Graham Bishop.com

This week in "Brussels"

12 November 2020

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Highlights of the week: A long-term budget deal seems within the EU’s grasp – unless Hungary’s Orban vetoes it due to the “rule of law” linkage. The RRF is teed up to go and EIB’s President is arguing for a further step on to the global stage with an “EU” development bank to match the US and China. The impending abolition of the “IBORs” may feel a bit like the Y2K problem that never appeared, but ISDA rightly presses on – with a handy overview of progress. Better Finance felt they had to warn ECON publicly of the MiFID `quick fix’ risks to the long term interest of `retail’ – the very foundation of CMU.

The Brexit saga still seems to be unending – though Britain’s ruling “Vote Leave” clique may have felt the need to wait for President Biden. Both EBA and ESMA have taken the precaution of up-dating/ re-iterating their post-transition guidance for 1 Jan 2021.

Graham Bishop

Articles from 5-12 November

General Financial Policy

EP: Long-term EU budget deal: a “win-win” result to face the challenges ahead : In Wednesday’s plenary debate, MEPs welcomed the agreement reached on EU financing, as well as the deal linking EU funding to respect for the Rule of Law. View Article

Next Generation EU: Europe needs pan-European investment : Next Generation EU should not turn out to be a missed opportunity to initiate and fund genuine pan-European infrastructure projects with a high impact on potential growth. Roel Beetsma, Lorenzo Codogno and Paul van den Noord argue that the subsidiarity principle calls for such a pan-EU initiative. View Article

EP COVID-19: first go-ahead given to the new Recovery and Resilience Facility : €672,5 billion in grants and loans to support EU countries for four years; Funds available only to member states that respect the rule of law; EU funding should be visible and implemented transparently View Article

Project Syndicate: The Case for an EU Development Bank : Werner Hoyer: The European Union needs to reinforce its development financing activities in order to level the playing field with the United States and China. Establishing its own development bank would have an immediate, significant, and resource-efficient impact. View Article

Vox: Economic rebound interrupted: Key features of the Commission’s Autumn 2020 forecast : The Autumn 2020 European Economic Forecast remains dominated by the pandemic. The exceptionally strong rebound experienced in the third quarter is being put on hold as national authorities introduce new public health measures to stem the resurgence of the virus. The projected return to the recovery in 2021 and its speed are subject to extremely high uncertainty. The economic impact of the pandemic is set to continue differing widely across the EU. In these circumstances, a rapid approval and speedy implementation of Next Generation EU is crucial. View Article

EURACTIV: Hungary’s Orban threatens EU budget veto over rule-of-law : Hungarian Prime Minister Viktor Orbán has threatened to veto an EU accord linking the bloc’s long-term budget to a mechanism requiring countries to uphold Europe’s democracy rules, according to an EU source on Sunday (8 November). View Article

Banking Union

FT: EU banks urged to prepare for bad loans as pandemic hits economy : Head of body responsible for winding down failing lenders issues warning. European banks need to prepare their balance sheets for the risk of pandemic-induced non-performing loans hitting them in the new year, the head of the EU agency tasked with winding down failing lenders has said. View Article

EBA announces timing for publication of 2020 EU-wide transparency exercise and Risk Assessment Report : The European Banking Authority (EBA) announced today that its 2020 Risk Assessment Report and transparency exercise with bank by bank data will be released on Friday 11 December at 18:00 CET. View Article

ISDA: Understanding the New IBOR Fallbacks Opening Remarks : Fallbacks mitigate the systemic risk that would arise from the cessation of a key interbank offered rate (IBOR) and, as such, they will be absolutely critical in the months ahead. During today’s event, we will look at what the fallbacks are, why they are important and how they work. View Article

FSB consults on regulatory and supervisory issues relating to outsourcing and third-party relationships : Financial institutions have relied on outsourcing and other third-party relationships for decades. However, in recent years, the extent and nature of interactions with a broad and diverse ecosystem of third parties has evolved, particularly in the area of technology. View Articl

Capital Markets Union

Better Finance: Public Letter to the European Parliament's ECON Committee: Harm Done to EU citizens as “Retail” Investors Through MiFID II “ : We welcome the EC’s initiative to alleviate some regulatory requirements .... However, we wish to warn about the long-term detrimental effects that several provisions and amendments will have on “retail” investor protection if done in “haste” and without proper scrutiny and attention to details. View Article

IPE: Germany to drive pension push at EU level in last month of presidency : The German government will continue to push for progress in the second and third pillars of its pension system in the context of CMU, as it reaches the last month of European Union presidency, said Jörg Kukies. View Article

EIOPA Risk Dashboard: European insurers slightly less exposed to risks compared to the beginning of COVID-19 outbreak but concerns remain : Insurers are particularly exposed to very high levels of macro risk, while market, credit, profitability and solvency risks decreased to medium level. However, the risk assessment does not account for the outbreak of the second wave of the pandemic. View Article

