This week in "Brussels"

08 December 2011



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Articles from 01 December 2011 - 08 December 2011

Banking

Commission asks EBA to review the impact of bank capital requirements on SMEs
The Commission has published several initiatives in a framework entitled “Easier access to funding for SMEs and social businesses”. Under this framework, the Commission has proposed an action plan to promote better access to finance for SMEs. 
EBA Enria: Banking Supervision - towards an EU Single Rulebook
The chair of the European Banking Authority, Andrea Enria, gave a speech at the Belgian Financial Forum Conference entitled "Banking Supervision: towards an EU Single Rulebook". 
CEPS: Placing EU banks under undue stress
This Commentary by CEO Karel Lannoo surveys the latest round of stress tests administered to EU banks by the European Banking Authority (EBA) and finds their exclusive focus on a single measure of capital, the Tier 1 capital ratio of Basel III, short-sighted.  
ABBL: Second impact assessment of the new liquidity rules for Luxembourg banks
Following a first study in Q1/2011, a second local Quantitative Impact Study (QIS) of the new Liquidity standards for credit institutions, based on the version published by the BCBS in December 2010, was conducted jointly in Q2/2011 by the BCL and the CSSF. 
FT: European banks face a dual burden
Europe's banks will simply have to get used to a higher cost of financing and smaller, more selective, lending capacity. That could hark back to the days before they supersized operations using cheap funding from markets. 
BBA: Glocalism - a world view of prudential regulation
Capital management is going to be at the heart of banking strategy moving into 2012. The international standard-setters in Basel have set 2019 as the deadline for implementation of more stringent regulatory rules, but the markets aren't going to wait that long. 
Onado/Resti: EBA and the capital of European banks - don’t shoot the messenger
The newborn European Banking Authority has been fiercely criticised in the few months of its life. This column argues that most of the criticisms have been driven by lobbying interests more than by noble worries on the future of the European economy. 
EMF: EU27 mortgage market grows to €6.4 trillion in 2010
The European Mortgage Federation has published the latest version of Hypostat, which provides detailed statistics and data on EU and international housing and mortgage markets. 
BIS: The internal audit function in banks - consultative document
The BCBS issued revised supervisory guidance for assessing the effectiveness of the internal audit function in banks, which forms part of the Committee's ongoing efforts to address bank supervisory issues and enhance supervision through guidance that encourages sound practices within banks.  
State aid: Commission scoreboard shows continued trend towards less and better-targeted aid
The Commission prolonged the crisis state aid regime for banks, but clarified its rules on remuneration of recapitalisations and revised its rules on fees for interbank financing guarantees to ensure the State is adequately remunerated. 
BoE: Financial Stability Report December 2011
The Bank of England published its Financial Stability Report – December 2011. 
BIS: International Journal of Central Banking (IJCB) December 2011
The journal features articles on central bank theory and practice, with a special emphasis on research relating to monetary and financial stability.  

