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Financial Services:Commission adopts additional legislative proposals to strengthen financial supervision in Europe
October 26, 2009--The European Commission has adopted additional legislative proposals today to further strengthen financial supervision in Europe. Following the adoption of a legislative package to strengthen financial supervision in Europe on 23 September 2009, including the creation of a European System of Financial Supervisors with three new European Supervisory Authorities, the Commission proposes to make targeted changes to existing financial services legislation to ensure that the new Authorities can work effectively. In particular, these proposals lay down in detail the scope for the Authorities to exercise their powers, ensuring a more harmonised set of financial rules through the possibility to develop draft technical standards, settle disagreements between national supervisors and facilitate the sharing of micro-prudential information. The package will now be sent on to the Council and the European Parliament for consideration.
Internal Market and Services Commissioner Charlie McCreevy said "This proposal complements and reinforces our supervision package of 23 September and provides more detail about precisely what powers are proposed for the new European Supervisory Authorities and in what areas. I urge the Council and the Parliament to adopt the whole supervision package in good time to allow the new Authorities to come into being at the end of 2010, if not before."
Today's legislative proposals complement a package of proposals on financial supervision presented by the Commission on 23 September ( IP/09/1347 ). In addition to proposals to create a European Systemic Risk Board, the package envisages the creation of a European System of Financial Supervisors (ESFS) for the supervision of individual financial institutions ("micro-prudential supervision"). The ESFS will consist of a network of national financial supervisors working in tandem with new European Supervisory Authorities, created by the transformation of existing Committees for the banking, securities and insurance and occupational pensions sectors 1 . There will be a European Banking Authority (EBA), a European Insurance and Occupational Pensions Authority (EIOPA), and a European Securities and Markets Authority (ESMA).
The new Authorities in the ESFS will take over all of the functions of the existing committees, and in addition have certain extra competences, including the following:
Developing proposals for technical standards, respecting better regulation principles;
Resolving cases of disagreement between national supervisors, where legislation requires them to co-operate or to agree;
Contributing to ensuring consistent application of technical Community rules (including through peer reviews);
The European Securities and Markets Authority will exercise direct supervisory powers for Credit Rating Agencies;
A coordination role in emergency situations.
In order for the ESFS to work effectively, changes to existing financial services Directives are necessary, laying down the precise scope for them to exercise certain of the proposed new powers. The areas in which amendments are proposed fall broadly into the following categories:
Definition of the appropriate areas in which the Authorities will be able to propose technical standards as an additional tool for supervisory convergence and with a view to developing a single rule book;
Incorporation in an appropriate manner of the possibility for the Authorities to settle disagreements between national supervisors in a balanced way, in those areas where common decision making processes already exist in sectoral legislation; and
General amendments which are necessary for the Directives to operate in the context of new authorities for example, renaming the level 3 committees to the new authorities and ensuring the appropriate gateways for the exchange of information are present.
Further proposals for technical amendments to sectoral Directives are envisaged by the Commission early in 2010, in particular in the insurance sector, which is not covered by the current proposal.
The Commission's supervision proposals are currently being considered by the Council and Parliament, and creation of the new Authorities is envisaged for the end of 2010. The proposals are an integral part of the Commission's strategy for preventing future crises.
More information is available at:
http://ec.europa.eu/internal_market/finances/committees/index_en.htm
1 :Currently there are three financial services committees for micro-financial supervision (supervision of individual financial institutions) at EU level, with advisory powers only: the Committee of European Banking Supervisors (CEBS), Committee of European Insurance and Occupational Pensions Committee (CEIOPS) and the Committee of European Securities Regulators (CESR).
Source: European Commission
FSA announces tough new code for financial reporting disclosure
The Financial Services Authority (FSA) has announced today that the major UK-headquartered banks have agreed to implement a tough new code for financial reporting disclosure.
October 26, 2009-The code forms part of proposals, designed to enhance investors’ confidence in financial reporting and to aid their ability to compare and contrast banks’ performance. It is based on an overarching principle that UK banks are "committed to providing high quality, meaningful and decision-useful disclosures to users to help them understand the financial position, performance and changes in the financial position of their businesses".
The FSA is inviting views on the application of this code to banks and other credit institutions. In the meantime, the major banks, at the FSA’s request, have agreed to implement the code in their 2009 year end annual reports.
