Graham Bishop.com

Financial supervision: ECOFIN Council sets out its position with a view to continuing negotiations with the Parliament
There is now a large degree of convergence between the Council and the EP, thanks to the negotiations which have already taken place. However, it has not proven possible to find an overall agreement in time to enable the Parliament to hold its first reading on 8 July. View Article

Third Task force meeting on economic governance: Sanctions system was discussed
Herman van Rompuy stressed that the sanctions could be applied in a way that also covers the preventive arm of the Stability and Growth Pact. A three-pronged macro-economic surveillance will be created, comprising a warning mechanism, in-depth assessment and corrective measures. View Article

Ackerman: Crisis triggered historic financial sector changes
The financial crisis has severely damaged the standing of the Western world and accelerated the shift eastward in economic and geopolitical power, Josef Ackermann said, warning against overregulation of financial markets. View Article

Trichet: Europe’s economic challenges are recovery, reform and renewal
Trichet highlighted that more transparency and less pro-cyclicality of the financial system will reduce market volatility. Regulation should be more effective and thorough, and misjudgement of underlying risk should be limited by more stress on long-term profitability. View Article

Commission proposes package to boost consumer protection and confidence in financial services
The Commission has launched a public consultation on options to improve protection for insurance policy holders. For investors, the Commission proposes faster compensation if an investment firm fails to return the investor's assets due to fraud, administrative malpractice or operational errors. View Article

US Senate close to passing Wall Street Reform
Democrats appeared to have won the 60 votes they need to move Wall Street reform through the Senate when two Republican Senators announced their support for a conference report. View Article

Schapiro outlines SEC implementation work of Wall Street reforms
During the next 18 months much of our focus could be implementing the important legislation pending before the Senate, SEC chair Mary Shapiro said. This includes all areas of financial services including OTC derivates, mandatory clearing, hedge funds, and investors protection. View Article

IMF Survey: IMF calls for Japan to rein in debt
Japan's economy is gaining strength following the global recession but, with a sharpened global focus on sovereign risks in some countries, the government needs to draw up a credible fiscal adjustment plan to secure long-term economic health, IMF economists say. View Article

UK Coalition Government launches consultation on Bank Levy
The document sets out issues around technical aspects of the design and implementation of the Bank Levy. It will apply to UK banks and building societies, and to the UK operations of banks from abroad. View Article

European Liberal Leader warns that the EU must prepare at stress tests follow-up plan
Guy Verhofstadt highlighted that progress is being made in publication of stress tests on the 23rd July. He also called for transparency in methodology. View Article

European banks call for level playing field in bonuses limitations
EBF recalled that banks operate in a global competitive environment, and that this environment calls for global solutions. Remuneration rules must therefore be international in order to be effective, and must cover not only banking, but also other sectors. View Article

CEBS on EU-Wide Stress Test: stress testing exercise has been extended to key domestic credit institutions in Europe
The 91 examined banks represent 65 per cent of the EU banking sector. Both aggregated and bank-by-bank results of the stress test will be disclosed on 23 July 2010. View Article

El Pais: Spanish government gives green light to reform the savings banks sector
The Spanish government has approved a reform of the savings banks sector which had come under severe pressure during the debt crisis. Under the decree approved, regional governments will no longer be able to appoint elected officials to the banks' controlling boards. View Article

Bankitalia’s Draghi: Banks are the pillars of growth
Mario Draghi, governor of Bankitalia, noted that growth in Italy must be “pushed by the reforms.” While consumption and investments are still relatively weak, “banks, if strong, are and will be the pillar of growth.” He also highlighted the reforms in public finances and pensions system. View Article

Intesa Sanpaolo’s Passera comments on the private recovery fund
Corrado Passera, the delegated administrator of Intesa Sanpaolo, voiced his scepticism regarding the proposal of the private recovery fund. Certainly yes to the deposit guarantee funds, but no to the recovery funds,‘ said Passera, expressing doubts on the practical side of managing the fund. View Article

Creation of a private fund to save European banks in crisis
Some of the largest European banks (e.g. Unicredit, Deutsche Bank or Santander) are negotiating the possibility of creating a rescue fund for the banks in case of a future financial crisis. The accumulated capital could reach 20 billion euro. View Article

ICMA: European Repo Market White Paper emphasises importance of repo and urges reform of market infrastructure
There is an urgent need for action to remove the barriers to the efficient cross-border transfer of securities posed by the settlement infrastructure. The paper focuses on the role and functioning of the repo market, and on the issue of short-selling. View Article

