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ECOFIN Council ready to conclude negotiations with Parliament on banking sector rules (BRRD/DGS)
EU finance ministers adjusted the Council's negotiating position on the Bank Recovery and Resolution Directive and on the Directive on Deposit Guarantee Schemes. Chair Šadžius said he believed agreement would be reached by the end of the year.

Commissioner Barnier's remarks on BRRD, SRM, DGS and Volcker law
Barnier welcomed the trilogue agreement on the framework for bank recovery and resolution, and expressed optimism that a compromise could be reached on the resolution and deposit guarantee directives in the coming days. He congratulated the US regulators on implementing the Volcker law.

FT: Banking Union framework set out by EU ministers, key questions remain unanswered
The ECOFIN Council meeting produced a draft compromise, broadly based on Germany's revised position, which sets out how eurozone countries cede power to a central bank resolution authority and establish a common funding network.

ESM/Regling: Interview with the Irish Examiner
Regling was quizzed i.a. on the future development of the EU/ESM and Banking Union. On the Single Resolution Fund, he said he saw 'some merit' in the ESM becoming a backstop.

Bloomberg: Dijsselbloem seeks EU bank failure breakthrough by dividing plan
Dijsselbloem has suggested splitting up an EU proposal for dealing with troubled banks. The idea could allow EU finance ministers to move beyond deadlock on the proposed SRM.

Reuters: Regulators' emphasis on resolution plans may be misplaced
Focusing on too-big-to-fail policies and hard-to-implement resolution plans may lead regulators to miss the next big financial failure, which could come in the areas of shadow banking and short-term financing, industry experts said.

IRSG publishes Principles for the RRD
In its report, 'Recovery and Resolution Directive: Principles for delivering clarity for market participants', the International Regulatory Strategy Group highlights its key concerns.

ECB/Praet: Interview with the Financial Times
Praet stressed the importance of strong comprehensive assessments, and said that the ECB was prepared to act should the procyclical impact of the AQR be significant. (Includes comments from Mario Draghi.)

SEC: Agencies issue final rules implementing the Volcker Rule
Five US federal agencies have issued final rules to implement the Volcker Rule. Banking organisations covered by section 619 will be required to conform their activities and investments fully by July 2015. (Includes comments from Commissioner Barnier, EBF and AGB.)

Fitch: Basel III to keep bank market, counterparty risk low
European bank trading and counterparty risk exposure is likely to remain relatively low in 2014 as Basel III's more conservative regulatory regime helps stifle bank risk appetite, says Fitch Ratings.

EBA publishes follow-up review of banks transparency in their 2012 reports
The EBA published a follow-up review aimed at assessing the disclosures made by 19 European institutions in response to the Basel Pillar 3 requirements, as set out in the CRD.

EBA publishes Guidelines on retail deposits subject to different outflows for the purpose of liquidity reporting
The EBA published its final Guidelines on retail deposits subject to different outflows. The document aims at providing greater harmonisation in the reporting of retail deposits in the EU banking sector.

EBA publishes final draft RTS on determination of overall client exposures in respect of transactions with underlying assets
These RTS define the conditions and methodologies used to determine the overall exposure to a client or group of connected clients resulting from an exposure to a transaction with underlying assets, and the risks inherent in the structure of the transaction itself.

EBA publishes final draft RTS on materiality of model extensions and changes
EBA published its final RTS specifying the conditions for assessing the materiality of extensions and changes of internal approaches for credit and operational risk.

Reuters: Watchdog warns of chaos in competing derivatives rules
Failure to thrash out common supervision of the $640 trillion global financial derivatives industry will split markets and raise costs for end users, IOSCO warned. Banks trading derivatives are looking to the US and the EU to harmonise the approach to new rules, making markets more transparent.

ISDA: Standard initial margin model for non-cleared derivatives
In order to facilitate the introduction of final BCBS-IOSCO guidelines for "Margin requirements for non-centrally cleared derivatives", ISDA is proposing a standard initial margin model (SIMM) to be used by market participants.

Philip Stafford: Cross-border chaos dogs derivatives rules
The G20 mandate to overhaul derivatives markets has failed to address how regulatory interpretations of different jurisdictions should work together, comments Stafford in the FT.

