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Highlights of my week: At the very last moment, Parliament has agreed the new Commissioners so “UvL2” should be able to take office on 1 December. But that start will have as its backdrop the ECB’s chilling assessment about the potential revival of the euro area debt crisis contained in its new Financial Stability Review. The G20 meeting triggered calls from both FSB and the Basel Committee (BCBS) to implement fully the agreed reforms, especially on links to NBFIs. CEPS suggested that the EU should not compare itself precisely to US financial markets, given its very different characteristics and the ECB seems split about publishing its report showing big EU banks would have lower capital requirement than US banks. Council finally agreed EMIR3 and ESMA promptly began asking about the Active Account Requirement (AAR). AFME published the next edition of its CMU Performance Indicators – with bleak comparisons for the EU. ICMA concluded that one-size-fits-all regulation is not appropriate for the NBFI sector. COP29 ends tomorrow and the institutional investors’ group – IIGCC- summarised the first week for investors. IFRS provided a guide for companies to identify their risks (and opportunities). The ESAs examined the risks of the transition to Fit-for-55 climate standards and concluded that the transition alone would not pose risks to financial stability. Chancellor Reeves delivered her Mansion House speech and the FCA came out with a statement about the UK being a world leader in several fields and the City of London pointed out that the UK raised as much new equity as Paris and Frankfurt together – but still ranked fifth in the world!
Graham Bishop
Articles from 15-21 November
Policy impacting Finance
EURACTIV: Parliament on cusp of centrist coalition agreement, unblocking new Commission--Updated: deal struck, centrist agreement confirmed : The deal clears the way for a final vote on the new Commission by MEPs on 27 November. View Article
POLITICO: Von der Leyen’s final hurdle: How to get her new Commission started by Dec. 1 : All the hypotheticals you’re dying to ask about the new European Commission’s start date. View Article
ECB: Euro area financial stability vulnerabilities remain elevated in a volatile environment : Economic growth remains fragile, while concerns about global trade outlook add to geopolitical and policy uncertainty; High valuations and risk concentration make markets more susceptible to sudden corrections View Article
Lack of growth threatens revival of Eurozone debt crisis, ECB warns : Higher interest rates mean higher debt repayment costs as European Union countries stare down the barrel of a trade war. View Article
FSB Chair calls on G20 Leaders to implement agreed reforms fully : Chair’s letter also details policy efforts aimed at mitigating risks associated with non-bank financial intermediation, digitalisation, and climate change. View Article
Basel Committee reaffirms expectation to implement Basel III; finalises guidelines to strengthen banks' counterparty credit risk management; : Unanimously reaffirms expectation to implement Basel III in full, consistently and as soon as possible; Finalises guidelines for strengthening banks' counterparty credit risk management; Progresses work to strengthen supervisory effectiveness following the 2023 banking turmoil. View Article
EBF: Europe’s economic challenges demand a strategic vision to enable a competitive future : View Article
CEPR: Corporate investment in Europe: A snapshot from the 2024 EIB Investment Survey : by Revoltella, Harasztosi, Delanote, Bending, André: The 2024 EIB survey on investment finance. Despite pressing needs to step up investment in innovation and digitalisation, strengthen value chains and encourage climate action, the investment activity of EU firms has indeed softened. View Article
CEPS' Thomadakis: Why the EU should not compare itself to the US when it comes to financial markets : While drawing inspiration from the US experience is understandable, Europe should not engage in a direct comparison or attempt to replicate the US model. The EU’s distinctive institutional, structural and cultural characteristics necessitate a tailored approach to capital market development. View Article
The ESAs publish Joint Guidelines on the system for the exchange of information relevant to fit and proper assessments : To enhance the information exchange between supervisory authorities within the European Union, also across different parts of the financial sector, the ESAs have developed an ESAs F&P Information System. The Joint Guidelines clarify its use and how data can be exchanged. View Article
Banking Union
