This week in "Brussels"

07 April 2016

BCBS, RWAs, PSD2, SEPA consultations, bonus cap, ECB, BoE, STS securitisation, OTC, MiFID II, ESMA, CCPs, EMIR, prospectus, CMU, Solvency II, EIOPA, AIFMD, UCITS, CRD, IASB and more.

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  Articles from 24 March 2016 - 07 April 2016

  Banking
 
 
Second report on risk-weighted assets in the banking book published by the Basel Committee
The Basel Committee on Banking Supervision has published a second report on RWAs in the banking book, as part of its Regulatory Consistency Assessment Programme (RCAP) to ensure full and effective implementation of the Basel III framework.  View Article
Basel Committee proposes measures to reduce the variation in credit risk-weighted assets
The BCBS released a consultative document entitled "Reducing variation in credit risk-weighted assets - constraints on the use of internal model approaches", which sets out a proposed set of changes to the Basel framework's advanced IRB approach and the foundation internal ratings-based approach.   View Article
Revisions proposed to the Basel III leverage ratio framework and answers to frequently asked questions issued by the Basel Committee
The Basel Committee on Banking Supervision released a consultative document entitled Revisions to the Basel III leverage ratio framework, and responses to a third set of FAQs.  View Article
EBA consults on draft amending standards on CVA proxy spread
The EBA launched a public consultation on draft amending RTS on CVA proxy spread. Through the proposed amendments the EBA expects to ensure a more adequate calculation of own funds requirements for CVA risk.  View Article
EBA reports on high earners and the effects of the bonus cap
The EBA report on remuneration practices published shows that the number of high earners in EU banks increased significantly in 2014, while the average ratio between the variable and fixed remuneration dropped significantly for high earners, as well as for all other identified staff.  View Article
The EPC launches the SEPA Credit Transfer and SEPA Direct Debit rulebook public consultations
These public consultations are designed to ensure that the SEPA schemes reflect the evolution of PSPs' needs and those of their customers, as well as technological changes.  View Article
EPC Blog: GLEIF proposes using the Legal Entity Identifier for passporting under PSD2
Gerard Hartsink, Chairman of the Global Legal Entity Identifier Foundation (GLEIF), explained what the LEI is, what are its benefits, and how it could be used to exchange information between competent authorities for passporting under Article 28 (5) of the revised PSD2.  View Article
ITProPortal: Increasing contactless payment limit to £30 hit the sweet spot
Contactless payments have seen an increase in use of 237 per cent year-on-year, new data from Visa Europe has shown. The company published the data to mark the release of its new campaign, “Cashfree and Proud”, which aims to encourage consumers to adopt contactless payments.  View Article
Reuters: ECB bows to Brussels' softer stance on bank payouts
The European Central Bank will apply new European Commission guidelines on bank capital that raise the bar for stopping lenders from paying bonuses, dividends and discretionary coupons, the ECB's chief supervisor said.  View Article
ECB: Occasional Paper Series: Profit distribution and loss coverage rules for central banks
The purpose of this European Central Bank’s paper is to investigate the policies and practices applied by a significant number of central banks worldwide in relation to profit distribution and coverage of losses.   View Article
Reuters: For banks, ECB policy experiment opens north-south divide
As the European Central Bank moves into an unfamiliar world of negative interest rates and incentives to encourage banks to make loans to businesses and consumers, a north-south divide is opening up between eurozone lenders.  View Article
Reuters: EU watchdog says bank capital cut has not sparked more lending
A cut in capital charges on bank loans to smaller companies has not sparked more lending to boost the economy, the European Union's banking watchdog said.  View Article
BIS: Seven essential guiding principles to boost financial inclusion laid out in new report
Seven guiding principles to help countries increase financial inclusion were set out in a report released by the CPMI and the World Bank Group. The Payment aspects of financial inclusion report seek to tackle barriers to the adoption and usage of transaction accounts.  View Article
Bloomberg: Basel Warns Against `Myopic' Calls to Ease Bank Capital Demands
Global regulators on the Basel Committee on Banking Supervision are pushing back against calls for them to ease capital requirements on lenders to stimulate lending.  View Article
Bank of England: Equity release mortgages
In this discussion paper, the PRA asks for views on ERM valuation, capital treatment, risk management and associated matters. The PRA seeks a range of views on good practice for managing the risks introduced by investing in this asset class.  View Article
Bank of England: Underwriting standards for buy-to-let mortgage contracts
This consultation paper seeks views on a supervisory statement which sets out the PRA’s proposals regarding its expectations of minimum standards that firms should meet when underwriting buy-to-let mortgage contracts.   View Article
Bank of England: Amendments to the PRA’s rules on loan to income ratios in mortgage lending
This policy statement sets out final rules intended to keep second and subsequent charge mortgage contracts excluded from the LTI flow limit, and provides feedback to responses to consultation on amendments to the PRA’s rules on LTI ratios in mortgage lending.  View Article
 
