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This blog covers the key subjects since our last meeting that I hoped to cover but, as always, we ran out of time to deal with them all. As a Friend, you can watch the 30 minute `structured’ CPD web-cast with CISI. These Notes may be read to record a further 30 minutes of `structured CPD’, including a dipping into the links to the underlying stories.
Highlights from the “Brussels for Breakfast” meeting
As is inevitable at the moment, Brexit developments dominated the discussion – with a deepening fear that it would be a Hard Brexit following the comments by the Prime Minister in her Party conference speech. What does this term really mean? At the least it seems to mean not even being a member of the EEA as that implies breaching several red lines: free movement of people, contributions to the budget an accepting the supremacy of the ECJ. Clearly, this means loss of passporting rights and thus direct access to the ECB for payments.
This led on to a wide-ranging discussion of ECB Director Mersch’s comments about the evolution of the Eurosystem’s market infrastructure. The consolidation of T2 and T2S could easily embed the notion that participants must be EEA-authorised, thus ruling out post-Brexit UK firms. It is not only ECB rules that may develop: Basel has yet to finalise Basel III in critical areas – most importantly the treatment of banks holdings of mortgages and corporate loans. In the US, these are normally converted into securities via Ginnie Mae etc. But EU banks still have vast holdings on-balance sheet and there is a real risk that the EU may decide to diverge from Basle on such issues.
The State of the Union message from Commission President Juncker included a commitment to accelerate CMU. Several legislative components are already underway (STS securitisation, Prospectus Directive) and more proposals are nearing launch (insolvency regime, withholding tax barriers, debt-equity bias as part of CCCTB) and further down the track would come personal pensions, supporting Fin Tech and further steps on the supervisory framework. Some of these ideas may make faster progress in a world without the UK acting as an “impediment”.
Join us again on November 8th for the 124th “Brussels for Breakfast” notes and CISI live webcast afterwards
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