AFME: The negative implications of the EBA's proposed approach to securitisation and the LCR
AFME and its members are concerned that the EBA is moving towards an inappropriate treatment of high quality securitisation which will hinder prospects for revival of this market in both the near and medium term.

Bloomberg: Bankers see reprieve from Basel clampdown on asset-backed bonds
The Basel group is seeking to make securitisation rules "more prudent and risk-sensitive" by setting stricter curbs on how banks should measure possible losses, and by limiting reliance on external credit ratings.

Response to consultation on removal of mechanistic references to credit ratings: Insurance Europe
On 7 November, the ESAs published a joint consultation paper on Mechanistic references to credit ratings in the ESAs' guidelines and recommendations.

FN: Rival models of swap futures evolve in Europe
Swap future volumes are expected to rise in the US once regulators force trading of OTC derivatives on to SEFs – new trading venues defined under the Dodd-Frank Act. ESMA is devising rules for clearing under the EU swap rules.

IndexUniverse.eu: UK Government scraps stamp duty on ETFs
The UK Chancellor of the Exchequer has announced that stamp duty will be abolished on exchange traded funds. Stamp duty is levied on purchases of UK shares meaning that investors have to pay 0.5 per cent on each transaction worth over £1,000.

Die Welt: BaFin wants bigger government role in setting market benchmarks
German banking watchdog BaFin is calling for far-reaching reforms in the setting of market benchmark values such as Libor, arguing for a more active government role.

Reuters: EU executive cautious on shadow banking controls
Testimony to Britain's parliament from Patrick Pearson, a senior official at the Commission, signalled the latest softening in tone among regulators, who are fearful of unintended consequences of new rules for the flow of credit to companies.

EIOPA updates on financial stability in (re)insurance and occupational pensions sector
EIOPA has published its Financial Stability Report December 2013, with updates on financial stability in the (re)insurance and occupational pension sectors in the EEA.

EIOPA issues report on Good Supervisory Practices for distributors of insurance products
The report sets out good supervisory practices in the form of high-level principles that competent authorities should apply to all distributors of insurance products.

EIOPA/Montalvo: Solvency II will help us to overcome possible future challenges
In an interview with NIAC Officials (Italy), Montalvo urged early compliance with the Solvency II requirements, saying that only with a strong risk-based supervision was there a good chance of preserving financial stability and enhancing consumer protection in the EU.

Risk.net: 'Unhedgeable' risk-free curve extrapolation method implied in Omnibus II text
European Member States are gearing up for a heated debate over what methodology should be used for extrapolating the risk-free rate in Solvency II. The controversial Smith-Wilson technique is expected to be confirmed in level 2 implementing measures.

Risk.net: UK regulator warns insurers over poor asset valuation controls
UK insurers must take a closer look at how they value the illiquid assets and complex financial products in their investment portfolios, after a review by the PRA found some insurers' practices "insufficiently robust and complete".

Risk.net: Delta Lloyd to lead European insurers into private debt market
Delta Lloyd, the Dutch insurer, is leading efforts to kick-start the European private debt market with a plan to set up a collective scheme to provide loans to mid-sized corporates in the Nordic region.

Finaccord: Professional indemnity insurance in Europe
New research by Finaccord forecasts that the market for PI insurance across 10 European countries - Austria, Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Switzerland and the UK - will be worth around €7.5 billion by 2017.

Swiss Re publishes global insurance review 2013 and outlook 2014/15
Swiss Re's insurance outlook for 2014/15 sees emerging markets driving premium growth, while alternative capital focuses on well-modelled risks.

Fitch: Stable outlook for MMFs in 2014
Fitch Ratings says its rating outlook for money market funds globally is stable for 2014, underpinned by funds' conservative, active management of credit, market and liquidity risks.

Bloomberg: Regulators seek pro-business recipe for asset-backed bond market
Global regulators are seeking to coax institutional investors, from insurers to pension funds, back into the market for asset-backed bonds to boost non-bank funding for businesses.

ECBC supports inclusion of covered bonds in LCR Level 1
The ECBC highlights a positive rationale to include covered bonds in LCR Level 1. The covered bond asset class has proved to be the most reliable source of wholesale funding through adverse market conditions, and has contributed to the financial stability of the European economy.

Hedgeweek: Options for distributing funds into Europe under AIFMD
For fund managers based outside the EEA, balancing the challenge of navigating each EEA State's regulatory requirements versus structuring to operate on a level playing field across Europe is a looming decision that will depend on fund distribution strategy.