ECON: Introductory statement by Claudia Buch, Chair of the Supervisory Board of the ECB, : I would like to provide an update on the European banking sector’s resilience and potential vulnerabilities, our supervisory efforts to ensure that the sector remains resilient, and the legislative foundations required to further strengthen our ability to respond to future challenges. View Article
FT: ECB split over report showing big EU banks’ capital requirements lower than US rivals : Officials say US rules would increase minimum capital levels by double-digit percentage for biggest EU banks View Article
Capital Markets Union
Capital markets union: Council adopts revamped rules for EU clearing services : The new rules improve EU clearing services by streamlining and shortening procedures, improving consistency between rules and strengthening CCP supervision. View Article
Active Account Requirement - ESMA is seeking first input under EMIR 3 : The amending Regulation introduces a new requirement for EU counterparties active in certain derivatives to hold an operational and representative active account at a Central Counterparty (CCP) authorised to offer services and activities in the European Union (EU). View Article
IOSCO unveils New Roadmap to enhance Retail Investor Online Safety : Comprehensive strategy to address online fraud, promote safe investing and enhance global cooperation.First phase delivers Consultation Reports on Finfluencers, Copy-Trading and Digital Engagement Practices (DEPs) View Article
ESMA proposes to move to T+1 by October 2027 : The report highlights that the increased efficiency and resilience of post-trade processes that should be prompted by a move to T+1 would facilitate achieving the objective of further promoting settlement efficiency in the EU, contributing to market integration and to the SIU objectives. View Article
EBF Position Paper on the Next Steps for Europe’s T+1 Transition : View Article
AFME: Capital Markets Union - Key Performance Indicators Report series : AFME’s “Capital Markets Union: Key Performance Indicator” report is an annual publication that has been published since 2018. Since its inception, the report tracks the development of the European capital markets ecosystem. View Article
ICMA responds to the European Commission survey assessing the adequacy of macroprudential policies for non-bank financial intermediation (NBFI) : We believe a uniform, one-size fits all macroprudential framework is unsuitable for the diverse NBFI ecosystem. The focus should be on enhancing regulatory cooperation, data sharing, and targeted interventions to support NBFIs’ liquidity and funding roles while addressing systemic risks ... View Article
ESMA finalises its advice on the CSDR Penalty Mechanism : ESMA has published its Final Report on the Technical Advice for the European Commission on the Penalty Mechanism under the CSDR. The advice aims at incentivisingall actors in the settlement chain to improve settlement efficiency, also in view of the potential move to T+1 in the EU. View Article
IAIS Executive Committee approves Insurance Capital Standard for adoption by IAIS members and concludes Aggregation Method comparability : Arriving at an agreement on a global Insurance Capital Standard as a prescribed capital requirement is a landmark achievement for the IAIS...This decision reflects our unwavering commitment to enhancing global insurance supervision and ensuring the resilience of the insurance sector. View Article
European mutual/cooperative insurers call on EU institutions to ensure that FiDA is genuinely fit for purpose : AMICE calls for an in-depth assessment of the proposed Financial Data Access (FiDA) regulation with all stakeholders, focussing on the true value to the consumer. AMICE believes a more thoughtful process would encourage the necessary dialogue with industry stakeholders to ensure its effectiveness. View Article
Insurance Europe: End the secrecy: Insurers call on the EU to regulate private Third-Party Litigation Funding : The group expresses its strong support for the 2022 European Parliament resolution on responsible private funding of litigation, which similarly called for robust EU regulation to regulate the activities of third-party funders operating in the EU. View Article
Environmental, Social, Governance (ESG)
IIGCC: What happened at COP29 in week one? A summary for investors : The Finance and Energy/Peace, Relief and Recovery Days saw a flurry of activity from investors and other non-state actors in Baku, even as uncertainty remained around the New Collective Quantified Goal on climate finance which must be agreed at COP29. View Article
