Graham Bishop.com

Van Rompuy’s Economic Governance Task Force: More budget and macro-economic surveillance and sanctions are needed
Herman Van Rompuy said policymakers will also improve the Stability and Growth Pact by creating more sanctions. Sanctions could already kick-in before the 3% threshold for the annual deficit is breached, for instance if warnings have been neglected, or if the level of debt is rising too quickly. View Article

ECOFIN Council conclusion on Excessive deficit procedure: strengthened rules on statistics
The Council agreed on a general approach on a draft regulation aimed at strengthening statistical data rules used under the EU's excessive deficit procedure. The role of Eurostat will be strengthened to verify the quality of data in cases where significant risks have been identified View Article

European Liberal Leader warns that peer review of national budgetary planning in eurozone is insufficient
Reacting to ECOFIN conclusions, Verhofstadt stressed that Europe's finance ministers have correctly identified the problem - a lack of governance - but failed to spell out the necessary solution. Peer review is exactly the mechanism that has failed to impose budgetary discipline in the past. View Article

IMF urges swift – but tailored - action to restore confidence and growth in Euro Area
The IMF would avoid a one-size-fits-all fiscal adjustment strategy, tailoring the response to each of the euro area’s 16 members. The IMF also said that countries facing market pressures have to go ahead with forceful fiscal adjustment. View Article

Rehn: It is essential that G20 Summit in Toronto spells out guiding principles for a sequenced and differentiated fiscal exit
Speaking at G20 Finance Minister’s meeting in Busan, he stressed that the EU considers that fiscal consolidation must be ambitious in terms of size and pace: it should start in 2011 at the latest, and even earlier in those countries whose fiscal space is zero or limited. View Article

Draft ECOFIN Report on the state of play on measures in the financial sector in response to the crisis - European Council preparation
The report states that the mandatory registering of CDS, with all OTC derivatives, in trade repositories, laid down in the upcoming European Market Infrastructures Legislation will dramatically improve transparency in this market. View Article

G20: Financial sector should make a fair and substantial contribution
G20 members agreed that the financial sector should contribute to the costs, G20 members could not agree on principles for an international taxation scheme as called for by the IMF, nor did they find minimum common ground for strengthening the Basel II Framework. View Article

UK Treasury Mark Hoban: The UK’s approach to European, global and domestic financial regulation
He emphasized that the new Government sees the importance of financial services as part of a wider European and global sector. The new Government needs to get the regulatory framework right and supports common EU standards on supervision. View Article

NYT: Congress pressed for reform bill deal
As Congressional negotiators begin this week to merge two bills overhauling the financial system, the White House wants them to reach an agreement before President Obama leaves for a Group of 20 meeting this month in Toronto. View Article

Reuters: New financial landscape emerges ahead U.S. reforms
Some big financial firms are moving out of the private equity business. Some are padding their capital cushions. Other players are already making the giant OTC derivatives market more transparent, Reuters reports. View Article

Reuters: Volcker Rule at issue as reform bill nears finale
New controversy emerged over the proposed "Volcker rule" that would bar banks from the risky private equity and hedge fund businesses. Paul Volcker said he firmly opposes giving banks that make only small investments in hedge funds or private equity funds any exemption from his proposed ban. View Article

CFTC Chilton calls for position limits and new trading technology curbs
We need thoughtful position limits and oversight of mammoth OTC trading, Bill Chilton, member of the Commodity Futures Trading Commission. Regulators should look into placing new restrictions on financial trading technology to prevent a repeat of the May 6 "flash crash". View Article

FSA Japan – Newsletter May 2010
The Japan FSA issued its latest newsletter. Subjects include among others a collection of opinions on the revision of audit standards and an explanatory note on the revision of the guidelines for supervising financial services companies. View Article

Volcker: Financial bill could be launching point for other countries
The US financial reform legislation would make the United States a model for the world, the former US Fed chairman and now economic adviser to President Obama said according to the NYT. View Article

SEPA Council meets for the first time: discusses migration end-dates and future of SEPA for cards
The objective of the SEPA project is to break down the barriers for euro payments within 32 countries. The SEPA Council will help create an integrated euro retail payments market by fostering consensus between all major stakeholders. View Article

European Commission Conference on Financial Conglomerates: some quick fixes
The Commission will present a “quick fixing” before the summer taking into consideration the supplementary supervision of credit institutions, insurance undertakings and investment firms within a financial conglomerate. The “quick fixing” will review the alignment of the Directive with the new ESAs View Article

ICMA releases survey of transparency and liquidity in the corporate bond market
Most respondents felt that improved quality of pre-trade pricing would have a positive impact on liquidity, market depth and bid-offer spreads, 87% of respondents felt that electronic trading would improve liquidity in the corporate bond market. View Article

AMF calls retail investor attention to the risks involved in bond issues
Furthermore the AMF calls on distributors that contact, or are contacted by, retail clients to acquire these bonds to perform proper due diligence and take into account the risks involved in these investments. View Article

