3 March - 7 March 2014
EP Comments on Position on SRM and Single Resolution Fund
The Chair of the European Parliament’s Economic and Monetary Affairs Committee (ECON) issued a statement on the Parliament’s position in respect of the single resolution mechanism (SRM) and single resolution fund. While compromises have been found on certain technical issues with the Presidency, on the essential issues of the decision-making processes and the single resolution fund, the parties remain “far apart”.
ECON has drafted texts on the crucial issues which set out its position while taking on board some of the Council’s concerns. These texts will form the basis of the April plenary vote in the event that there is no agreement with Member States.
EC Adopts RTS for Identification of Material Risk Takers Subject to Remuneration Rules
The European Commission adopted a delegated Regulation supplementing the amended Capital Requirements Directive (CRD 4) containing the final regulatory technical standards (RTS) on criteria to identify staff whose professional activities have a material impact on the risk profile of banks and investment firms (“material risk takers”). Under CRD 4, material risk takers are subject to restrictions on the proportion of their total remuneration which may take the form of a variable component.
EC Delegated Regulation (Text with EEA Relevance)
ESRB Publishes Handbook: Macro-Prudential Policy in the Banking Sector
The European Systemic Risk Board (ESRB) published a handbook on the operation of the new macro-prudential policy framework in the EU. The handbook provides guidance to macro-prudential authorities in using instruments set out in the Capital Requirements Directive and Capital Requirements Regulation.
EBA Issues Report on Impact of Differences in Leverage Ratio Definitions
The European Banking Authority (EBA) published an own initiative report in which it recommends that the current Capital Requirements Regulation (CRR) definition of the leverage ratio exposure measure be aligned to the updated Basel III standard rather than the December 2010 Basel III standard.
The report is intended to inform the Commission in view of its delegated act on the definitions for the leverage ratio by which the capital measure and total exposure measure can be amended before the start of public disclosure in 2015.
ASX Releases Consultation Paper on Shortening the Settlement Cycle for Cash Equities in Australia
On 25 February 2014, the Australian Securities Exchange (ASX) issued a Consultation Paper, Shortening the Settlement Cycle for Cash Equities in Australia. ASX is consulting on the introduction of T+2 settlement for cash market trades in Australia. The consultation seeks to obtain feedback on the size of the benefits, industry-readiness, an achievable timeframe and the issues that need to be addressed to facilitate the transition to T+2. Today, T+2 operates in a number of markets, including Germany and Hong Kong, and will shortly be introduced throughout Europe.
ASX is seeking feedback on the feasibility of introducing T+2 in the first quarter of the 2016 calendar year, or whether an earlier implementation date is supported. Feedback is due by 7 April 2014.
ASX Consultation Paper
HK SFC Issues Consultation Paper Concerning the Regulation of Alternative Liquidity Pools
On 27 February, the Hong Kong Securities and Futures Commission (SFC) issued a Consultation Paper Concerning the Regulation of Alternative Liquidity Pools. The evolution and continuous growth of electronic trading platforms for securities and other financial products has recently given rise to concern and debate among regulators, market participants and the investor community. One innovation in this area has been the development of the alternative liquidity pool (ALP). ALPs are also known by other names such as electronic “alternative trading systems” and, in Hong Kong, the operation of an ALP requires a broker-dealer operator to be licensed under the Securities and Futures Ordinance (SFO) to carry on the business of providing “automated trading services” (ATS). ALPs are also commonly known as “dark pools.” The deadline for submitting your input is on or before 25 Apr 2014.
FCA Publishes Paper on the Role of the FCA in Regulating Commodity Markets
In this paper, the Financial Conduct Authority (FCA) describes the regulatory framework and its role as it relates to the commodity markets. The FSA published a similar overview in 2007 as part of a wider paper, Growth in Commodity Investment: Risks and Challenges for Market Participants. Here we consider how the regulatory framework has evolved since then, and we also outline some of the changes that are expected from developments, primarily at the European level. We want this overview to be accessible and it does not constitute formal guidance.
BoE’s Carney Comments on the PRA's Work on the Remuneration Code; and UK Banks' Exposures to China
In a letter dated 30 January 2014 to the Chairman of the Treasury Committee, UK House of Commons, Bank of England's Mark J. Carney in response to the Committee's request the Committee with further information on two topics: the PRA's work on the Remuneration Code; and UK banks' exposures to China.
Carney provided am estimated timetable for the PRA's response to the Parliamentary Commission on Banking Standards' (PCBS') recommendations on claw back and other aspects of the Remuneration Code. In addition, he shared his views on the scale of UK banks' exposures to China, a question prompted by a recent paper by Dong He and Robert McCauley at the Bank of International Settlements (BIS).Dong and McCauley noted the evidence session held on 15 January that UK banks had, in aggregate, the largest exposures to China of any country's banking system.
Treasury’s Miller Speaks on Financial Regulatory Reform
U.S. Treasury Acting Deputy Secretary and Under Secretary for Domestic Finance Mary Miller delivered remarks on financial regulatory reform and Treasury’s priorities during the Annual Washington Conference of the Institute of International Bankers in Washington, D.C.
Stefan Ingves Speaks on Basel III and Combating Financial Stress
Stefan Ingves Chairman, Basel Committee on Banking Supervision and Governor, Sveriges Riksbank delivered a keynote address to the 15th Annual Convention of the Global Association of Risk Professionals New York. In his speech, Restoring Confidence in Banks, Ingves discussed the existing regulatory framework in certain jurisdictions, the prudential frame work, and existing accounting standards.
Ingves Speech, as prepared for delivery.
GFMA & GFMA-Affiliate News & Events
GFMA’s Lewis to FT: Start regulatory coordination by endorsing principle of comity
GFMA Chief Executive Simon Lewis wrote to the editors of the Financial Times calling for G20 finance ministers and financial heads of all nations to start regulatory coordination by formally endorsing the robust application of the international principle of comity. This principle, whereby the home regulator defers to the host regulator where the latter’s rules are consistent with G20 recommendations and best practices, could prove to be the “imperfect answer That is better than no answer at all.”
SIFMA Op-Ed: “Holes in the Volcker Rule”
As firms comb through almost a thousand pages to interpret the complex Volcker Rule and comply by its July 2015 deadline, a host of questions and concerns continue to arise. In an op-ed in The Hill, SIFMA President & CEO Kenneth E. Bentsen, Jr. stated that one of the industry’s greatest challenges with both interpretation and implementation is the lack of statutory direction for ensuring coordination amongst the five regulatory agencies responsible. This glaring omission is a significant worry for members of the financial services industry, who are diligently working toward compliance but face the possibility of inconsistencies in interpretation and enforcement. Thankfully, in a move to address these concerns, regulators announced last week the formation of an interagency working group. While its establishment is a step in the right direction, much remains to be done. “Coordination is key to implementing the Volcker Rule, or any rule, within the U.S. and beyond our borders,” stated Bentsen. “Only through coordination can we create the clarity and consistency in our financial markets that will pave the way for greater efficiency, lower costs and economic growth.”
ASIFMA India Repo Markets Workshop: 25 March 2014, Mumbai
Repo is an important funding activity in India that is traded in various forms, including the CBLO, and is fundamental to the creation of a liquid and deep secondary bond market. However, it is the classic repo that truly fundamental to a liquid and deep secondary bond market. The India continues to show interest in moving toward a classic repo model. At our workshop, global players in the repo market and leading Indian market practitioners will participate as speakers and panelists to share their thoughts and experience on developing the repo markets in India.