EACH’s response to EC consultation on derivatives and market infrastructures
The lack of global harmonisation in binding standards on CCPs’ risk management standards leads EACH to encourage further global co-ordination as legislation is being developed in different jurisdictions. View Article

FESE responded to EC’s consultation on 'Derivatives and Market Infrastructures': ESMA should play an essential role
The consultation deals with the subject of interoperability in cash equity markets. FESE believes that interoperability for cash equity deserves a separate debate and an appropriate impact assessment. Moreover, a badly designed interoperability framework could put financial markets’ security at risk View Article

Joint ISDA, AFME and BBA response to the EC’s public consultation on derivatives and market infrastructure
They stated that in case of a mandatory clearance of a particular contract, market participants should be given a reasonable amount of time to develop new systems and controls or to raise money for margin requirements without being required to close their business in the meantime. View Article

AMF Jean-Pierre Jouyet: OTC derivatives trade repositories should be involved in macro-supervision
AMF Chairman Jean-Pierre Jouyet stressed that the AMF will be pushing strongly towards an ambitious reform of OTC derivatives markets. He said that the more transactions migrate to clearing houses, the more resilient the system will become. View Article

MiFID Review: CESR consults on Client Categorisation
The consultation paper deals with distinctions between regulated entities, and categorisation of local authorities and municipalities as public debt bodies. View Article

AMF publishes a best practice guide to preparing advertising materials for complex debt securities
The aim is to inform the industry about the practices identified as being potentially in breach of prevailing regulations and about the practices that help improve the standard of disclosure. View Article

FESE responded to the EC consultation on Short Selling
FESE believes that restrictions imposed by several authorities in the EU have been both discriminatory and ineffective. To avoid similar situations in the future, FESE support a strong co-ordinating role to be given to ESMA. View Article

IOSCO published final report on Transparency of Structured Finance Products
Respondents to the consultation paper agreed that the level of post-trade transparency on any particular market needs to be carefully tailored on the basis of the characteristics of that particular market and the particular SFPs being traded. View Article

CEIOPS consults on equivalence assessments to be undertaken in relation to Solvency II articles 172, 227 and 260
The EC called for advice asking CEIOPS to identify and prioritise the third countries where an equivalence assessment would be desirable before the introduction of Solvency II. View Article

CEA questions EC proposals on insurance guarantee schemes
The CEA questions pre-funding of IGS as suggested by the EC, and believes that the decision on how to fund schemes should be left to individual EU member states provided that equivalent protection is given to policyholders. View Article

Deposit Guarantee Schemes: Improving protection for insurance policy holders
In the White paper, the Commission consults on the different options to ensure a fair and comprehensive level of consumer protection, as well as on safeguards against the need for taxpayers to foot the bill in case of a collapse of an insurance company. View Article

CESR comments on the IASB’s exposure draft fair value option for financial liabilities
CESR believes that IASB proposal would create a mismatch for some banks where assets and liabilities are closely matched due to changes in assets going to profit or loss and some changes in liabilities going to Other Comprehensive Income. View Article

EFRAG comments on the IASBs ED Measurement Uncertainty Analysis Disclosure for Fair Value Measurements
The ED proposes to change the sensitivity disclosure of assets and liabilities measured at fair value within level 3 of the fair value hierarchy with two main tasks -to focus on unobservable inputs and to consider the effect of correlation between inputs where relevant and significant. View Article

FEE comments on the IASB Exposure Draft Financial Instruments: Amortised Cost and Impairment
Conceptually, FEE broadly agrees with the proposals to include a provision for the expected losses which are inherent in portfolios. However significant concerns are expressed concerning the operability of the proposals and also concerning the integral approach to credit losses and interest income. View Article

Commission approves restructuring plan of Bank of Ireland
Bank of Ireland will reduce its presence in certain market segments in order to limit the distortions of competition created by the aid. In Ireland, it will sell its New Ireland Assurance Company plc and its mortgage brokering business ICS Building Society. View Article

ECB Vítor Constâncio: The future of euro governance, how to contain imbalances and preserve financial stability
Constâncio stressed that it is essential to put in place a framework of economic governance and a set of policies to prevent a recurrence of the crisis. There is evidence of significant progress having been made in recent months in this area. View Article

BIS: The determinants of cross-border bank flows to emerging markets - new empirical evidence on the spread of financial crises
This paper studies the nature of ‘spillover effects’ in bank lending flows from advanced to emerging market economies and identifies specific channels that serve as conduits for such effects. View Article

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This week in "Brussels"

15 July 2010

© Graham Bishop