this consultation to draw attention to fund managers experience of difficulties in obtaining access to clearing and the costs this incurs that must be supported and reduces the benefits to use central clearing. View Article |
Financial Times: MiFID II’s transparency rules go global
The is growing pressure on rivals as a US group moves to absorb research cost. View Article |
Financial Times: MiFID II hysteria over analyst research appears misplaced
The claims that new EU regulations will leave smaller companies unloved are questionable, the author reckons. View Article |
ESMA agrees position limits under MiFID II
ESMA published six opinions on position limits regarding commodity derivatives under the Markets in Financial Instruments Directive and Regulation. View Article |
ESMA updates commodity derivatives transitional transparency calculations for MiFID II/ MIFIR
ESMA published an updated version of the MiFID II/MiFIR transitional transparency calculations (TTC). View Article |
ESMA publishes responses to Call for evidence on periodic auctions for equity instruments
ESMA has published the responses received to its Call for evidence on periodic auctions for equity instruments. View Article |
Bruegel: Equity finance and capital market integration in Europe
The authors examine the present use of external equity by EU companies, the roles of listings on public markets, and the regulatory impediments in national laws. They assess to what extent EU market integration has overcome the crucial obstacle of shallow local capital markets. View Article |
Bruegel: Analysis of developments in EU capital flows in the global context
This report, commissioned by the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union, aims to analyse capital movements in the European Union in a global context. View Article |
BIS: Committee on the Global Financial System report outlines ways to boost domestic capital markets
The analysis highlights the importance of macroeconomic stability, market autonomy, strong legal frameworks and effective regulatory regimes in supporting market development. Better disclosure standards, investor diversity, internationalisation, and deep hedging and funding markets, as well as efficient and robust market infrastructures, also play a key role. View Article |
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Clients Union |
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European Commission adopts adequacy decision on Japan, creating the world's largest area of safe data flows
The Commission has adopted its adequacy decision on Japan, allowing personal data to flow freely between the two economies on the basis of strong protection guarantees. View Article |
Commercial Risk Europe: French regulator fines Google record €50m for GDPR breaches
Google has been fined €50m under Europe’s new data protection rules by the French data protection regulator CNIL, making it the largest penalty by some margin since the General Data Protection Regulation (GDPR) was introduced in May 2018. View Article |
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Insurance |
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EIOPA seeks evidence on integration of sustainability risks in Solvency II
Market participants to provide evidence on the integration of sustainability risks in investment and underwriting practices. Call for Evidence part of EIOPA's action plan on sustainable finance. View Article |
Commercial Risk Europe: IAIS recovery planning paper ‘highly and unnecessarily prescriptive’, says GFIA
GFIA said the significant costs insurers face when developing recovery plans, as well as the existence of other risk management tools, mean that insurance supervisors must have the flexibility to tailor rules, and therefore welcomed the IAIS’s acknowledgement of the need for supervisors to consider proportionality when determining such requirements. View Article |
GFIA comments on the OECD Insurance and Private Pensions Committee’s (IPPC) next steps on cyber issues
GFIA appreciates its engagement with the OECD to date and would like to renew its commitment to working with the OECD on its new cyber insurance project to review legislative and regulatory impacts on cyber insurance coverage. View Article |
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Asset Management |
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Investment & Pensions Europe: Eurosif launches strategy review in light of ESG regulatory changes
Eurosif, the Brussels-based pan-European sustainable investment organisation, has launched a strategic review to inform its future mandate, including how to best support implementation of EU sustainable finance measures, it announced today. View Article |
AMF study on the characteristics of AIFs managed by French management companies: exposure, liquidity risk and leverage employed
Based on the declarations made pursuant to the Directive on Alternative Investment Fund Managers, the AMF provides an insight for the first time into the market of AIFs that are subject to reporting in France. View Article |
Commercial Risk Europe: Automatic enrolment – a pensions success, backed by increasing enforcement
Even though it has been declared a success, as with all legal and regulatory changes, risk managers still need to understand the regulatory regime that sits behind the process and the potential risks of non-compliance. View Article |
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Corporate Governance/Accounting |
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BIS: Luís Máximo dos Santos: Corporate governance - importance and limits
Speech by Mr Luís Máximo dos Santos, Vice-Governor of the Bank of Portugal, at the Conference "Corporate Governance - creating value for society", in which he summaries the regulatory requirements imposed by European and national legislation in corporate governance area. View Article |