  Securities
 
 
PCS: A new joint-note shows the depth of consensus over the European Commission’s securitisation proposals
A note on STS securitisation signed by 32 associations and market participants sets out aspects of the Commission’s simple, transparent and standardised securitisation proposals that would need modifications if the project is to revive the European securitisation market.  View Article
BIS launched the 2016 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets
Preliminary results for turnover will be published by the BIS in early September 2016, and for amounts outstanding in early November 2016. The final, comprehensive results will be published in December 2016.  View Article
MiFID II – ESMA: no need to temporarily exclude ETDs from open access to trading venues and CCPs
MiFIR requires ESMA to assess whether exchange traded derivatives should be exempted for a period of 30 months from the non-discriminatory access provisions.  View Article
ESMA report on enforcement and regulatory activities of accounting enforcers in 2015
This report provides an overview of the activities of the ESMA and the accounting enforcers in the European Economic Area when examining compliance of financial information provided by issuers listed on regulated markets.  View Article
Bank of England: Implementation of MiFID II - Part 1
In this consultation paper, the PRA sets out its proposals for rules to transpose the MiFID II legislative package, comprising the Directive, MiFID II, and MiFIR.  View Article
ESMA issues amended rules for access, aggregation and comparison of data across trade repositories
ESMA published amended RTS implementing the European Market Infrastructure Regulation that deal with the access, aggregation and comparison of data across trade repositories.  View Article
EMIR: ESMA proposes one-day margin period of risk for CCP client accounts
ESMA's RTS detail the margin period of risk for CCP client accounts, e.g. the amount of initial margins collected by a CCP. The amended RTS would allow EU-based CCPs to margin on a one-day MPOR basis.  View Article
ESMA updates its EMIR Q&A
ESMA published an update of its Questions and Answers document regarding the implementation of the European Market Infrastructure Regulation.  View Article
ESMA updates its Q&A document on prospectus related issues
The updated Q&A includes two new questions and answers on the capitalisation and indebtedness table and the validity of the base prospectus.  View Article
ESMA consults on future MAR list of information regarding commodity and spot markets
The consultation contains information on the background and mandate and provides examples of information relating directly and indirectly to commodity derivatives and information directly relating to a spot market contract. It also contains a proposal of guidelines.  View Article
ISLA securities lending market report
This report is designed to complement concurrent work around the implementation of the European Commission's regulation on SFTR by ESMA which will lead to the detailed collection of large numbers of securities lending transactions in Europe over the next two years.   View Article
FESE Response to the ESMA Discussion Paper on Benchmarks Regulation
FESE supports efficient, fair, orderly and transparent financial markets that meet the needs of well protected and informed investors and provide a source for companies to raise capital and for investors to hedge their portfolios.  View Article
AFME: Investors and brokers unite to make algo-trading more transparent
The Investment Association and AFME have paved the way for safer and better executed algorithmic trading on Europe’s financial markets.  View Article
ISDA: Starter’s gun fired in European margin race
The publication by the ESAs of their final rules on the margining of non-cleared derivatives marks the start of a sprint to comply ahead of the global, pre-agreed start date.   View Article
Financial News: Europe retreats in US derivatives battle
Europe's markets regulator has issued its final report on how much margin is required to be posted at clearing houses for derivatives trades – and has come down in favour of a US approach that was heavily contested for years.  View Article
 
