reforms in financial regulation in europe n.
Skip this Video
Loading SlideShow in 5 Seconds..
Reforms in Financial Regulation in Europe PowerPoint Presentation
Download Presentation
Reforms in Financial Regulation in Europe

Loading in 2 Seconds...

play fullscreen
1 / 27

Reforms in Financial Regulation in Europe - PowerPoint PPT Presentation

  • Uploaded on

Reforms in Financial Regulation in Europe. Eddy Wymeersch. Banking. Systemic risk – strengthening solvency and liquidity of the bank strengthening the banks own funds: Basel III and CRD IV remuneration: make it less short term to reduce systemic risk crisis resolution systems

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

Reforms in Financial Regulation in Europe

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
  • Systemic risk – strengthening solvency and liquidity of the bank
    • strengthening the banks own funds: Basel III and CRD IV
    • remuneration: make it less short term to reduce systemic risk
    • crisis resolution systems
    • Liquidity rules prepared in Basel
orderly functioning of markets
Orderly functioning of markets
  • Short selling
  • Derivatives
  • Post trade in securities
    • securities law
    • further work on C&S
  • Mifid: market structure
  • MAd, PD, TD reviews
  • etc
  • Roll out of Solvency II, advice by CEIOPS
  • Insurance mediation
  • Insurance guarantee schemes
major regulatory reforms
Major regulatory reforms
  • Banking
    • Capital Requirements Directive III/IV
      • countercyclical buffers
      • new capital requirements
    • CEBS work streams
    • Crisis management in the banking sector: crisis resolution with haircuts proposed by Comm. but Parl. proposals in Germany
    • DGS new style
      • can we move to a European Fund?
      • or a system of mutual support by the existing funds
major regulatory reforms1
Major regulatory reforms
  • Securities
    • CRA changes approved: direct supervision by ESMA
    • AIFMD: approved
    • ESAs: approved
    • Short selling: in Council
    • Review of MAD, PD , TD and Mifid: consultation
    • Post trade: EMIR, European Securities law:ongoing
    • Corporate governance Financial Institutions: cons.closed
      • later general corporate governance
    • Prips: consultation
    • Audit: consultation closed
  • Derivatives
    • identify the derivatives that should be cleared
    • general obligation to clear, unless taxed in own funds
    • organisation and safeguards for CCPs
      • legal status: banks, who will supervise
    • TR: what has to be registered and what not?
      • Supervision
    • US links: reciprocity
    • Corporates: exempted if below floor
  • Broad scope: all managers of collective investment are subject
    • exc. banks, insurance (?)
    • holding companies, family offices
    • Registration of the managers, not of the funds
    • Passport for funds by EU registered managers
  • Points of contention
    • remuneration: similar to banks
    • depositary: with full restitution liability, but for sub depositaries only for due diligence
    • evaluator
    • Conduct of business rules on conflicts of interest
    • Third country regime: very complicated but no full access to third AIFM/AIF
short selling
Short selling
  • applicable to all instruments
  • Short sale
    • also derivatives if related to decrease of price
    • sovereign bonds: includes CDS
    • Net short: Long minus Short of all kinds
    • Obligations
      • disclosure at 0,2% to Supervisors,+ 0,1% of issued capital
      • at 0,5% to market
short selling1
Short selling
  • Sovereign debt
    • net short
    • uncovered position, no relation with that St debt
    • minimum threshold: to be fixed later, variable
    • Notification
  • Applicable also outside the Union
short selling2
Short selling
  • permissible shorts only if:
    • borrowed
    • agreement to borrow
    • located pursuant to agreement
  • Measures against late settlement
    • Buy-in procedures
    • within 4 days: buy-in by CCP or trading venue
      • if non: cash compensation to buyer by CCP/trading venue
      • if not: daily payments to CCP or Trading venue
      • Exemption for market makers/primary markets
short selling3
Short selling
  • Significant fall in price
    • exceptional power to restrict for significant fall in prices
      • 10%
      • national decision but coordination by ESMA
      • including market making
corporate governance
Corporate Governance
  • Consultation is closed: applicable to financial institutions, later to all listed companies
  • Supervisory role of independent directors
  • New role for shareholders
  • Insurance and asset managers: recent reforms: are these not enough?
cg in financial institutions
CG in Financial institutions
  • Limit number of mandates per person: devote sufficient time
  • Split Chairman – CEO
  • Diversity in board, including gender diversity
  • Compulsory evaluation
  • Skill and experience
  • Risk- audit committees: 1 or 2? cross participation
  • CRO: stronger position
  • Much attention to risk management and controls
cg in financial institutions1
CG in Financial institutions
  • Serious offences: to be reported to the board? –
  • Whistle blowing
  • Institutional investors: disclosure voting practices
  • Identification of shareholders and empty voting
  • Remuneration policies
  • Involve shareholders and employees?
  • Conflicts on interest: how to deal with it
  • Shareholders: long term investors preferred
  • Regulation final 9 November 2010
    • not yet published
  • Three parallel authorities-agencies + ESRB
  • Start 1 January 2010
  • Structure: similar to CESR: substantial powers with the national supervisors
  • Legal powers quite limited
regulatory powers in aifmd
Regulatory powers in AIFMD
  • Level 1: Directive-Regulation in co-decision
  • Level 2: Delegation to Commission
    • de facto advice of ESMA, but proposal by Comm.
      • subject to art 190 of TFEU
      • call back by EP or Council
      • revocation of delegation of Council or EP
regulatory powers in aifmd1
Regulatory powers in AIFMD
  • Level 2 Delegated Acts art 290 TFEU
    • Proposal by ESMA for Regulatory Technical Standards and Endorsement by Commission
    • No Commission own initiative, except refusal to act by ESMA
    • Commission can endorse, refuse to endorse, modify, substitute
regulatory powers in aifmd2
Regulatory powers in AIFMD

