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Hedge funds directive: MEPs start scrutiny of draft legislation
February 23, 2010--The size, location and leverage of funds to be covered by the proposed EU directive on alternative investment fund managers, which would subject them to a mandatory authorisation and supervisory system, were debated by the Economic and Monetary Affairs Committee on Tuesday.
In discussion of the 1,669 proposed amendments to the report, a number of issues were raised by rapporteur Jean-Paul Gauzès (EPP, FR) and also by the shadow-rapporteurs of the political groups and other MEPs.
Scope
The draft report removes the €100 million threshold exemption from the directive’s application and suggests replacing it with a proportionality rule. At the meeting, Mr Gauzès added that this rule would need to be "very well defined, so as to avoid catching funds which need not be over regulated". Peter Skinner (S&D, UK), agreed: "we will lose the battle with the Council if we go back to the thresholds approach", he said.
The report also broadens the scope to cover EU-located offshore fund managers and limits the exemption possibility for pension funds, insurance firms and credit institutions. In his intervention however, Mr Gauzès emphasised that he would be working to clearly define what is not to be considered a fund and hence will not fall under this directive. Robert Goebbels (S&D, AT), agreed that exemptions should be kept to a strict minimum.
Marta Andreassen (EFD, UK), said that investment trusts like those in the UK must be excluded. Sharon Bowles (ALDE, UK), warned that if only private equity companies had to comply with this directive, it would place them at a disadvantage vis-à-vis other private companies.
Marketing rules and non-EU domiciled AIFs
The rapporteur's draft proposes granting a "European passport" to allow any EU-domiciled fund to be marketed throughout the EU. It agrees with the European Commission that the marketing of non-EU funds within the EU should be subject to authorisation by individual Member States, but removes the initially proposed three-year wait before this takes effect.
Mr Gauzès said he would work on the idea of a dual period whereby permission to market would be granted after a transition period in which equivalence of supervisory standards in third countries would be ascertained, possibly by the Commission. If after such a period it were found that equivalence did not exist then the marketing of the non-EU funds concerned would be prohibited.
Robert Goebbels (S&D, AT), warned against the risk of putting funds outside the EU in a more favourable position than those within it. By contrast, Syed Kamall (ECR, UK), observed that "we must avoid discrimination against third country funds. The new position proposed by Mr Gauzès is good provided it is clear to third country jurisdictions what the equivalence rules are".
Leverage
AIF managers should define in advance the leverage limit which they will use for each AIF, according to Mr Gauzès' draft, which also provides that the Commission may set leverage limits on advice from the European Systemic Risk Board (ESRB), if the EU Securities and Markets Authority (ESMA) considers that the leverage being used is excessively risky.
"Defining leverage is more difficult than it may at first appear", said Wolf Klinz (ALDE, DE), who felt that Member States should nonetheless have the option of laying down certain conditions.
Sven Giegold (Greens/EFA, DE), felt that the report's leverage provisions were too weak. "This issue will need to be cleared up quickly", he said. Ms Andreassen replied that hedge funds' use of leverage has declined considerably and that therefore "leverage caps today are outdated. The industry has moved on."
Short-selling
Mr Gauzès would subject short selling to a harmonised regulatory framework, so as to reduce its potential destabilising effect, and proposes that the ESMA be empowered to restrict it.
"It is immoral to influence markets through the practice of naked short-selling and such scandalous practices needed to be eliminated", said Mr Goebbels. The directive needs to be strict, so as to protect companies from such practices, agreed Mr Giegold. By contrast, Mr Kamall, called for a distinction to be made between naked and covered short-selling with the latter being a valid activity which increases liquidity.
Remuneration of managers
The rapporteur proposes applying the principles of the G20's Pittsburgh Declaration on the remuneration of executives of banks and other financial institutions to AIF managers. Pay should be commensurate to risk and would need to be disclosed. Mr Kamall, observed that it would be unwise to follow the remuneration philosophy applied to the banking sector because fund managers are rewarded on their performance and their priorities are often the same as those of investors.