  Insurance
 
 
European Commission: Capital Markets Union - Making it easier for insurers to invest in infrastructure
As a result of one of the first measures in the Capital Markets Union Action Plan, insurers will find it more attractive and cheaper to invest in infrastructure projects as of 2 April 2016.  View Article
EIOPA consults on amendments for the supervisory reporting templates and Guidelines on Reporting and Disclosure under Solvency II
This EIOPA’s amendment introduced tailored treatments to insurers' investments in infrastructure, in European Long-Term Investment Funds (ELTIFs) and in equities traded through multilateral trading platforms.  View Article
EIOPA issues Guidelines on the supervision of branches of third-country insurance undertakings
The EIOPA issued its Guidelines on the supervision of branches of third-country insurance undertakings under Solvency II. The objective of these Guidelines is to ensure a consistent, efficient and effective consumer protection within the European Union.   View Article
Commercial Risk Europe: Risk managers begin to feel burden of the Insurance Act
The application of new insurance contract law is proving to be a complex and burdensome task for risk managers. Failure to realise the enormity of the task or prepare early for the Insurance Act will inevitably see some companies sign contracts this year that fail to comply with the new law.  View Article
Commercial Risk Europe: European insurers underprepared for UK insurance law changes
Risk managers at European companies need to urgently familiarise themselves with forthcoming changes to UK insurance contract law, according to Ferma.  View Article
Commercial Risk Europe: Bermuda officially Solvency II equivalent
Bermuda has now completed the process for full equivalence with Solvency II. The regime becomes retroactively effective from 1 January, 2016 on the island.  View Article
 
  Asset Management
 
 
PensionsEurope response to the Commission consultation on long term and sustainable investments
PensionsEurope wrote that European pension funds recognise that, with their long-term investment horizons, a key consideration must be to look both at the returns on their investments and any associated risks.  View Article
FEE responds to Commission’s consultation on long-term and sustainable investment
FEE has responded to the EC‘s consultation on long-term and sustainable investment, which seeks to establish the role of environmental, social, governance issues in investment decisions and to identify if any obstacles exist to longer-term, sustainable investment.  View Article
FRC response to the EU consultation on long-term and sustainable investment
The FRC has launched a consultation on proposals for the Audit Enforcement Procedure, developed to implement its forthcoming responsibility for audit enforcement.  View Article
ALFI responds to the EC consultation on long-term and sustainable investment
In their capacity of investors, funds would welcome more harmonisation in the disclosure/reporting made by companies with respect to compliance with ESG standards. This would enable asset managers to more easily screen issuers pursuant to non-financial criteria, ALFI states.  View Article
ESMA publishes updated AIFMD Q&A
The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of the AIFMD and its implementing measures.  View Article
ESMA publishes Discussion Paper on UCITS share classes
The DP describes the nature of share classes, the reasons for their existence and the key elements of share classes.  View Article
ESMA publishes updated UCITS Q&A
The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of the UCITS and its implementing measures.  View Article
Financial Times: EU rules set to hurt City and asset managers
The Commission delegated regulation supplementing Regulation No 596/2014 of the EP and of the Council is an important document, since it tears up working practices across the City and other European financial centres. And it’s coming to a statute book very soon.  View Article
MFA and AIMA file comment letter on SEC Derivatives rule
While generally supporting several aspects of the SEC’s proposal, including asset segregation requirements and an activities-based approach to regulation, the Associations have concerns with the adverse effects of the rule’s imposition of a new notional-based leverage limit on registered funds.  View Article
SIFMA Asset Management Group recommends improvements to the SEC proposed rule regulating fund use of derivatives
SIFMA AMG announced it has submitted a comment letter to the Securities and Exchange Commission regarding the SEC’s proposed rule governing registered funds’ use of derivatives.   View Article
Financial Times: Fund houses favour the challenger banks
Challenger banks are becoming increasingly popular with fund houses, who are increasing their exposure to listed upstarts including Metro, Shawbrook, Aldermore and Virgin Money as the traditional banking model comes under pressure.  View Article
 
