A watershed year for regulation?

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2015 has the potential to be a turning point in terms of the post-crisis re-regulatory agenda, when the focus shifts from repairing balance sheets and reputations to the role of financial services in promoting jobs and growth.  And indeed from proposing new rules to implementing the multitude that has been agreed over that last few years. Deloitte’s EMEA Centre for Regulatory Strategy have identified what we believe to be the ten key areas of regulatory focus for financial markets in 2015.

Posted on 15/12/2014 | 0 Comments

Bank of England UK stress testing exercise | And now for 2015

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The Bank of England today announced the results of the first exercise under its new framework for stress testing the UK banking system.  The results are themselves important, but once they have been pored over, attention will turn to how the exercise will evolve.  There is a growing trend for supervisory stress testing exercises to increase in intensity over time.  The BoE makes clear in its comments today that the UK exercise will be no exception.

Posted on 16/12/2014 | 0 Comments

Setting the scene for the Capital Markets Union

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The Capital Markets Union (CMU) is a flagship initiative in the European Commission’s agenda for financial services during the next five years. This “concept under construction” has already caused much debate as stakeholders attempt to define the CMU and set its primary aims and principles. However, the real debate is only just starting. The agenda will evolve rapidly over the coming months with a Commission consultation paper expected in Q1 2015 and a road map in Q3 2015.

Posted on 15/12/2014 | 0 Comments

Loss-absorbing capacity for banks: EBA consults on EU requirements – ‘MREL’

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Following the recent publication of the Financial Stability Board’s (FSB)  proposals for an international standard for Total Loss-Absorbing Capacity (TLAC), the European Banking Authority (EBA) has published a consultation on a version for the EU – the Minimum Requirement for Own Funds and Eligible Liabilities (MREL).  MREL, like TLAC, is intended to make banks – credit institutions and large investment firms – more resilient and ensure they have enough loss-absorbing capacity so that resolution tools, including the bail-in tool, can be applied effectively.

Posted on 3/12/2014 | 0 Comments

Global information exchange | What’s that coming over the hill?

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The landscape for global information exchange is changing rapidly. In the next three years the burden of information reporting for funds will expand exponentially driven by new global tax initiatives. As a result, reporting on investor information and financial data will be mandatory for many funds as early as March 2015. This is not just a one off exercise and it represents a new form of annual compliance that is here to stay.

Posted on 25/11/2014 | 0 Comments

A “watershed” moment for financial regulation, and “the next phase of reform”

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What Mark Carney has termed a “watershed” moment in post-crisis financial regulation passed this weekend with the G20 Leaders’ Summit in Brisbane. In a fairly short Communique, G20 political leaders declared: “We have delivered key aspects of the core commitments we made in response to the financial crisis. […] The task now is to finalise remaining elements of our policy framework and fully implement agreed financial regulatory reforms.”

Posted on 18/11/2014 | 0 Comments

International regulators confirm bail-in-able debt requirement – ‘TLAC’

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Ahead of this weekend’s G20 Leader’s Summit in Brisbane, the Financial Stability Board (FSB) has published its proposals to require global systemically important banks (G-SIBs) to hold a minimum amount of capital plus bail-in-able debt, known as ‘TLAC’. While this is by no means the end of the journey to eliminate ‘too big to fail’, these proposals represent the last major outstanding piece of post-crisis prudential policy for banks. A quantitative impact study (QIS) will be run in 2015, before finalisation of the proposals. This process will not be a formality – there are questions of substance left to address.

Posted on 11/11/2014 | 0 Comments

UK leverage ratio requirement: a cornucopia of capital complexity?

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The Bank of England Financial Policy Committee’s (FPC) recently published review on the role of the leverage ratio in the UK proposes moving ahead of international standards to introduce new requirements for the biggest UK banks and building societies from next year. It recommends those banks eventually meet a ‘static’ requirement of up to around 4% on an ongoing basis (comprising a minimum of 3% and a supplementary buffer capturing systemic risk). There would also be a time-varying component that varies with the credit cycle and could add around 90 basis points more for some banks at the top of the cycle (on the FPC’s current assumptions).

Posted on 4/11/2014 | 0 Comments

Driving change in FICC markets

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On 27 October the Fair and Effective Markets Review (FEMR) published a consultation document outlining high-level policy proposals aimed at reinforcing confidence in the fairness and effectiveness of the Fixed Income, Currency and Commodities (FICC) markets, including associated derivatives and benchmarks.

Posted on 31/10/2014 | 0 Comments

Reconsider the principles for Sound Management of Operational Risk

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Banks have invested heavily in their Operational Risk capability in recent years with many continuing to do so. The papers released at the start of the month by the Basel Committee on Banking Supervision (BCBS) indicate that the job is not yet done for such enhancement programmes and these latest proposals are likely to prompt organisations to reconsider the nature of their operational risk framework as well as their approach for operational risk regulatory capital calculation and the associated business case.

Posted on 31/10/2014 | 0 Comments