Securities

ECON Committee: Public hearing on MiFID II/MiFIR
Rapporteur Markus Ferber (EPP, DE) questioned the necessity of introducing a new trading category (OTF) in MiFID II. He called on all interested parties to respond to the ECON Committee questionnaire on MiFID II. 
Speech by AMF chair, Jean-Pierre Jouyet, at the EP on MiFID Review
Mr Jouyet said that protecting investors is a key remit of financial regulators and it must be central to the review of the Markets in Financial Instruments Directive. 
ESMA issues a warning to retail investors on trading in foreign exchange products
ESMA is also alerting retail investors about the main risks involved in forex trading. 
ECB assessment of new direct and relayed links between securities settlement systems in the euro area
The Governing Council of the ECB approved direct and relayed links to be used for collateralisation of credit operations. 
FN: Investors cry foul over MiFID exclusion
European investors claim they are being shut out of the financial policymaking process after the European Parliament failed to include investor groups in a hearing on the Markets in Financial Instruments Directive. 
FN: ETF participants urged to 'stop fighting'
Participants in the exchange-traded fund market need to work together to restore the reputation of the funds, with investor education the key to boosting sales. 
FN: ESMA targets physical ETF
The European Securities and Markets Authority, Europe's securities watchdog, is to put the stock-lending and collateral policies of physical exchange-traded funds under its review spotlight. 
AMF launches public consultation on the transposal provisions in amending the Prospectus and Transparency Directives
The delegated acts adopted by the European Commission will have an impact on the application of the General Regulation of the Autorité des Marchés Financiers (GRAMF). 
AFME responds to investor concerns with new High Yield Guidelines and a permanent forum for discussion
New disclosure guidelines have today been published by the Association for Financial Markets in Europe, in response to investor concerns regarding structure and disclosure in high yield transactions. 
FN: ESMA chief in call for alms
The chairman of Europe's leading securities watchdog has repeated calls for the agency to receive greater funding and more appropriate timeframes for shaping new regulation, warning that a lack of resources could lead to rules being rushed through without proper industry consultation. 
Speech by Jean-Pierre Jouyet at the AMF Annual conference
Mr Jouyet said it is too early to draw any conclusions as to the regulatory reforms currently underway, but it is possible to judge what has been completed and what remains to be done in market regulation and financing the economy. 

Insurance

EIOPA & Solvency II: What to expect in non-Member States such as Switzerland
EIOPA chair, Gabriel Bernadino, highlighted that equivalence criteria will facilitate cross-border activities of insurance and it will diminish the burden on internationally-active insurance groups. 
EIOPA calls for paradigm shift in consumer protection
EIOPA chair, Gabriel Bernardino, said that there is a need to question the strategy and policy tools that traditionally have been used to address information asymmetries, conflict of interest and market inefficiencies to protect the rights of policyholders, pension scheme members and beneficiaries. 
Implementing Solvency II will cost UK insurers £2 billion
In a 110-page consultation document and impact assessment published last week, the Treasury has set out how it intends to adopt the mandatory Directive, which will introduce EU-wide rules for insurance and reinsurance companies. 

Asset Management

Commission proposes rules on venture capital
The new regulation will make it easier for venture capitalists to raise funds across Europe for the benefit of start-ups. The approach is simple: once a set of requirements is met, all qualifying fund managers can raise capital under the designation "European Venture Capital Fund" across the EU.  
Advice on ESMA’s public consultation on UCITS exchange traded funds in the European Union
The consultation advises that ETFs are a low cost and straightforward investment proposition for investors, and as such, ESMA should investigate how to make indexed ETFs more available to retail investors. 
FT: Private equity struggles to find finance
The volume of European private equity deals has dropped to its lowest level since the height of the financial crisis two years ago, as buy-out groups struggle to finance deals amid the eurozone debt crisis. 
FN: EU rule changes could hit financial service buyouts
Senior industry figures are worried that changes to a key European Union Directive could hamper private equity investment in financial services. 
ECMI Statistical Package 2011
The ECMI Statistical Package represents a comprehensive collection of relevant data on the dynamics of various segments of the European capital markets. It includes disaggregated data on equity markets for each stock exchange belonging to the same group. 
OECD/IOPS Good Practices on pension funds' use of alternative investments and derivatives
The Good Practices reflect what pension regulatory and supervisory authorities usually expect to examine when assessing the risk management of pension funds that use alternative investments and derivatives. 
IPE: Portugal to transfer banks' pension fund liabilities to state
The Portuguese government has agreed to transfer €6 billion from the pension funds of four of the country's largest banks to the state, as part of a plan to cut the deficit to 5.9 per cent of GDP. 
IPE: What the revised IORP Directive should focus on
IPE editor, Liam Kennedy, explains why the original Directive was inadvisable and offers suggestions as to what the revised version might focus on instead. 

