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Welcome to our Friends weekly e-mail.
Highlights of my week: As expected, the first problem of the Hungarian Presidency is: what to do about it! The Council’s legal services said that President Orban’s unauthorised visit to see his friend Putin breached the EU’s Treaties and the Parliament is thought to be considering whether it should – or can – boycott or shorten the Hungarian Presidency. However, it will take another two weeks to constitute the new Parliament completely as the structure of the political “families” continues to evolve. Moreover, the full implications of the shock result of the French elections are yet to emerge. The forthcoming European Political Community is yet another factor to add to the mix as the new UK Prime Minister may take the opportunity to start building bridges to the EU. As a result, financial market participants will have to continue waiting for the next round of regulatory activism but the current “mandate” still has many loose ends. ESMA seemed intent on clearing its desks ahead of the holidays by launching no less than five consultations to keep the lobbyists occupied over the summer. BETTER FINANCE continues to bemoan the weak influence of consumers rather than the financial industry. DG FISMA produced a useful overview of what the EU has done about climate change and finance during this “mandate”. The European Payments Initiative of private banks began the rollout of its digital payment wallet. The sweeping victory of the Labour Party in the UK election triggered a first wave of advice from think tanks on concrete steps to improve relations as the Federal Trust pointed out that the Brexit issue had been “too hot to handle in the General Election”. Graham Bishop Articles from 5-11 July 2024
Policy impacting Finance FT: Viktor Orbán’s trip to Moscow in breach of EU treaties, legal service says : Hungarian PM’s freelance diplomacy sparked condemnation from European and Nato allies View Article
EURACTIV: EU Parliament’s Conference of Presidents to discuss Orbán’s case : Various measures could be considered, including the possibility of boycotting or prematurely ending the Hungarian presidency, appealing to previous Belgian or Spanish presidencies, or even speeding up the Polish presidency, Euractiv has learnt. View ArticleEURACTIV's Powers: How the formation of new European Parliament Party Groups is going : Negotiations are still ongoing to finalise the new groups that will be running the European Parliament for the next five years. At risk for the political parties themselves is prestige, funding, and access to power. Below you can see the state of play, as Euractiv understands it. View Article
Chatham House's Maillard: Four far-reaching consequences of France’s shock election result : The far right RN may have failed to take power, but France’s political institutions, its place in the world, its financial position and its fragmented society will all be affected by a hung parliament. View Article
Project Syndicate's Drochon: Macron’s Huge Bet Paid Off : French President Emmanuel Macron’s decision to dissolve the National Assembly and call a snap election now looks like a brilliant move. Although his allies finished second, the far right has been left far from power – at least for now. View Article
Bruegel: Overcome divisions and confront threats: Memo to the Presidents of the European Commission, Council and Parliament : by Demertzis, Sapir, Zettelmeyer: Memo to the Presidents of the European Commission, Council and Parliament View Article
CEPS's Crosson, Blockman: Blood, toil, tears and sweat: the European Political Community’s summit in the UK? : Facing an existential battle on the continent, Keir Starmer, the UK’s freshly elected prime minister, will have a baptism of fire at the first major international gathering he’ll host. Due to the EPC’s origins and aims, the format is a high-stakes gamble in diplomacy. View Article
Banking Union The EBA starts dialogue with the banking industry on 2025 EU-Wide stress test methodology : This step marks the beginning of the dialogue with the banking industry and builds upon the methodology used in the 2023 exercise, with improvements reflecting new insights and regulatory changes. View Article
SRB's Laboureix at the European University Institute (EUI) - "Supervision and resolution: cooperation or conflict?" : ..an interesting discussion on SSM integration, I will touch upon the Banking Union’s recent achievements, SRM and SSM cooperation today and how that might look in the future. Finally, I will briefly touch upon what is missing for a complete Banking Union. View Article
Resolvability on track, as SRB shifts to testing crisis readiness : By the end of 2023, except for a few banks, all banks under the SRB’s remit have met their MREL requirements. For the few banks with a longer transition period, the external MREL shortfall amounts to €6bn, compared to an overall amount of €2,555bn of MREL instruments for the Banking Union. View Article
FT interview with SSM's McCaul by Arnold and Mourselas : We don't have a fully clear line of sight from the banking supervisory standpoint about the level of exposures that may be correlated to risk on NBFI balance sheets from banking industry lending arrangements, including repurchase agreements, lines of credit or derivatives to and from NBFIs View Article
Capital Markets Union MiFIR review: ESMA launches new consultations : ESMA, the EU’s financial markets regulator and supervisor, is publishing today a new package of public consultations with the objective of increasing transparency and system resilience in financial markets, reducing reporting burden and promoting convergence in the supervisory approach. View Article
CSDR Refit: ESMA consults on rules to recalibrate and further clarify the framework : The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is launching today new consultations on different aspects of the Central Securities Depositories Regulation (CSDR) Refit. View Article
ESMA’s stress test of Central Counterparties finds clearing system resilient : The results confirm the overall resilience of European Union (EU) CCPs, as well as third-country Tier 2 CCPs, to core credit and liquidity financial risks under the tested scenarios. View Article
ESMA consults on Liquidity Management Tools for funds : “The revised AIFMD and UCITS Directive have introduced long-awaited provisions on the availability and use of Liquidity Management Tools. ESMA is consulting on how to apply these provisions. These new rules being proposed are in line with the latest global standards provided by the FSB and IOSCO.. View Article