FT: Hedge funds clash with banks over securitisation rules
Investment banks are reluctant to provide the level of information hedge fund managers need to meet compliance requirements introduced under the AIFMD, which was designed to bring greater stability to financial markets and protect end investors.

Hedgeweek: Guernsey reveals opt-in AIFMD equivalent regime
The Guernsey Financial Services Commission (GFSC) has released a new set of rules which form an opt-in regulatory regime of measures equivalent to the AIFMD.

IASB/Hoogervorst: Concrete steps towards accomplishing IASB's mission of bringing transparency to the world in 2013
The IASB chair delivered the opening remarks at the FASB and IASB accounting standards-setting update during the conference on current SEC and PCAOB Developments, held in Washington DC.

IASB: Latest update to study confirms substantial progress towards global adoption of IFRS
With the completion of the third phase of its project to study jurisdictional adoption of IFRS, the IFRS Foundation has gathered solid evidence that IFRS has already become the de facto global language for financial reporting. The third phase involved research on how IFRS is used in 122 countries.

IASB publishes proposals for amendments under its annual improvements project
The IASB published for public comment an ED of five proposed amendments to four IFRSs under its annual improvements project (Annual Improvements Cycle 2012-2014). Comments on the ED are requested by 13 March, 2014.

IIA supports release of International Integrated Reporting Framework
IIA President and CEO Richard Chambers provided support for the official release of the International Integrated Reporting Framework. The release of the Framework marks an important milestone in the market-led evolution of corporate reporting.

IFAC: IAASB enhances standard for assurance engagements
The IAASB released ISAE 3000 (Revised), 'Assurance Engagements Other Than Audits or Reviews of Historical Financial Information', which addresses a broad range of assurance engagements.

FEE commented on the auditor reporting prepared under the PCAOB standards
FEE issued a comment letter to the PCAOB on the PCAOB Rulemaking Docket Matter No 034: 'Proposed Auditing Standards Regarding the Auditor's Report and the Auditor's Responsibilities Regarding Other Information'.

FRC: European audit regulators intensify their cooperation
Independent audit regulators from 27 European countries have launched a common database to collect and exchange their findings from the inspections of audit firms.

IIF Market Monitoring Group warns on impact of regulatory reforms on financial markets
Some regulatory reforms aimed at stability may reduce financial market efficiency; rising corporate debt levels are seen as a risk for pockets of weaker firms and fragile economies.

UK Parliament: FTT proposal 'unjustified and misconceived'
Proposals for a Financial Transaction Tax, to be implemented by a 'breakaway' group of the EU, could significantly damage the UK and the rest of the EU, a Lords committee has found.

Plenary Session: European Central Bank - "Independence without democratic scrutiny is dangerous"
In the annual plenary debate on the ECB's activities with its President Mario Draghi, the ECB was urged to do still more for the real economy. (Includes link to Draghi speech.)

Plenary Session: Basic bank accounts for all
Anyone legally residing in the EU should have the right to open a basic payment account, and this right should not be denied on grounds of nationality or place of residence, said MEPs voting on draft EU legislation to this end.

Plenary Session: New mortgage rules to be properly enforced EU-wide
The EP confirmed its willingness to make the mortgage credit sector subject to heightened consumer protection measures at EU level by approving the new rules on mortgage credit lending. (Includes Barnier/EACB statements.)

ECOFIN Council results: Macro-economic imbalances / AMR / AGS / Economic partnership programmes
The Council took note of the presentation by the Commission of its alert mechanism report, as well as its annual growth survey. It also took note of a report from the ECON Committee on the coordination of economic policies and reforms.

ECOFIN Council results: Taxation
The Council's discussion confirmed broad support for the draft directive aimed at strengthening EU rules on the taxation of savings income. However, Luxembourg and Austria maintained reservations. (Includes link to Commissioner Šemeta statement.)

Graham Bishop: Governance of the SRM - Escalating complexity = inability to act in extreme crisis?
Graham reviews the latest text of the Terms of Reference for the Single Resolution Mechanism.

European Integration Monitor - November 2013
The driving forces of politics, finance, economics and budgets are a powerful cocktail that will intensify in the years ahead.

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This week in "Brussels"

12 December 2013

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