Next steps
Mr Gauzes presented his draft report to the Economic and Monetary Affairs Committee members in December 2009. A further discussion of the amendments will take place on 17 March. It is expected that this report together with the amendments will be put to a committee vote in mid-April and a plenary vote in July.
Source: European Parliment
A financial transaction tax to dampen speculation and pay for the crisis
February 23, 2010--A globally implemented tax to discourage excessive risk-taking by financial institutions and to ensure the industry pays for the damage caused by the financial crisis should be considered, believes Parliament's Economic Affairs Committee. If a worldwide tax proves unachievable, the EU could consider going it alone, say MEPs.
In an oral question and resolution adopted on Tuesday on a financial transaction tax, members of the committee also urge the Commission and Council to look at how the tax could be used to help developing countries fund the fight against climate change as well as to finance development cooperation. They should also consider how the tax could contribute to the EU budget, say MEPs.
The Commission is asked to carry out an impact assessment of such a tax, to see how far it could contribute to stabilising financial markets and prevent a similar crisis by targeting "undesirable" transactions.
While preferring a global approach through the G20, MEPs believe the pros and cons of introducing a purely EU-wide tax should be weighed up, even if the EU's main partners do not introduce such a tax.
Any such tax must not harm the banking system's ability to perform its vital role of financing real economy investments, stresses the Economic Affairs Committee.
These issues will be put to the Council and the Commission during the March plenary session in Strasbourg.
Source: European Parliment
CESR Updates The List Of Measures Recently Taken By Members Regarding Short-Selling
February 23, 2010--CESR published on 22 September 2008 a statement that facilitates an overview of actions taken by CESR Members in relation to short-selling. The statement paper includes either the statements or links to the statements published by CESR Members explaining the measures taken. This paper is not a comparison of the measures taken.
CESR updates the list of measures recently taken by Members regarding short-selling. The documents will be updated on a continuous basis; the latest update has been provided by the Austrian regulator FMA that extended their ban on naked short selling in certain shares.
Further information can be found in the statement published today.
Source: CESR
Turkish banks still have long way for Basel II
February 23, 2010--As of December 2009, banks holding 68.7 percent of the total assets of the banking sector had presented their strategies and policies to adopt the Basel II criteria, a set of banking laws and regulations, to their boards for approval or had already started to implement the norms, a recent survey has shown, indicating that the system will require a lengthy period of time to become fully functional.
The Banking Regulation and Supervision Agency (BDDK) yesterday released its latest Banking Sector Basel II Progress Report, based on answers given to surveys conducted with a view to monitoring bank preparations relating to Basel II implementations.
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Source: Todays Zaman
Banking Sector Basel II Progress Report is Published-BRSA-Turkey
February 23, 2010--“Banking Sector Basel II Progress Report” is prepared based on the answers given to
surveys arranged with a view to monitor the preparations of the banks relating to Basel II implementations.
view report-Turkish only
Source: BRSA
BUSINESSEUROPE Priorities for External Competitiveness 2010-2014: Building on Global Europe
February 23, 2010--EXECUTIVE SUMMARY
The paper presents BUSINESSEUROPE’s views on the external dimension of the EU’s competitiveness strategy from 2010, and expands on Go for Growth, BUSINESSEUROPE’s agenda for 2010-2014. The EU’s external competitiveness policy should generate long-term growth and employment in the European economy through expanded trade and investment.
This is accurately reflected in the link between commercial policy and EU competitiveness that is at the heart of the EU’s current Global Europe strategy.
The EU 2020 strategy should, therefore, maintain Global Europe while making improvements in some key areas.
The EU should:
1 Deliver new market access through trade negotiations and ensure that these are
better enforced:
• An ambitious and balanced conclusion of the WTO’s Doha Round aiming for substantial market access for EU companies to major markets should be the top priority for 2010. If this is not possible in the short term new approaches should be considered, including broad sectoral negotiations and moving ahead with such topics as trade facilitation, within the single undertaking.
• The EU’s agenda for bilateral free trade agreements must be continued and intensified. Agreements must comprehensively address the barriers faced by companies.
• Agreements and other trade rules must be enforced through all effective means including dispute settlement and a revised Trade Barriers Regulation.