If the banks are unable to sufficiently improve the quality and comparability of their disclosures in their 2009 annual reports, the FSA is also seeking views as to whether the code needs to be supplanted by more detailed disclosure templates.
Paul Sharma, FSA director, prudential policy, said:
"In the Turner Review we set out our view that the financial crisis had raised questions as to the adequacy of financial disclosure by banks throughout all major economies and the level of confidence that investors could place in their financial reports.
"The tough disclosure code published today puts UK banks further ahead of the game internationally in addressing these concerns. But when applying this code to their 2009 year end accounts, the FSA expects firms to achieve significant improvement in the quality and comparability of disclosures."
The code is being launched to the industry by the British Bankers Association (BBA) today.
The Turner Review identified a concern that in spite of banks’ efforts to enhance disclosures during 2008 and 2009, investor confidence in financial reports appeared to remain low.
The FSA has worked closely with the BBA and major firms to develop the code, which sets out key principles accompanied by explanatory text to highlight how the principles should be applied in practice.
View the Enhancing financial
reporting disclosures by UK credit
institutions
Source: FSA.gov.uk
BBA Code for Financial Reporting Disclosure
October 26, 2009--The UK's seven largest lending institutions have today committed themselves to support a new BBA Code for Financial Reporting Disclosure, as part of their ongoing efforts to ensure disclosures continue to provide the market with high quality, decision useful information about their financial positions.
In reflection of their desire to respond to market expectations, the seven institutions and the BBA have agreed to the inclusion of the draft BBA Code in an FSA Discussion Paper on financial reporting disclosures also published today.
The FSA Discussion Paper 'Enhancing financial reporting disclosures by UK credit institutions' takes stock of developments in financial reporting disclosure since the onset of the financial turmoil. It sets out the FSA's views on the future evolution of UK banks' financial reporting disclosures and how the current level of disclosure can be maintained and the comparability between disclosures enhanced. It presents two options for consultation: the imposition of mandatory standard disclosure templates for all UK banks or the industry led adoption of the draft BBA Code.
To provide the market with an understanding of the impact the BBA Code would have, the seven UK institutions have agreed to comply with the draft Code in preparing their 2009 year-end financial reports. Market participants will therefore be able to assess the impact the draft BBA Code has made before responding to the Discussion Paper by 30 April 2010 deadline.
View the BBA Code for Financial
Reporting Disclosure October 2009
DRAFT
Source: British Banking Association
Barclays in Standard Life deal
October 26, 2009--Barclays has agreed to buy Standard Life Bank, the mortgage and savings arm of the Scottish insurer, for £226m ($369m), a price well below analysts’ expectations.
The cash purchase will include a savings book of about £5.5bn and almost 80,000 mortgages, totalling £8.8bn.
Frits Seegers, chief executive of Barclays global retail and commercial banking, said the deal would increase the bank’s savings book by 6 per cent – more than double the rate of growth achieved in the first six months of the year – and inflate its mortgage book by 10 per cent.
read more
Source: FT.com
Pensions review reveals rule breaches
October 26, 2009--Thirty per cent of defined contribution pension schemes have breached at least one requirement to disclose information to members and more than half have some scope to improve the quality of the information they provide, according to a study released on Monday by the Pensions Regulator.
A small minority of schemes, 4 per cent, have multiple breaches that are considered severe. The study, a review of how well DC schemes are preparing members to achieve the best possible deal in retirement, comes as the UK prepares for a dramatic shift in pension provision, with the majority of those saving through their own investment pots outstripping the numbers saving through defined benefit company schemes.
read more
Source: FT.com
UK banks face tougher reporting rules
October 26, 2009-UK banks could be forced to disclose the value of their holdings in officially prescribed detail if they do not meet the spirit of a new reporting code.
The code, published by the British Banker’s Association on Monday, is designed to encourage banks to provide more details and was produced alongside a Financial Services Authority consultation paper seeking comments on the idea of a reporting template.
The code and discussion paper come as regulators wrestle with pushing banks to provide more detail on their holdings while also trying to reduce the complexity of their accounts.
read more
Source: FT.com
ING to be broken up in wake of bail-out
October 26, 2009--ING, one of Europe’s biggest financial groups, unveiled a radical break-up forced on it by the European Commission that will have the financial services group sell off its insurance and investment management business.
