38 posts categorized "Capital Markets"
The next few months will barely feel like a summer holiday for Eurozone banks. As banks in the single currency area prepare for the European Central Bank (ECB) to take over banking supervision under the Single Supervisory Mechanism (SSM), the balance sheets of the largest banks are being reviewed and stressed as part of the ECB’s comprehensive assessment. In October, the results – based on an asset quality review (AQR) and EU-wide stress test - will be revealed.
We have recently launched the summer instalment of the Deloitte Real Estate London Office Crane Survey. This is our flagship report (released bi-annually) which has been monitoring office construction activity in Central London for almost twenty years. The level of construction is widely used as a measure of economic activity - counting the number of cranes / construction sites across Central London is a relatively easy and accurate way to benchmark London’s economic health.
The revised Markets in Financial Instruments Directive (MiFID II) and new Regulation (MiFIR) were published yesterday in the Official Journal and will enter into force on 2 July. This is an important milestone as it officially starts the countdown to the 2017 go-live date, establishing the various deadlines that firms, member states, national competent authorities (NCAs) and the European Securities and Markets Authority (ESMA) will need to meet.
In six months’ time, the Single Supervisory Mechanism (SSM) will take effect, with the European Central Bank (ECB) taking charge of prudential supervision in the Eurozone. The project to establish the SSM has been ambitious, especially against a tight time schedule, but the ECB confirmed in its latest SSM Quarterly Report on the operational implementation of the SSM that progress was on track and the SSM would start on schedule, on 4 November. Banks now need to turn in earnest to preparing for the new supervisory regime, under which they will no longer be able to deal only with a local supervisor.
Large European banks now know a lot more about what's expected of them in the forthcoming stress testing exercise, coordinated by the European Banking Authority (EBA). The stress scenario will be more severe than in previous exercises, and supervisory scrutiny more intense. The exercise has been some time in the planning and banks now need to take action. The outcome of the recent US Federal Reserve’s stress testing exercise highlights the potential dangers of shortcomings in banks' approaches to stress testing, quite apart from the numerical outcome of the test.
Earlier this week, the European Supervisory Authorities (ESAs) published the much anticipated consultation paper and draft regulatory technical standards (RTS) setting out of risk-mitigation techniques for OTC derivative contracts not cleared by a CCP under Article 11 of the European Market Infrastructure Regulation (EMIR).
30 April 2014: this is the deadline that the Financial Conduct Authority (FCA) has set for firms to demonstrate compliance with the Risk Mitigation Techniques requirements for non-centrally cleared derivatives set out in the European Markets Infrastructure Regulation (EMIR). This leaves firms just over two weeks not only to ensure that they have processes and controls in place to comply fully, but also that those processes and controls are documented to a standard that will satisfy the regulator. Many firms may be failing to meet one or even both of those targets.
Firms currently in the midst of implementing the European Market Infrastructure Regulation
(EMIR) will be left with little doubt that the cost of doing business in over-the-counter (OTC) derivatives is set to increase. But to date there has been little clarity as to the size of the increase in costs and how they will differ for a cleared trade versus a non-cleared trade. In our paper ‘OTC Derivatives – The new cost of trading’, we explore how much more expensive cleared and non-cleared OTC derivative transactions will become as a result of the EU OTC derivative reform package; how the structure of OTC derivative markets is set to change; and what strategic challenges arise for firms.
It is now several years since the scope of Mobile Device Management (MDM) expanded to become EMM and Bring Your Own Computer (BYOC) morphed into Bring Your Own Device (BYOD). As mobile management technologies enable even wider and better risk management, the consumerisation of IT is pulling the organisational risk profile in the opposite direction. So should organisations approach mobile technology choices with risk and controls as the priority, or should the personal preference of the employees drive the overall approach to risk when buying mobile phones?
There is no right or wrong answer. Clearly mobile device choice can be emotive and personal and it depends on what is most important on a case by case basis. However, blindly pandering to the ‘wants’ of employees removes very valuable protections that would traditionally be seen as ‘needs’ in any IT security context outside of mobile.
Is your business FCA regulated? Do you have responsibility for overall risk management and compliance? Perhaps you have a team of voice traders and wealth managers. If that describes you as a business manager, then chances are that you should be very concerned. However, if you work in Compliance, Risk or Internal Audit, those business concerns could be a source of easy, high impact wins for 2014.
Compliance might do well to look closely at that IT team usually called ‘Voice Infrastructure’. Have you ever wondered what they actually do? It is often a bit of a mystery. So then how transparent do you think Voice Infrastructure teams really are on the day-to-day management of high impact IT compliance risks? I am referring to the sort of risk issues and supporting evidence that become highly visible in scandals such as Libor.