  Corporate Governance/Accounting
 
 
ESMA: Report on Enforcement and Regulatory Activities of Accounting Enforcers in 2015
The report issued by ESMA provides an overview of the activities of ESMA and the accounting enforcers in the EEA when examining compliance of financial information provided by issuers listed on regulated markets with the applicable financial reporting framework in 2015.   View Article
Corporate Reporting Dialogue publishes statement on materiality
The CRD, an initiative consisting of organisations with responsibility for setting standards or developing guidance for corporate reporting, has published a 'statement of common principles of materiality'.  View Article
EuropeanIssuers: Country by country disclosure of certain tax information
EuropeanIssuers supports transparency, but opposes disclosure to the public of information on profits, taxes and subsidies on a country-by-country basis, which would put EU companies at a competitive disadvantage and have a negative impact on the EU economy, growth and jobs.  View Article
FRC: Consultation on the FRC’s Audit Enforcement Procedure
The FRC has launched a consultation on proposals for the Audit Enforcement Procedure, developed to implement its forthcoming responsibility for audit enforcement.  View Article
FRC: Non-binding guidelines for reporting non-financial information by companies
The FRC believes that non-mandatory guidance can be helpful to companies when implementing legal requirements. The FRC attaches great importance to Clear & Concise reporting and ensuring that the annual report includes information that is relevant to investors.  View Article
IFAC: IAASB finalizes changes for engagements to report on summary financial statements
The IAASB has released ISA 810 (Revised), Engagements to Report on Summary Financial Statements, which deals with the auditor’s responsibilities relating to an engagement to report on summary financial statements derived from financial statements audited in accordance with ISAs by that same auditor.  View Article
FEE highlights the key benefits of adopting accrual accounting
FEE published a briefing paper on accrual accounting. This paper aims at highlighting some of the key benefits of adopting accrual accounting and its contribution to governments’ financial decision-making process.  View Article
IASB: Shining the light on leases
In his article, IASB Chairman Hoogervorst analysed the current accounting requirements for leases and a new standard on lease accounting, IFRS 16.  View Article
ACCA - Grant Thornton: Audit needs to respond more quickly to change, evolve or die
The ACCA - Grant Thornton report, The Future of Audit, showed that in countries where audit is still developing, it was valued far higher than in countries where it is has been long established.   View Article
 
  Financial Services Policy
 
 
The EPC publishes its response to the European Commission’s Green Paper on Retail Financial Services
In the EPC's opinion, the Commission’s main goal is to make it easier for companies wanting to offer retail financial products in other EU Member States. This, in turn, will give consumers access to a far greater range of services.  View Article
 
  Grahams Articles, Comments & Speeches
 
 
Deepening EMU – Round-up of Key Events – March 2016
The UK Government published two reports on the process for withdrawing from the EU and the possible alternatives to EU membership. The CBI and the City of London Corporation made the case for staying In. The EU Council published the Annual Growth Survey and several documents of conclusions on taxes.  View Article
Should supporters of free markets support Britain’s continuing membership of the EU?
Speech by Graham Bishop at the Institute of Economic Affairs (IEA) Dinner.  View Article
 
  Friends Services
 
 
Deepening EMU – Round-up of Key Events – March 2016
The UK Government published two reports on the process for withdrawing from the EU and the possible alternatives to EU membership. The CBI and the City of London Corporation made the case for staying In. The EU Council published the Annual Growth Survey and several documents of conclusions on taxes.  View Article
 

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