This week in "Brussels"
09 March 2017
Stress testing, asset encumbrance across the EU, LCR disclosure, specification of an economic downturn, internal model outcomes, IFRS 9, recovery plans, supervisory reporting requirements, Basel III, Capital Markets Union, DVP Securities Settlement, Solvency II, China, G20 and more.
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Articles from 02 March 2017 - 09 March 2017 |
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Banking |
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EBA's Andrea Enria remarks at Joint Colloquium with IMF on stress testing
The aim of the workshop was to stimulate the discussion on stress testing ranging from the latest methodologies and frameworks for the implementation of liquidity stress tests to macroeconomic variables, capital planning and governance. View Article |
EBA provides transparent and harmonised information on asset encumbrance across the EU
The European Banking Authority published its final draft Regulatory Technical Standards on the disclosure of encumbered and unencumbered assets for the provision of transparent and harmonised information on this topic, as laid down in the Capital Requirements Regulation. View Article |
EBA publishes final guidelines on LCR disclosure
The EBA published its final Guidelines on liquidity coverage ratio (LCR) disclosure. These Guidelines provide harmonised disclosure templates and tables for LCR disclosure and aim at improving transparency and comparability of LCR and other liquidity risk management related information. View Article |
EBA consults on specification of an economic downturn
The European Banking Authority launched a public consultation on its draft Regulatory Technical Standards specifying the nature, severity and duration of an economic downturn according to which institutions shall estimate the downturn loss given default (LGD) and conversion factor (CF). View Article |
EBA publishes its regular assessment of EU banks internal model outcomes
The EBA published two reports on the consistency of RWAs and across all EU institutions authorised to use internal approaches for the calculation of capital requirements. The reports cover residential mortgage, SME and other corporate portfolios, as well as market risk. View Article |
EBA opinion on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9
The EBA published its opinion on the replacement of IAS 39 with IFRS 9 Financial Instruments which was adopted in the EU in November 2016. This replacement caused the change, which marks a move from an incurred loss model under IAS 39 to an expected credit losses (ECL) model under IFRS 9. View Article |
EBA sees good range of options in recovery plans but areas for improvement still remain
The European Banking Authority published its fourth thematic comparative Report on recovery planning. The focus of this comparative analysis is recovery options, which are crucial for assessing institutions' actual capacity to regain viability following a period of severe financial distress. View Article |
EBA consults on the coverage of entities in banking group recovery plans
The EBA launched a consultation on its draft Recommendation on the coverage of entities in banking group recovery plans, which is aimed at defining common criteria to identify entities (subsidiaries and branches) that need to be covered in group recovery plans, and the extent of such coverage. View Article |
EBA calls for improvements to decision-making framework for supervisory reporting requirements
The EBA issued an Opinion to the European Parliament, Council and Commission proposing that the decision-making framework for adopting supervisory reporting requirements be made more efficient and fit-for-purpose by replacing the Commission's ITS with decisions adopted directly by the EBA. View Article |
ISLA: FSB published reports on financial stability and regulatory approaches to asset re-hype and non-cash collateral re-use
The FSB has published its reports on financial stability issues and regulatory approaches to asset re-hypothecation and non-cash collateral re-use alongside its report on the final metrics and measures report data collection on collateral re-use. View Article |
Bloomberg: ECB official warns banks can’t keep EU access with shells after Brexit
UK banks trying to keep access to European Union markets after Brexit will have to set up full-scale operations in the bloc, European Central Bank Executive Board member Sabine Lautenschlaeger said. View Article |
ECB's Lautenschläger: The European banking sector - growing together and growing apart
Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the Single Supervisory Mechanism, spoke about banking supervision at European level and Brexit. View Article |
The Chairman of the Basel Committee reaffirms commitment to finalise post-crisis Basel III reforms
Following this week's meeting of the Basel Committee, Stefan Ingves, Chairman of the Basel Committee and Governor of Sveriges Riksbank, stated the BCBS' commitment to finish the revamp of the Basel III package. View Article |
March 2017 BIS Quarterly Review: Beyond swings in risk appetite
Investors have started to discriminate more across asset classes, regions and sectors as they try to make sense of the implications of a changing political environment, in contrast to the cross-asset herd behaviour that characterised markets in recent years. View Article |
OMFIF: Hazards of relaxing financial reform
At a sensitive time for the world economy, there are calls in the US and Europe to undo parts of the reform programme. But legislators and regulators should beware of the hazards of relaxing, suspending or back-tracking on past advances. View Article |
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Securities |
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Bruegel: Institutional investors and home bias in Europe’s Capital Markets Union
Zsolt Darvas and Dirk Schoenmaker find strong support for the hypothesis that the larger the assets managed by institutional investors, the smaller the home bias and thereby the greater the scope for risk sharing. View Article |
EBA: Vienna Initiative: New Working Group on Capital Markets Union for CESEE region
The Vienna Initiative has agreed to establish a Working Group on Capital Markets Union. This follows the European Union's push to strengthen Capital Markets which will have a major impact on financing of investment and sustaining growth in the Central, Eastern and South-Eastern Europe region (CESEE) View Article |
Granularity: DVP Securities Settlement on DLT White Paper
Granularity has collaborated with RISE Financial Technologies to compose a white paper on Delivery Vs Payment on Distributed Ledger Technology: Linking Cash and Securities for Delivery vs Payment Settlement in Distributed Ledger Arrangements. View Article |
