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Highlights of my week: The European Parliament approved – rapidly and strongly – their negotiating mandate for the EU’s new fiscal rules so they should be in force for the new Commission. As the fallout continues from the sudden decision of Council President Michel to step down, a familiar name floated to the top of the suggestions list: Mario Draghi even as ECB President Lagarde blasted the `tribal clique’ of economic modellers! (though Draghi is not a member of that tribe…) Council and Parliament reached agreement on the anti-money laundering package while the EBA reported that banks remain robust even though headwinds probably lie ahead. Parliament also gave approval to the MiFID/R package – welcomed by both AFME and EFAMA but caveated with “could do more”. BCBS, IOSCO and CPMI published further reports on how margining could still be improved in both cleared and non-cleared derivative markets. The “T+1” question is now looming urgently as the US makes the change in just four months. Market participants are clear that the EU and UK should move in lockstep (Brexit seems to be absent here..) but the speed of doing it was questioned by ICMA as the EU’s capital markets are still a patchwork of national silos despite the Commission’s efforts over the last decade. Operational resilience of EU markets’ infrastructure was highlighted by ECB Board Member Cipollone and also publication of DORA’s first set of detailed rules.
Graham Bishop
Articles from 12-18 January 2024
Policy impacting Finance
Remarks by Paschal Donohoe following the Eurogroup meeting of 15 January 2024 : We are within the Eurogroup working on many of the economic aspects of this - how we can strengthen our European capital markets, how we can improve our competitiveness and security, how we can bring the single currency into the digital age,... View Article
ECON supporting analysis: Economic Dialogue with the President of the ECOFIN : ...the document covers policy streams relevant to the EU single market and the deepening of the Economic and Monetary Union, including the review of the EU economic governance framework. View Article
Parliament: Economic governance reform: improving credibility, ownership and scope to invest : The text, adopted by MEPs with 431 votes in favour, 172 against and 4 abstentions, constitutes Parliament’s mandate for negotiations with member states on the final shape of the law,... View Article
EURACTIV: European Parliament stifles Green revolt against new EU debt rules : With an overwhelming majority, the European Parliament adopted its negotiating position for the EU rules on national debts and deficits, despite Green fears that it could lead to renewed austerity and destabilise the European Union. View Article
LSE's Holesch: What impact will Donald Tusk’s return have on European integration? : Donald Tusk was officially appointed as Poland’s new Prime Minister in December. Adam Holesch assesses whether Tusk’s return to power will signify a strengthening of EU integration or whether it could instead foster a diverging approach to the EU in Central and Eastern Europe. View Article
EPC's Scalamandrè: Ursula von der Leyen at Davos: Why the EU must prioritise economic security : This year, economic security should be the primary focus of Commission President von der Leyen’s time at Davos. In a world of shocks and increasing fragmentation, the EU is compelled to rethink its international economic agenda and anchor it on resilience and economic security. View Article
POLITICO: Make Mario Draghi European Council chief, Renzi says : Former premier Matteo Renzi brought Draghi to power in Italy in 2021. Now he wants to do the same for Europe. View Article
Jacques Delors Centre: The Individual in the Economic and Monetary Union : A contribution to legal theories of accountability, this book offers pioneering research on the position of the individual in the EU's Economic and Monetary Union. View Article
ESRB improves its macroprudential stance framework : The macroprudential stance assessment is a conceptual framework for comparing systemic risks with the policy measures taken to address them. This helps the ESRB to see whether the financial system is resilient enough,... View Article
IMF's Georgieva: AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity : AI will affect almost 40 percent of jobs around the world, replacing some and complementing others. We need a careful balance of policies to tap its potential View Article
EURACTIV: ‘A tribal clique’: Lagarde denounces economists at Davos : European Central Bank President Christine Lagarde launched a stinging attack on the economics profession on Wednesday (17 January), accusing analysts of having “blind faith” in their models, which often bear little connection to reality. View Article
Banking Union
Anti-money laundering: Council and Parliament strike deal on stricter rules : The Council and Parliament found a provisional agreement on parts of the anti-money laundering package that aims to protect EU citizens and the EU's financial system against money laundering and terrorist financing. View Article
Banks remain robust but higher interest rates could impact their asset quality, the EBA finds : The publication also includes information on minimum requirement for own funds and eligible liabilities (MREL). EU/EEA’s banks remained highly profitable, well capitalised and maintained robust liquidity. Banks expect the asset quality to deteriorate as higher interest rates affect borrowers. View Article
SSM's af Jochnik/Quagliariello: Priorities to help banks withstand headwinds : In this blog post, we would like to stress the importance of these priorities, as they clearly reflect the existing and emerging risks supervised banks are facing. Having derived these priorities from our risk View Article
European Payments Council: Around the web - a compilation of interesting reports about payments : See here for our list of free, recently published payment-related reports from a variety of sources, all in one place for your convenience. View Article
Capital Markets Union
Parliament: Financial services: final vote on better data access and more robust EU markets : MEPs adopted rules to enhance financial market data transparency, optimise orderly trading and prohibit payments for forwarding client orders. View Article