The Market Access Partnership should be further strengthened.
2 Take a more strategic approach to its relationships with important partner countries:
• The EU needs comprehensive strategies for its economic relations with major partners – both traditional and emerging. These should include improved analyses of priorities and better coordination within and between EU institutions and with Member States.
• Priority countries for BUSINESSEUROPE are the United States, China, Russia, India, Japan and Brazil.
read report
Source: Business Europe
STOXX Changes Composition Of European Benchmark Indices - Results Of The First Regular Quarterly Review To Be Effective On March 22, 2010
February 23, 2010-STOXX Limited, the leading provider of European equity indices, today announced the new composition of the Dow Jones STOXX Global 1800 Index, Dow Jones STOXX Total Market Index, Dow Jones STOXX 600 Index, Dow Jones STOXX EU Enlarged Total Market Index, Dow Jones STOXX Eastern Europe Total Market Index, Dow Jones STOXX Eastern Europe 300 Index and their sub- and sector indices, as well as that of the Dow Jones STOXX Football Index and Dow Jones STOXX Private Equity 20 Index.
Effective as of the open of European markets on March 22, 2010, the following
14 stocks will be added to the Dow Jones STOXX 600 Index and its respective size and
sector indices: BWIN INTERACTIVE ENTERTAINMENT (Austria, Travel & Leisure,
BWIN.VI), CONTINENTAL (Germany, Automobiles & Parts, CONG.DE), DELTA LLOYD
(Netherlands, Insurance, DLL.AS), GESTEVISION TELECINCO (Spain, Media,
TL5.MC), KLOECKNER & CO (Germany, Basic Resources, KCOGn.DE), MICRO
FOCUS INTERNATIONAL (U.K., Technology, MCRO.L), RHODIA (France, Chemicals,
RHA.PA), SCHIBSTED GRUPPEN (Norway, Media, SBST.OL), SPIRAX-SARCO (U.K.,
Industrial Goods & Services, SPX.L), TECNICAS REUNIDAS (Spain, Construction &
Materials, TRE.MC), TELENET GRP HLDG (Belgium, Media, TNET.BR), TEMENOS
GRP (Switzerland, Technology, TEMN.S), TRELLEBORG B (Sweden, Industrial Goods
& Services, TRELb.ST) and VOLKSWAGEN PREF (Germany, Automobiles & Parts,
VOWG_p.DE).
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Source: STOXX
EU should 'coordinate' Tobin tax ideas: Commission
February 23, 2010--European nations should use a tax on financial transactions to boost their income, European Commission policymakers argue in a report on economic strategy for the next decade.
"New tax bases, eg financial transactions, should be explored, in a coordinated way, as potential sources of government revenues," according to the European Commission's "2020" vision, seen by AFP and due to be published on March 3.
Post-economic crisis moves to tax the finance industry have moved higher up the political agenda but still divide European Union leaders, while efforts to coordinate such a tax on a pan-European basis would face huge obstacles as taxation is a reserved power at national level.
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Source: EU Business
Europe faces 'painful' budget tightening: IMF
February 23,2010--Budget tightening in Europe will be "extremely painful" and will take up to 20 years, the International Monetary Fund's chief economist Olivier Blanchard said in an interview published on Tuesday.
"The adjustment is easier for countries that can devalue their currency. In countries that do not have this option, it is fair to say that the tightening will be extremely painful," Blanchard told Italy's La Repubblica daily.
He said the process would require concerted efforts "over 10 or 20 years."
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Source: EU Business
SCM launches emerging market income fund
February 22, 2010--Somerset Capital Management, the boutique founded by Jacob Rees-Mogg, is launching one of the UK’s first global emerging market income funds next week.
The Emerging Dividend Growth fund is offering a 4.6 per cent yield at first, with manager Edward Lam saying many of his stocks could double their pay-outs within five or six years.
Mr Lam, a former Asia and global emerging market analyst from Lloyd George Management, will run a concentrated 40-stock portfolio and said he would cap assets under management at roughly $2bn (£1.3bn)
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Source: FT.com
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