ECGI: Universal corporate governance
This paper by authors at the European Corporate Governance Institute addresses questions such as: Are some sets of corporate governance practice universally effective across the world? If some governance practices are not unconditionally applicable, under what conditions are they effective? View Article |
FRC: Artificial intelligence and corporate reporting
The Financial Reporting Lab has published the latest in its series of reports looking at how technology might impact the production, distribution and consumption of corporate reporting. View Article |
IOSCO: Statement on disclosure of ESG matters by issuers
The IOSCO has published a statement setting out the importance for issuers of considering the inclusion of environmental, social and governance (ESG) matters when disclosing information material to investors’ decisions. View Article |
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Financial Services Policy |
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ISDA CEO Scott O’Malia guest remarks at Exchequer Club Luncheon
Mr O’Malia described where things stand on financial regulation and the challenges still facing the market, spoke about the results of the reforms, and then highlighted where he thinks additional attention is required. View Article |
Financial Times: Banks embrace Fintech to exploit disrupter expertise
Barclays and Santander have taken stakes in British Fintech group MarketInvoice in a sign of established lenders’ growing willingness to team up with technology-driven challengers. View Article |
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Political |
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Bloomberg: How Brexit could spill over into EU elections
Nationalists from Italy to Hungary are preparing for battle in European Union elections later this year, seeking allies for a united Eurosceptic front against what they call the cosy liberal elite. Now the chaos of Brexit may end up providing them with an army they probably didn’t expect. View Article |
Speech by President Donald Tusk at the signing ceremony of the Franco-German Treaty of Aachen
The European Council President saluted the Franco-German accord but cautioned "all convinced Europeans" against losing faith in the purpose of Europe's integration as a whole. View Article |
LSE: How the electoral success of radical right parties normalises public expressions of support for them
Drawing on a new study, Vicente Valentim illustrates that once a radical right party enters parliament they can effectively become normalised, with supporters more likely to report their backing for the party in surveys. View Article |
Financial Times: Europe is an alliance, not a union of values
The EU27 display of unity over Brexit is not an accident or a one-off, writes, Gideon Rachman. The 27 small and medium-sized nations that make up the EU have a powerful shared interest in protecting the European single market. View Article |
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Economic |
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Main results - Economic and Financial Affairs Council
Finance ministers discussed the European system of financial supervision, InvestEU, Romanian priorities, the European Semester and the follow up to the December Euro-summit. View Article |
Main results - Eurogroup
The Eurogroup President launched a call for candidates for a new member of the ECB's Executive Board. Ministers discussed the international role of the euro and, in inclusive format, exchanged views on the follow-up to the December Euro summit. View Article |
Recommendations on the economic policy of the euro area under the European Semester - January 2019
This note presents information on the Eurogroup’s policy actions in relation to the 2018 euro area recommendations and provides an overview of the recommendations addressed to the euro area as a whole under the European Semester for 2019. View Article |
IMF: A weakening global expansion amid growing risks
While global growth in 2018 remained close to post crisis highs, the global expansion is weakening and at a rate that is somewhat faster than expected. This update of the World Economic Outlook projects global growth at 3.5% in 2019, 0.2 percentage point below last October’s projections. View Article |
ACCA and IMA issue latest edition of Global Economic Conditions Survey for Q4 2018
Global economic confidence fell for the third consecutive quarter in Q4 2018, ending the year at an all-time low finds the latest edition of Global Economic Conditions (GECS) from ACCA and IMA. View Article |
PIIE: US-EU trade negotiations: A daunting mission
The administration’s recently released ambitious objectives for the United States–European Union negotiations indicate that the goal of a transatlantic trade deal will now be even harder to achieve than five years ago. View Article |
Carnegie Europe: A relationship under extreme duress: U.S.-China relations at a crossroads
The U.S.-China relationship is confronting its most daunting challenge in the forty years since normalization of relations. Current trends portend steadily worsening relations over the long term and the threat of an even more dangerous decline in the relationship demands serious corrective measures. View Article |
Annual inflation down to 1.6% in the euro area
The euro area annual inflation rate was 1.6% in December 2018, down from 1.9% in November. A year earlier, the rate was 1.4%. European Union annual inflation was 1.7% in December 2018, down from 2.0% in November. View Article |
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Graham's tweets |
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© Graham Bishop
Banking Union