European banks urge structural deficiencies in OTC derivatives markets to be addressed via CCPs and collateralisation
The EBF paper summarises the views of the European banking community on the upcoming EC proposals on OTC derivatives markets. The document covers four topics: issues around clearing of OTC derivatives contracts; Central Counterparties; Trade Repositories; and interoperability. View Article

ICMA responded to CESR consultation on non‐equity markets transparency: Concerns on the publication of post-trade data
ICMA’s Members support greater transparency of post‐trade data to regulators. However, they are concerned that publication of post‐trade data to the market as a whole, especially without adequate delays for less liquid bonds or for block trades, will negatively impact liquidity. View Article

Germany and France urged the Commission to make a proposal on short selling
In a letter addressed to President Barroso, Sarkozy and Merkel urged the Commission to accelerate and intensify work on the regulation of financial markets and to explore the possibility of EU wide ban on short selling. The Commission announced that new measures will be presented during the summer. View Article

CESR updates the list of measures recently taken by members regarding short-selling
EU securities regulators are closely monitoring the functioning of the markets under the current circumstances. CESR, has been coordinating actions by its Members regarding short selling practices, in particular in financial companies. View Article

EACH published Default Procedures Publication Guidelines
This standardised guidance note has been prepared as EACH believes that presenting default procedures in a standard format across all member CCPs will serve to make procedures as transparent as possible for the benefit of all market participants. View Article

CESR’s advice on the equivalence between the Japanese Regulatory and Supervisory Framework and the EU Regulatory Regime for CRAs
CESR has assessed the ability of the Japanese framework to achieve the main EU requirements, and finds it comprehensive so makes no recommnedations. The areas include corporate governance, disclosure and conflicts of interest management. View Article

CESR Guidelines on implementing the Regulation for CRAs: - effective from Monday 7 June
CESR published two sets of guidance on the current CRA regulation. CESR also publishes a feedback statement on the consultation held to develop the guidance on registration, as well as an updated Q&A on CRAs. View Article

IAIS position on key financial stability issues in insurance - Insurance does not generate or amplify systemic risk
The insurance sector is susceptible to systemic risks generated in other parts of the financial sector. For most classes of insurance, however, there is little evidence of insurance either generating or amplifying systemic risk, within the financial system itself or in the real economy, IAIS said. View Article

KPMG survey on the future of alternative investments - Regulation an unwelcome challenge for hedge funds
Transparency was also seen as critical and gained the biggest response from investors. A majority of investor respondents said they saw transparency as a challenge. Relatively few managers believe issues such as taxation, systemic risk and shortage of talent could be a problem. View Article

FSA consults on strengthening its requirements on competence and ethics for individuals carrying out retail activities
FSA proposals clarify how individuals carrying out approved persons roles should demonstrate a good standard of ethical behaviour. They will be expected to act in the interests of their client, avoiding consumer detriment and taking responsibility for their own level of competence. View Article

EFRAG's draft comment letter on the IASB's ED Fair Value Option for Financial Liabilities
The IASB’s ED only focuses on accounting for own credit risk on liabilities that entities choose to measure at fair value. However, EFRAG solicits additional views of constituents on some overarching aspects of the new requirements for classification and measurement of financial instruments. View Article

EFRAG compatibility analysis: IFRS for SMEs and the EU Accounting Directives – sometimes unclear and ambiguous
In some cases, EFRAG has assessed that the EU Accounting Directives were not clear and therefore could be interpreted in different ways. EFRAG has performed its assessment from a technical accounting perspective only. View Article

Commission report on Competition Policy 2009 in financial services: phasing out support and paving the way to normality is the cornerstone
The report provides an overview of the European financial services sector. Discussions on a gradual phasing out of financial support to banks and how to best pave the way for a return to normal market conditions has been a cornerstone of competition policy in financial services, the reports argue. View Article

May 2010 - with Podcast
Exactly sixty years ago, French foreign minister Schuman made his famous Declaration “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity…” View Article

Paul Goldschmidt: The European Financial Stabilisation Mechanism - The unanswered questions!
Goldschmidt argues that the ECOFIN meeting missed a golden opportunity to bring some clarity to the proposed support mechanism for the Euro. He explained that there are a number of unanswered issues concerning the interest rate, the maturities and the covenants of the loans agreed. View Article

CEPS report on Europe 2020: A Promising Strategy?
Karel Lannoo argues that the combined effect of global and EU rules will lead to lower profitability for global universal banks and will represent an incentive to re-consider the universal model in favour of a segmentation of the financial system in niches to benefit from the lower capital charges. View Article

Bruegel paper on Euro area governance: What went wrong in the euro area? How to repair it?
Bruegel Director Jean Pisani-Ferry explains why implementation of existing rules needs to be strengthened and why the Van Rompuy Task Force should revisit the fundamental principles on which the EMU is founded and resist the temptation to solely address divergences. View Article

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Insurance	Asset Management	Corporate Governance/Accounting
Competition: Financial Services	Financial Services Month in Brussels - Report	Edited Minutes of key legislative Bodies
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This week in "Brussels"

10 June 2010

© Graham Bishop