AFME welcomes European Parliament vote on MiFID/R but calls for more ambition to effectively deliver a successful CMU : Following the conclusion of trilogues on 29 June 2023, and confirmation of final compromise texts by the EU Council on 18 October 2023, the European Parliament has today voted on the latest amendments to the MiFID/MiFIR in its plenary session. View Article
EFAMA: New rules establishing EU consolidated tape will boost capital markets, but could still go further : Today’s European Parliament vote concludes the MiFID/R review process: The European asset management industry regards the proposed reforms as critical to improving transparency in EU capital markets and reducing the effects of market fragmentation. View Article
ESMA and NCAs to coordinate supervisory activities on MiFID II pre-trade controls : Following the May 2022 flash crash, ESMA and NCAs have focussed their attention on the implementation of PTCs in the EU, gathering evidence through questionnaires submitted to a sample of EU investment firms. View Article
ECB's Cipollone: One step ahead: protecting the cyber resilience of financial infrastructures : ...the Euro Cyber Resilience Board (ECRB) offers a unique forum that brings together pan-European financial infrastructures, their critical service providers, central bank overseers and other key European authorities for strategic discussions on cyber risks. View Article
BCBS-IOSCO-CPMI report sets out recommendations for good margin practices in non-centrally cleared markets : This BCBS-CPMI-IOSCO consultative report sets out ten policy proposals which aim to increase the resilience of the centrally cleared market ecosystem in times of market stress. View Article
BCBS/IOSCO: Streamlining VM processes and IM responsiveness of margin models in non-centrally cleared markets : This BCBS-IOSCO consultative report sets out eight recommendations to participants in non-centrally cleared markets to encourage the widespread implementation of good market practices related to (i) variation margin processes; and (ii) the responsiveness of initial margin models. View Article
FT: Fund managers urge European regulators to mirror US move to T+1 : Efama says there is ‘compelling case’ to reduce current two-day settlement time given that US does so in May View Article
EIOPA publishes second Report on the application of the Insurance Distribution Directive (IDD) : Initial evidence from NCAs about the application of the new sustainability rules illustrate challenges for consumers to understand the disclosures and complex concepts introduced by the new rules ... View Article
ESMA publishes latest edition of its newsletter : Your one-stop-shop in the world of EU financial markets focused in December on the European Securities and Markets Authority (ESMA) latest report on Cost and Performance of retail products. View Article
ICMA Quarterly Report First Quarter 2024 : Navigating a technology transformation; Stress and resilience in international capital markets; A shift in the settlement cycle; Sovereign bond market liquidity; EU Government retail-targeted bond issuance; Risk factors and disclosure in DLT bond offering documents; SFDR: the evolving framework.. View Article
Environmental, Social, Governance (ESG)
ECIIA: 2024 Global Internal Audit Standards : The new Global Internal Audit Standards were published on January 9, 2024, and will become effective on January 9, 2025. Early adoption is encouraged. View Article
IFAC Publishes Sustainability & Education Literature Review : The review highlights key themes in current sustainability-related education, learning and development to provide insights on how the global accountancy profession can meet stakeholder demands for relevant and reliable sustainability reporting. View Article
SSE Launches toolkit for exchanges to help guide markets on the new IFRS Sustainability Disclosure Standards : In response to demand from SSE Partner Exchanges for support on the new sustainability disclosure standards recently launched by the IFRS Foundation, the SSE and its partners developed a toolkit to help exchanges and market participants View Article
GRI: New year, new reporting standards for issues that matter most : Two GRI Sector Standards come into effect 1 January: As part of the GRI Standards - the most widely used sustainability reporting standards in the world – two additional Sector Standards become effective for reporting from 1 January 2024: for coal and agriculture, aquaculture, and fishing. View Article
CEPR/ECB's Hiebert: A macroprudential approach to managing climate risk : This column harnesses a growing body of evidence on indicators into three primary categories: climate shocks, exposures to these shocks, and financial risks resulting from the interaction of exposure and prevailing vulnerabilities. View Article
Fin Tech Regulation
ESAs publish first set of rules under DORA for ICT and third-party risk management and incident classification : They published the first set of final draft technical standards under the DORA to enhance digital operational resilience of the EU financial sector by strengthening financial entities’ Information and Communication Technology (ICT) and third-party risk management and incident reporting frameworks. View Article
EBF: JOINT STATEMENT Understanding Credit Scoring: Techniques and Distinction from Artificial Intelligence : With this statement the co-signatories aim to draw the co-legislators’ attention to the need to safeguard ongoing credit scoring operations from potential disruptions caused by pending technical details around the agreed definition of “artificial intelligence systems”,... View Article
DORA | RTS on ICT Incident Classification based on EBF’s Position : The main key attention points raised by the EBF members during the consultation of the Draft RTS: Unclear definition of Critical Services; Sound Application of Proportionality Principle and Risk-based Approach; The Challenges in the Notification of Significant Threats View Article
Brexit
Federal Trust video: Labour Divided on Brexit? : Brendan Donnelly and John Stevens suggest that the Mayor of London’s new intervention in this debate is both part of his election strategy for the Mayoral elections and a foretaste of debates to come within the Labour Party. View Article
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