ESMA consults on guidance for funds’ marketing communications : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation on guidelines on marketing communications under the Regulation on facilitating cross-border distribution of collective investment undertakings. View Article

ESMA CONSULTS ON MIFID II/ MIFIR OBLIGATIONS ON MARKET DATA : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today launched a Consultation Paper (CP) seeking input from market participants in relation to its draft guidelines on the MiFID II/MiFIR obligations on market data. View Article

ESMA sees potential for sudden reversal in investors’ risk assessment : The European Securities and Markets Authority (ESMA), the EU securities markets regulator, today publishes its second risk dashboard for 2020 which sees a continued risk of decoupling between asset valuations and economic fundamentals. View Article

ESMA releases Report on post trade risk reduction services : ESMA, the EU's securities markets regulator, has today released a Report on Post Trade Risk Reduction services (PTRR) under EMIR. The Report analyses whether any trades that directly result from PTTR services should be exempted from the clearing obligation. View Article

BIS: OTC derivatives statistics at end-June 2020 : The gross market value of over-the-counter (OTC) derivatives, which provides a measure of amounts at risk, rose from $11.6 trillion to $15.5 trillion during the first half of 2020, led by increases in interest rate derivatives. View Article

Environmental, Social, Governance (ESG)

CDSB: The UK Government announces intention to mandate climate disclosure by large companies and financial institutions across the economy: CDSB welcomes mandatory implementation of climate risk disclosures using the TCFD recommendations across major sections of the UK economy by 2025 View Article

FRC Statement on Non-Financial Reporting Frameworks : Climate change is one of the defining issues of our time and, by its nature, material to companies’ long-term success. Boards have a responsibility to consider their impact on the environment and the likely consequences of any business decisions in the long-term. View Article

IASB: Trustee Chair’s keynote to UNCTAD on sustainability reporting : Sustainability and climate change are global challenges, and there is now growing focus on how companies perform and report on these matters. So sustainability reporting is continuing to increase in importance for various stakeholders. View Article

BETTER FINANCE Response to the European Supervisory Authorities' Survey on templates for Environmental and/or Social financial products unde : BETTER FINANCE welcomes the the use of specific templates to standardise the disclosures of ESG information. View Article

EBA: Jose Manuel Campa delivers keynote speech at the XVII international professional conference on good corporate governance : He highlighted the corporate governance challenges faced by the financial sector. View Article

IPE: IASB urged to add projects on pensions accounting, sustainability reporting : Constituents and consultation groups advising the International Accounting Standards Board (IASB) say the standard setter should canvass views on adding two potential pensions accounting projects to its future work plan. View Article

Fin Tech Regulation

BIS: An early stablecoin? The Bank of Amsterdam and the governance of money : Trust is the bedrock of a sound monetary system. This paper examines the rise and fall of the Bank of Amsterdam (1609-1820) to gain insights on the central bank underpinnings of money. It sheds light on the governance of digital currencies. View Article

Brexit

Bloomberg:EU, U.K. Warn of Big Disagreements After Intensive Brexit Talks : No breakthrough was made after 14 days of negotiations; talks to resume next week as both sides race to reach a deal View Article

FT: Brussels holds out on post-Brexit financial services access for UK : EU still unsure what rights to grant City of London despite Sunak step. Brussels has warned that it will only grant the City of London market-access rights that are “in the EU’s interests” even after Britain adopted regulatory decisions designed to smooth future ties. View Article

Chancellor sets out ambition for future of UK financial services : The UK will remain an open, attractive international financial centre, and extend its global leadership in green finance and financial technology, under plans outlined by the Chancellor Rishi Sunak View Article

FCA responds to Treasury announcement on equivalence : The Treasury has announced its intention to take equivalence decisions in respect of the European Economic Area (EEA) states across a number of financial services areas. These will come into effect at the end of the transition period. View Article

UK Finance responds to the Chancellor's ambition for future of UK financial services : Responding to the Chancellor Rishi Sunak's ambition for the future of the UK's financial services, Bob Wigley, Executive Chair of UK Finance said: "Making our financial system the safest and most transparent place in the world to conduct business is vital for the UK’s future global success.... View Article

Reuters: Sunak says no longer waiting for EU on post-Brexit finance rules : Britain set out on Monday how it would let European Union financial services firms operate in Britain after a post-Brexit transition period ends on Dec. 31, saying it was no longer waiting for Brussels to decide access to its markets in return. View Article

ESMA updates Brexit statements for the end of UK transition period : ESMA, the EU’s securities markets regulator, has updated three statements which address the impact on reporting under EMIR and SFTR and on the operation of ESMA databases and IT systems after 31 December 2020, the end of the UK’s transition from the EU. View Article

EBA reminds financial institutions of the need for readiness in view of the Brexit transition period ending on 31 December 2020 : From that date provision of financial services from UK authorised institutions to EU customers on a cross-border basis (passporting) will no longer be possible. View Article

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