ESMA consults on reporting requirements and governance expectations for some supervised entities : The consultations are aimed at the following entities: Benchmark Administrators, Credit Rating Agencies, and three types of Market Transparency Infrastructures (Securitisation Repositories under SECR, Trade Repositories under EMIR/SFTR, and Data Reporting Service Providers under MiFiR). View ArticleFT's Asgari: EU plans move to shorter trade settlement times in 2027 : Consultation by regulator finds 70% of participants favour reduction that would align with UK’s timing View Article
ICMA's Richards: Third Quarter 2024 Report : ICMA’s role and priorities in ever-changing markets; Increasing focus on NBFI:where next? The debate about EU policy on Capital Markets Union; Developments in Primary markets; Secondary markets; Repo and collateral markets; Sustainable finance; FinTech and digitalisation View Article
PCS: FSB report cum consultation - a surprisingly (if deliberately) narrow document : The first conclusion is that, notwithstanding the very broad title, the report is deliberately narrow in the topics it chooses to cover. The FSB explicitly states that it has focused solely - on the policy side - on the retention rules and the prudential capital requirements for bank investors. View Article
FESE response to the IOSCO consultation on the evolution in the operation, governance and business models of exchanges : Overall, we advocate for principle-based, outcome-focused measures and stress that most risks identified are already addressed in Europe. View Article
ISDA, AIMA, EFAMA: Trade Associations Submit Letter on EMIR IM Model Validation : The letter highlights challenges posed by the three-month period granted to the EBA and national competent authorities (NCAs) to validate changes to an IM model and describes how the ISDA Standard Initial Margin Model (ISDA SIMM) schedule can be amended to address these issues. View Article
ISDA’s Commitment on Data Reporting : ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues. By using the ISDA DRR, firms not only reduce implementation and maintenance costs, but they also mitigate non-compliance risk. View Article
BETTER FINANCE Welcomes New EIOPA Stakeholder Group Members and Calls for Greater End-User Representation : “Strengthening the voice of EU citizens as savers and investors remains a priority to ensure that the financial industry supports the real economy and serves the interests of its consumers rather than its own.” View Article
Environmental, Social, Governance (ESG) DG FISMA: Climate and financial stability : Report looks at key risks climate change poses to financial stability – and what the EUis doing about them. View Article
Insurance industry: EU taxonomy law needs changes to fulfil green potential : The insurance industry recognises that the law is fostering investment towards delivering climate neutrality. However, the insurance industry raises several concerns on the current reporting demands for underwriting and investment that is ‘taxonomy-eligible’ View Article
ESMA puts forward measures to support corporate sustainability reporting : Through the Public Statement on the first-time application of the ESRS, ESMA intends to support large issuers in going through the learning curve associated with the implementation of these new reporting requirements. View ArticleIASB publishes its review of impairment requirements relating to financial instruments : The objective of the PIR was to assess whether the effects of applying the impairment requirements are as the IASB intended when it developed these requirements. View Article
International Federation of Accountants, ICAEW, and Basel Institute on Governance Urges Accountants in Business to Continue : It offers practical guidance and actionable strategies to approach anti-corruption initiatives with an integrated mindset, resulting in long-term value creation. View Article
ECA: Citizens still face difficulties having their professional qualifications recognised by other EU countries : The number of regulated professions varies considerably between member states; EU rules to facilitate the procedure are not applied consistently; Authorities do not consult alerts about misconduct when reviewing applications View Article
Fin Tech Regulation EPI launches wero, its innovative digital payment wallet in Germany, alongside founding members – DSGV and DZ BANK, followed by Deutsche Ban : European Payments Initiative (EPI), a European-grown player committed to offering a sovereign payment solution to all consumers on the continent, today announced the launch of its mobile-first wallet and instant account-to-account payment solution, wero... View Article
Brexit and the City FCA overhauls listing rules to boost growth and innovation on UK stock markets : The new rules are the biggest changes to the listing regime in over 3 decades. They aim to support a wider range of companies to issue their shares on a UK exchange, increasing opportunities for investors. View Article
City Corporation's Hayward: Financial services must be at forefront of Labour’s economic growth plan : The sector must be at the forefront of Labour’s plans to drive growth. Employing over 2.4 million people – two-thirds of whom are outside London – the industry now contributes over £110 billion in taxes annually – more than the Government’s annual education budget. View Article
Brexit EU-UK Forum's Henig: UK Election campaign shows need for another reset in handling EU relations : On my calculation, the UK is currently in its fourth distinctive approach to Brexit, all of which have so far been failures. Primarily this has been because the issue is too sprawling for the narrow ways in which it has been handled. View Article
ECIPE's Henig: Early reflections of a new UK trade policy approach – tensions to be resolved, narrative created : New UK Secretary of State for Business and Trade Jonathan Reynolds seems to have received that memo. His expressed priorities described before the election were smaller more targeted deals and focus on implementation within the context of a trade strategy. View Article
UKandEU's Menon: A brave new (Brexit) world : Labour’s victory means we’ll have to get used to pressure on government over EU policy very different to what we’ve become used to, writes Anand Menon. View Article
Federal Trust's Stevens and Donnelly: Brexit – Too Hot To Handle in the General Election : They warn that the Labour Party will not gain much purchase in Brussels by the simple fact of not being the Conservative Party. View Article
CER's Grant: An open letter to Keir Starmer: Ten suggestions on how to foster better relations with Europe : ..as a prime minister with a huge majority, you need to decide how to implement your manifesto promise to “deepen ties with our European friends”. Many (but not all) Labour voters will be urging you not to forget that pledge. View Article
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