AFME: Securitisation data report Q4 2016
Among other findings, this report shows increase in securities product issuance compared to previous periods. View Article |
IOSCO finds little evidence of declining secondary corporate bond market liquidity
A report published by the Board of the International Organization of Securities Commissions (IOSCO) has found no substantial evidence showing that liquidity in the secondary corporate bond markets between 2004 and 2015 has deteriorated markedly from historic norms for non-crisis periods. View Article |
AFME publishes new report on the challenges of raising pre-IPO finance
AFME has published a new report examining the specific challenges associated with raising risk capital for small and mid-size high-growth companies in the EU. The report aims to inform policymakers about the challenges facing Europe’s high growth companies in obtaining crucial early stage financing. View Article |
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Insurance |
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Insurance Europe: Response provided to EIOPA Solvency II review discussion paper
Insurance Europe has responded to a European Insurance and Occupational Pensions Authority (EIOPA) discussion paper on the upcoming review of Solvency II, where it raised a range of concerns on current Solvency II provisions and proposed ways to address them. View Article |
Insurance Europe: No need for major overhaul of EU recovery and resolution rules for insurers
A new EU framework on recovery and resolution for insurers is not required, because Solvency II already provides strong safeguards. However, a degree of convergence on certain issues may be beneficial, according to Insurance Europe, the European insurance and reinsurance federation. View Article |
Insurance and reinsurance undertakings requested to provide information for the EIOPA’s 2017 Long-Term Guarantees Report
EIOPA requests insurance and reinsurance undertakings from the European Economic Area and subject to Solvency II to provide specific information in the context of EIOPA's 2nd Long-Term Guarantees (LTG) Report due in 2017. View Article |
EIOPA strengthens supervision of cross-border insurance groups
The EIOPA published its 2016 Year-end report on Functioning of Colleges of Supervisors and priorities for 2017. The report shows that the European insurance market is dominated by more than 90 cross-border insurance groups with a head office in the European Economic Area (EEA). View Article |
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Asset Management |
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Investment & Pensions Europe: ECB preps regulation, consultation on pension fund data
The European Central Bank wants pension funds to report harmonised data to it in a bid to gain better insight into the sector’s potential macro-financial impact. View Article |
AIMA: FCA publishes concerns regarding firms’ approach to best execution
The FCA published their findings from supervisory work looking at how investment managers deliver best execution for clients. This follows a thematic review on best execution and payment for order flow. The FCA’s view is that most firms have failed to take on board the findings from the thematic review. View Article |
AIMA: FCA warning to firms on the use of dealing commission
The FCA published a clear warning to asset managers on research spending issues. The overwhelming area of concern relates to research valuation and budgeting (rather than the payment process). View Article |
Bold thinking on consolidation needed, says PLSA DB taskforce
The Pensions and Lifetime Savings Association released the second report by its DB Taskforce, ‘The Case for Consolidation’. The report outlines how consolidation into new superfunds could tackle the issues which place an unacceptable, and mostly unrecognised, risk on scheme members. View Article |
Investment & Pensions Europe: Dutch regulator to survey costs of asset management
Dutch supervisor DNB is to scrutinise the costs of asset management and mortgage investments through on-site visits at pension funds and their asset managers. View Article |
Investment & Pensions Europe: German government says no to guarantees, insurance exemption
The government has rejected proposals to introduce guarantees to new pension vehicles to be created under the “Betriebsrentenstärkungsgesetz” (BRSG). View Article |
BIS' Hyun Song Shin: Long-term interest rates overrated as signposts for future growth, inflation
Very low yields on long-term government bonds may not necessarily signal prolonged future economic stagnation and deflation but instead reflect efforts by institutional investors to limit risk, Bank for International Settlements Economic Adviser and Head of Research Hyun Song Shin said. View Article |
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Corporate Governance/Accounting |
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IASB: Accounting for non-GAAP earnings measures
In this article, IASB Member Gary Kabureck discusses non-GAAP accounting and the Board’s Primary Financial Statements project. View Article |
FRC: Scope to improve quality control practices at audit firms
The FRC is calling on audit firms to improve quality control procedures by building on examples of good practice identified in its latest thematic review. View Article |
ACCA: Preventive restructuring and second chance for entrepreneurs: what’s in it for SMEs?
The main conclusions of a recent joint ACCA, BusinessEurope and UEAPME conference held under the auspices of the Maltese Presidency were that it is necessary to create a positive corporate culture in order to reduce the fear of failure and give companies a second chance. View Article |
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International/G20 |
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Financial Times: China overtakes eurozone as world’s biggest bank system
China’s banking system has surpassed that of the eurozone to become the world’s largest by assets, a sign both of the country’s increased influence in world finance and its reliance on debt to drive growth since the global financial crisis. View Article |
Bloomberg: G-20 Drops Wording on Resisting Protectionism in Draft Document
Finance chiefs of the Group of 20 economies plan to drop an explicit pledge to resist protectionism, while still promising open trade, a draft of their statement showed. View Article |
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Graham's tweets |
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© Graham Bishop
Banking