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Welcome to our Friends weekly e-mail.
Highlights of my week: Finally, the new economic governance rules were agreed by the co-legislators and POLITICO pointed out that defence spending etc routed through the EU budget were exempt from the limits. No less that twenty-five Europe-wide associations called for deepening the single market as the priority for the next two Commissions. ECON voted through the new rules on payments services. The SRB’s Laboureix set out his vison for 2028 but the commentariat continues to make the case for improvements to the system. CPMI and IOSCO opened a discussion on streamlining CCP variation margin (VM) management especially as it impacts clients – underlining that, more than a decade after G20-mandated central clearing, there are still unresolved difficulties. GDPR is up for review and new technologies may pose new difficulties. The EU is stepping up pressure on G20 to implement the OECD-agreed global corporate tax rules. The revisions to the UK’s listing regime were spelt out by the FCA but blasted by the International Corporate Governance Network (ICGN) and global financial institutions. British voters now seem settled in their view that Brexit was wrong – by 60:40% - as they contemplate the view of increasing numbers of economists (with Goldman Sachs the latest addition) that the UK economy is about 5% smaller than it would have been without Brexit. That may explain the stubborn decline in support for the Tory party – cheerleaders for Brexit – that now threaten its annihilation at the imminent election. Graham Bishop Articles from 9-15 February 2024
Policy impacting Finance Parliament: Deal on EU economic governance reform : EU co-legislators on Saturday provisionally agreed a revamp of EU economic governance making it clearer, investment friendly, more tailored to each country’s situation, and more flexible. View Article
Economic governance review: Council and Parliament strike deal on reform of fiscal rules : The Commission will submit a ‘reference trajectory’ (previously called ‘technical trajectory‘) to member states where government debt exceeds the 60% of gross domestic product (GDP) or where the government deficit exceeds the 3% of GDP. View Article
POLITICO: There’s a loophole that could give the EU a lot more money : Defense projects and the “green transition” may benefit from radical change to the bloc’s spending rules. View Article
ECB's Cipollone: The euro at 25: what next for Economic and Monetary Union? : Jacques Delors believed that the European economic model should rest on three principles: “La concurrence qui stimule, la coopération qui renforce et la solidarité qui unit” (competition that stimulates, cooperation that strengthens, and solidarity that unites) View Article
ECON study: Sailing in all weather conditions the next 25 years: challenges for the euro : Concerns arise regarding the ECB's exposure to risk and the necessity of deep reforms for managing growing ecological, financial, and geo-economic risks. Despite initial achievements like the banking union, challenges persist, such as financial instability and economic fragmentation. View Article
ERT/ACCA/EuropeanIssuers+22: European business calls for deepening the EU Single Market and renewing the dynamic of European integration : 1. Redressing the cost-of-living crisis felt by EU citizens; 2. Improving the EU business environment by addressing obstacles that companies face; 3. Deepening the EU Single Market should be the main political priority until 2030; + six recommendations. View Article
EU: the financial communities of Italy and Germany share strategies towards the new legislature : The future of the next European legislature and the need to ensure the European strategic autonomy; the economic, financial and political outlook in Italy and Germany; how to strengthen the Capital Markets Union (CMU); current and future developments in sustainable finance in both countries and in Europe; View Article
ECIPE's Pandya: EU Autonomy, the Brussels Effect, and the Rise of Global Economic Protectionism : A holistic approach, both internally and globally, is crucial to prevent regulatory and subsidy spirals on a global scale. This recalibration is essential to keep global markets open and enhance the EU’s own economic and technological competitiveness. View Article
Banking Union ECON: Vote on payment services: Better access to cash and protection against fraud and hidden charges : MEPs’ changes to the Payment services regulation were adopted with 39 votes to 1 and 3 abstentions. The regulation should provide more harmonisation in the EU for payment and electronic money services. It applies to banks, post office giro institutions and payment institutions. View Article
SSM's Buch: European banking supervision a decade on: safeguarding banks’ resilience amid global challenges : ... in the longer term, banks will not be immune to risks and unexpected events. The currently good level of profitability provides an opportunity to build buffers to cushion shocks. At the same time, a stable banking system is crucial for managing risks and promoting welfare. View Article
Single Resolution Board publishes MREL dashboard Q3.2023 : Banks continued to make progress in building up their levels of MREL. In aggregate terms, the total MREL shortfall (including the CBR) against final targets of resolution entities decreased to EUR 8.9 bn (corresponding to 0.1% TREA). View Article
Dominique Laboureix's welcome speech at the SRB Annual Conference 2024 : ..today is a very important day in the life of the SRB and the SRM as a whole, because we are launching a new vision, SRM VISION 2028, which is precisely connected to the different terms I have just commented on. View Article
CEPR's Perotti/Martino: Give recovery a chance: Containing runs on solvent banks : This column reviews specific lessons from the 2023 bank runs and make a case for stronger Pillar II power for contingent measures on capital and liquidity, with the aim of restoring credibility to a timely intervention process and favouring the recovery of viable banks. View Article
CEPS' Arnal/Lannoo /Lastra : Is CMDI what the Banking Union needs? : While this proposal has its merits, it falls short of the real pending issues for completing the Banking Union, namely the third pillar (EDIS or the European Deposit Insurance Scheme), a mechanism for liquidity provision in resolution, and the ‘missing pillar’ regarding the provision of ELA View Article