The dismantling of ING is one of the toughest interventions yet by Europe’s competition authorities, which waved through state aid to financial groups during the crisis but made clear these would be subject to scrutiny if they later appeared too generous.
read more
Source: FT.com
Unscheduled adjustment in TecDAX
EVOTEC replaces IDS Scheer effective 28 October 2009
September 26, 2009--Deutsche Börse has announced an unscheduled adjustment in TecDAX®. The
freefloat of IDS Scheer has dropped below ten percent and does therefore no
longer meet the criteria of the index.
EVOTEC will replace the share of IDS
Scheer in TecDAX.
The next regular review of the equity indices of Deutsche Börse is scheduled for 3 December 2009.
TecDAX® is a registered trademark of Deutsche Börse AG.
Source: Deutsche Börse
Raise retirement age to 70, say Business Leaders
October 22, 2009-The Institute of Directors (IoD) launched a major new report into pensions ‘Roadmap for Retirement Reform 2009’ on October 19, 2009, which sets out a radical reform agenda, and direction of travel, for both the state and private retirement benefit systems.
Looking at the retirement policy scene holistically, it argues, is essential for effective change designed to deliver better outcomes for consumers, better understanding and better engagement in long term saving
The paper proposes 4 fundamental changes:
• In the face of greatly increased longevity, the state pension age should rise to 70 as soon as reasonably practical
• The State second pension should be abolished, together with most means tested state retirement benefits
• The savings made should be diverted to the provision of a universal Basic State Pension probably above the level we see today topped up by Pension Credit
• The current private pension saving regime does not meet 21st Century needs and should be replaced.
Commenting on the report, Graeme Leach, Chief Economist at the IoD, said:
“Radical simplification is needed. Startling increases in longevity in recent decades also mean that it is unrealistic to expect to be able to fund a potential 25 to 30 year retirement from an effective 30 to 35 year working life. New approaches are needed to recognise this reality. The whole area of retirement needs to be looked at holistically, including how we fund the care needs which will come with increasing longevity. We need a state and private retirement system fit for the 21st Century. This is a policy journey which needs to begin now.”
Malcolm Small, Senior Adviser, Pensions Policy at the IoD and author of the report, said:
“We were surprised at the appetite for radical reform amongst IoD members. Both state and private pension systems have now become so complex that people are becoming disengaged from pension saving and are looking for alternatives. If people don’t like the structure, they are less likely to stay in it, even if they are auto-enrolled into saving, as they will be from 2012.”
view Roadmap for
Retirement Reform 2009
Source: Institute of Directors (IoD)
Nomura Launches Ultra Low Latency Trading Service
October 23, 2009--Nomura today announced the launch of its next generation ultra low latency trading service. Utilising the latest networking technology, the platform will offer clients co-located software hosting and ultra fast connectivity to major exchanges and MTFs in Europe.
The low latency network has been designed by Nomura’s technology and product teams utilizing the expertise of COLT, a leading European infrastructure services provider to the finance community. COLT will provide the network infrastructure for this solution. A dedicated fibre optic network has been rolled out in three major European cities, setting new standards for speed and throughput.
“The fastest possible market data and the fastest possible trading connections are critical for the low latency trading community. At Nomura, we have combined leading networking and trading expertise with significant investments to achieve these goals,” said Jeff Zorek, Global Co-Head of Prime Product Management at Nomura.
Nomura’s co-location service is supported by a specialist infrastructure team, ensuring clients receive a dedicated end to end service. The platform also delivers a very high level of security and seamless integration with Nomura’s Prime Services products. Nomura and COLT aim to continue collaborating on future enhancements to the platform.
Tanuja Randery who heads COLT’s Global Business Division added, “Harnessing the power of ultra low latency network solutions is increasingly critical for our finance customers. We have worked closely with Nomura to build a solution that pushes the boundaries of latency. We have combined speed to market, advanced technology leveraging our Next Generation Platform and real market knowledge to help Nomura drive its business growth and we look forward to collaborating with Nomura to enhance the solution in the future.”
Nomura has this year climbed the ranks of the London Stock Exchange (LSE), reaching and retaining the number 1 spot in July, August and September 2009. “The launch of Nomura’s co-location network will help expand our market share across all European equities, and will assist us in becoming a top-five global trading house,” said Mr Zorek.
Source: Online Trading News
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