Level 2 Implementing Acts art 291 TFEU

      • ESMA proposal and Commission endorsement
      • No Commission own initiative
      • Commission can endorse, refuse to endorse, modify substitute
      • No formal intervention of Council or Parliament
      • Mostly formalities, formats, procedures
  • Directive must identify “delegated” or “implementing" acts
soft powers
Soft powers
  • Guidelines in many fields
    • not necessarily secondary questions:
      • matters too difficult to formally regulate
      • matters with differences op opinions
      • matters subject to further developments
    • not legally binding but authority rests on consensus by members, flexibility in practice
    • indicates likely interpretation by national supervisors
    • useful for markets
  • Differences of opinion between national supervisors
  • ESMA mediation panel: Chair + 2 members
  • Finding a compromise solution, if not binding decision
  • Mostly narrowly described: but see art 53
    • Especially in process of identifying who will be in charge of non-EU AIF: “MS of reference”, “equivalence” e.g. of FATF regime (art 35. 2 and 15)
  • Practical importance: unpredictable
prohibition of certain instruments art 45
Prohibition of certain instrumentsart 45
  • See art 6 a of the ESMA regulation
    • prohibit distribution of non authorised non-EU funds
    • restrictions for excessive concentration in cross border cases
    • restriction for counterparty risk
  • Only in case of
    • orderly functioning and integrity
    • financial stability
right of appeal
Right of Appeal
  • Appeal against decision of nat. supervisors
  • Before national courts for all negative decisions (refusal, withdrawal)
  • Decision to be properly reasoned
  • Administrative decisions to be taken within 6 months, if not: appeal, but against what?
right of appeal1
Right of Appeal
  • Against ESMA individual decisions: before Board of appeal of the three ESAs
  • Not for regulations: preparatory act before Comm. endorsement
  • Appeal suspends and remand to ESMA
  • Appeal decision is binding on national supervisors
  • Anyone affected by a decision can appeal.
general powers
General powers
  • Cooperation among supervisors
      • information exchange
      • standard notifications
      • cross-border supervision with non EU supervisors
  • Central Registry of AIFM/ AIF
    • also list of rejected applications: art. 37(10)
  • Convergence of supervisory practices
    • coordination task e.g. on leverage restrictions
  • Nothing about colleges
  • Much work ahead !
  • What will the new Authorities become?
  • Overregulation? more or less in line with US
  • Will it save us from the next crisis?