ACCA: Risk cultures can make or break banks : Special report on banking by ACCA shows how the financial services industry needs to learn where risk governance went wrong in the run-up to the 2023 bank collapses. View Article
Capital Markets Union CPMI-IOSCO publish discussion paper and call for comments on streamlining variation margin in centrally cleared markets : The effective practices cover intraday VM call scheduling and frequency, treatment of excess collateral, the pass-through of VM by CCPs and transparency between CCPs, clearing members and their clients. View Article
ESMA clarifies certain best execution reporting requirements under MiFID II : The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today issued a Public Statement providing market participants with clarity concerning their reporting requirements under RTS28, pending full application of the new rules under MiFID II. View Article
Environmental, Social, Governance (ESG) EBF response to the EFRAG ESRS Implementation Guidance consultation : EBF welcomes EFRAG’s development of the ESRS implementation guidance considering ..significant complexity ..importance of for preparation of comparable and qualitative disclosures...timely elaboration of specific guidance for financial institutions would be equally important and necessary View Article
ICMA publishes a new paper on transition finance in the debt capital market : The paper reviews the latest guidance and recommendations on transition finance from both the market and the official sector. It also underlines the progress of international taxonomies to integrate transition, as well as the latest developments on sectoral pathways and industry roadmaps. View Article
LSE's Scandizzo: In defence of the “green supporting factor” : EU policymakers have previously proposed a “green supporting factor” to encourage banks to lend to environmentally friendly projects. Sergio Scandizzo writes that while this proposal has proven to be controversial, the key arguments against the policy do not stand up to scrutiny. View Article
ISDA: Climate Scenario Analysis in the Trading Book – Phase II : Climate scenario analysis has become a central focus for banks and financial institutions, with regulatory expectations becoming more stringent and firms required to understand and assess both short- and long-term financial risks associated with climate change. View Article
Protecting Customers EBF response to the European Commission Call for Evidence on the Report on the General Data Protection Regulation (Art. 97) : The banking sector has a long tradition of compliance and affinity with customer data protection since even before the entry into force of the Directive 95/46/EC. This enduring commitment underscores the industry’s dedication to maintaining the highest standards of data security and privacy for its clients. View Article
ESBG’s response to the Commission’s consultation on the GDPR : ESBG requests prioritized focus on GDPR compatibility with new technologies and refining the material scope. ESBG advocates for a pragmatic approach, aligning with the UK’s data protection reform. View Article
Fin Tech Regulation BIS: Tap, click and pay: how digital payments seize the day : By Di Iorio, Kosse and Szemere: The use of digital payment methods continues to increase, particularly for small amounts. In tandem, cash withdrawals and the number of small-denomination banknotes in circulation have declined. View Article
Economic Policies Impacting EU Finance POLITICO: Hurry up and tax Google, Apple, EU urges the world : Bloc to tell the G20 that the time has come to push through tax overhaul View Article
Insurance Europe: Insurers raise serious concerns about EU tax plans : While the insurance industry supports the goal of harmonising corporate tax rules across the EU, it raises serious reservations about the current draft EU Directive. The industry is concerned about the interplay between the proposed European framework and existing legislation... View Article
Brexit and the City FCA's Cole: The UK listing regime - developments since the UK Listings Review and next steps for reform : Our proposals are the most wide-ranging reforms to the UK’s capital markets in over three decades, driving forward changes to attract the brightest and best companies and ensure investors have the information they need. View Article
ICGN Statement on High Standards of Corporate Governance and Investor Protections as Pre-requisites for UK Capital Market Competitiveness an : ICGN is concerned by recent UK announcements..detrimental to corporate governance standards and shareholder protections...undermining UK’s economic growth and attractiveness as a global financial centre,...potentially significant implications for pensioners, insurance and retail investors’ savings. View Article
FT: Global investors warn UK on overhaul of listing rules : Institutions say the proposals will erode shareholder rights and harm the country’s reputation for high corporate governance View Article
EFAMA: UK investors will continue to benefit from easy access to EU investment funds under new regulatory regime : HM Treasury stated that the EU UCITS fund regime is considered equivalent to the UK regime...regulatory alignment between markets is very welcome ...benefit investors and asset managers alike...few more changes to envisaged regime would ensure that UK investors can continue to invest in EU funds.... View Article
Reuters: In latest snub to London, travel firm TUI flies to Frankfurt : TUI , opens new tab has become the latest company to ditch the London stock market, which is struggling to retain big companies and attract new share offerings, after shareholders of Europe's biggest travel agent voted to move its listing to Frankfurt. View Article
AFME: UK proposals for stablecoins should incentivise DLT-based capital markets : AFME is greatly concerned that the proposed custody rules would undermine the status quo for the provision of custody services, especially in wholesale markets. We therefore urge the UK Treasury and FCA to reconsider their proposals.. View Article
Brexit Bloomberg: Goldman Says UK Economy Suffering ‘Long-Term’ Cost of Brexit : Real GDP has underperformed similar nations by 5% since 2016; Pandemic, energy crisis also played a part, bank says in note View Article
What UK thinks: Brexit: 60% wrong - 40% right : British electors views now seem to have settled. View Article
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