Corporate Governance/Accounting

ESMA discussed enforcement of IFRS
Accounting enforcers from around 30 countries met on 1 and 2 December 2011 in Paris, following an invitation by ESMA to discuss IFRS, enforcement systems and enforcement decisions. Representatives of the IASB, IAASB, the EC and the IOSCO participated in the meeting as well. 
IASB: Current status on ED Insurance Contracts
The IASB has been discussing the responses to the exposure draft (ED) Insurance Contracts with the FASB since December 2010. The project page has been updated to report on the boards' joint tentative decisions and to help interested parties to evaluate its impact on the forthcoming standard. 
EFRAG's final comment letter on the IASB Agenda Consultation 2011
EFRAG published its final comment letter in response to the IASB Agenda Consultation 2011. EFRAG thinks such public consultation strengthens the transparency of the IASB's processes and believes this is an important first step in improving the agenda-setting process. 
FEE commented on the IASB Agenda Consultation 2011
FEE welcomes the IASB's consultation on its three-year agenda. The Consultation will certainly help the IASB to understand the needs of the growing IFRS community better, and provide a strategic focus when allocating its limited resources. 
IAASB, IFAC, IASB standard-setters and professional accountancy organisations from CIS and Baltic States discussed international standards
Over 60 representatives from 12 Commonwealth of Independent States (CIS) and Baltic countries met with leadership and staff of the IAASB, the IASB and the IFAC to discuss adoption and implementation of ISAs and IFRSs. 
FEE commented on the PCAOB Rulemaking Docket Matter No 029 concerning the transparency of audits
FEE provided its comments on the PCAOB Rulemaking Docket Matter No 029, 'Improving the Transparency of Audits: Proposed Amendments to PCAOB Auditing Standards and Form 2'. FEE has not expressed views on issues that focus on purely national US matters. 
IFAC commented on EC's proposed legislation
IFAC commented on the EC's proposed legislation dealing with audit policy, issued on 30 November, 2011. IFAC supports initiatives continually to improve audit quality, enhance the role of audit, and safeguard auditor independence. 
FEE's views on European Commission Proposals on audit policy
FEE notes that the Proposals released on the 30th of November by the EC represent a complex and detailed set of provisions that will require in-depth analysis and debate.  
IFAC: Proposed international guidance to help accountants improve internal control
The PAIB Committee of the IFAC issued proposed 'International Good Practice Guidance, Evaluating and Improving Internal Control in Organisations' for public comment. Comments on the exposure draft are requested by February 29, 2012. 
FASB: Speech by Leslie Seidman on current SEC and PCAOB developments
At the AICPA National Conference on Current SEC and PCAOB Developments held on December 6, 2011 in Washington, FASB chairman, Leslie Seidman, discussed global accounting standards and the possible future endorsement of IFRSs by the US SEC. 
IASB: Speech by Hans Hoogervorst at AICPA Conference on current SEC and PCAOB developments
At the AICPA National Conference on Current SEC and PCAOB Developments held on 6 December, 2011 in Washington, IASB chairman, Hans Hoogervorst, discussed global accounting standards and the possible future endorsement of IFRSs by the US SEC. 

Financial Services Policy

EFAMA's comments on the Commission's proposal for a Council Directive on a common system of financial transaction tax
Given the arguably misleading statements in the proposal and the accompanying press releases, EFAMA is particularly concerned that end consumers and their advocates have not appreciated the very significant cost impact which the FTT will have on their long-term savings. 

International/G20

Ignazio Angeloni: The Group of 20 - trials of global governance in times of crisis
In spite of the disappointing outcome of some recent summits, notably the most recent in Cannes, the G20 is and should remain the cornerstone of the global financial architecture. Its record of performance in the last three years, reviewed in this paper, is mixed but not as unambiguously negative as critics have said. 
IMF: Emerging markets seen as part of solution to global problems
IMF's Christine Lagarde, wrapping up a visit to Latin America, said that the balance of economic power was shifting and that emerging economies were part of the solution to global problems. 
IMF revamps lending options in response to global crisis
The IMF is upgrading one type of precautionary credit line and broadening the reach of its emergency assistance. The Precautionary and Liquidity Line will enable the IMF to provide upfront liquidity in a broad range of circumstances.  



© Graham Bishop