UN SSE convenes exchanges, standard setters and regulators at Climate Summit COP29 : The United Nations Sustainable Stock Exchanges (SSE) initiative convened market leaders at COP29 to promote sustainable finance as a critical tool in addressing the climate crisis. View Article
IFRS Foundation publishes guide to help companies identify sustainability-related risks and opportunities and material information to providers : IFRS Foundation has published a new comprehensive guide designed to help companies with the fundamental task of identifying and disclosing material information about sustainability-related risks and opportunities that could reasonably be expected to affect their... View Article
Accountancy Europe comment letter: Exposure Draft — Climate-related and Other Uncertainties in the Financial Statements: Accountancy Europe welcomes the work done by the IASB to address the reporting of climate related effects in financial statements. However, we emphasise the following two points merit further consideration by the IASB... View Article
GRI: Sustainability disclosure still driven by voluntary policies : New ‘Carrots & Sticks’ report finds GRI approaching almost 500 policy references worldwide, while sector-specific ESG regulations on the rise View Article
ESAs: Transition risk losses alone unlikely to threaten EU financial stability, “Fit-For-55” climate stress test shows : Under the scenarios examined, transition risks alone are unlikely to threaten financial stability. However, when transition risks are combined with macroeconomic shocks, they can increase losses for financial institutions and may lead to disruptions. View Article
ECB's Elderson: Taking account of nature, naturally : I will outline how the relevance of nature is being confirmed by incoming research and how the European Central Bank (ECB) is acting on this to deliver on its mandate of maintaining price stability and preserving the safety and soundness of banks. View Article
OECD: Renewed momentum for emissions trading systems as tax-based carbon pricing stalls post energy crisis : Reduced energy excise tax rates in many countries in response to the recent energy crisis led to lower implicit carbon prices in 2023, but the development of new emissions trading schemes should lead to a greater share of emissions being priced in the next five years. View Article
PensionsEurope’s Position Paper on the SFDR Level 1 Review: Response to the Joint ESAs’ Opinion : The current SFDR framework has led to significant implementation challenges for pension funds, which we highlighted previously in our response to the targeted consultation on the implementation of the SFDR in December 2023. View Article
Chatham House's Butler: Closing the climate finance gap : How to raise the money the world needs to support climate action View Article
Brexit and the City
FCA statement on the Chancellor’s Mansion House speech : The UK is a magnet for talent and investment, with London ranking as the world’s second financial centre. We are the world leader for international bond issuance, foreign exchange trading and cross-border banking. View Article
TheCityUK's Celic comments on the Chancellor's Mansion House speech : “It is very encouraging to hear the Chancellor underline the important role financial and related professional services have to play in delivering growth. .. View Article
City of London: London remains Europe’s largest equity market, with over £17bn raised last year : State of the Sector: Annual Review of UK Financial Services 2024 - showed companies on the London Stock Exchange raised over £17bn last year, far ahead of Paris at £10bn and Frankfurt at £8bn. On a global scale however, the UK ranked fifth for raising equity capital last year... View Article
The Bank of England launches consultation on Fundamental Rules for Financial Market Infrastructures and publishes its approach to FMI supervision : The Bank is consulting on proposals to introduce a set of Fundamental Rules for UK Financial Market Infrastructures (FMIs), which are essential to the smooth and safe operation of the UK financial system and broader economy. View Article
Commercial Risk: UK finalises Solvency II rules and consults on SPV reform : The UK has finalised new rules to replace Solvency II following a four-year long review of the European regime inherited when the country was part of the EU. View Article
Brexit
UKandEU's Reland: Labour’s regulatory EU-turn : With reports that Trump may seek to pull the UK away from the EU’s regulatory orbit, Joël Reland sets out the obstacles to this agenda. Drawing on the forthcoming edition of the UKICE Divergence Tracker, he highlights that under the new Labour government a shift from divergence to alignment with the EU is in fact taking place. View Article
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