EMEA Centre for Regulatory Strategy in Financial Services UK

Is Basel driving banks down a one-way street?

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In recent papers1, the Basel Committee (BCBS) has proposed a number of changes to the scope and use of internal modelled approaches.  Taken together, they represent a tectonic shift in banks’ ability to use internal models for regulatory capital purposes:

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Posted on 28/04/2016 | 0 Comments

Management information on culture | Connecting the dots

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Culture in financial services firms has moved towards the top of the agenda for regulators, investors and consumers in the wake of excessive risk-taking by some firms in the run-up to the financial crisis and a string of misconduct scandals.  Despite this, there can be a tendency on the part of some in the industry to see culture as “someone else’s problem”.  A Deloitte survey on culture in banking carried out in 2013 found that 65% of senior bankers believed there were significant cultural failings across the industry, while only 33% believed the same of their own bank. 

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Posted on 27/04/2016 | 0 Comments

FCA publishes Business Plan | What to expect from the FCA in 2016-17

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The FCA published its 2016-17 Business Plan on 5 April. The document is shorter and less detailed than in previous years, with only a brief Risk Outlook section, and makes limited announcements of new work. This may reflect the fact that the new CEO, Andrew Bailey, will not join the FCA until July, although as a member of the FCA Board, he will already have had an opportunity to influence the Plan. Like last year, the FCA has continued with its magic number of seven priority areas, rolling over five areas and prioritising two new areas – wholesale markets and the provision of advice.

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Posted on 11/04/2016 | 0 Comments

Banking Union and sovereign exposures | Europe’s risk averse risk sharing

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When the EU launched the Banking Union, the ultimate objective of the project was to be able to share risks between countries, rather than retain them at the national level. It is an aspiration that faces many complex political challenges, including the trade-off necessarily made by countries involved between risk sharing and risk reduction. The current EU debate on European deposit insurance, the so-called third pillar of the Banking Union, and the sovereign exposures of banks, reflects precisely such a compromise.

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Posted on 21/03/2016 | 0 Comments

Payments infrastructure | Breaking up the banks’ club?

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Last week, the Payment Systems Regulator (PSR) recommended that banks sell their shares in the main UK central payments infrastructure provider, VocaLink, to encourage competition.

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Posted on 2/03/2016 | 0 Comments

MiFID II delay | A reprieve for firms but no time to pause in implementation

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Following months of speculation, the European Commission published yesterday (10 February) legislative proposals to delay both the MiFID II and MiFIR implementation dates by a year to 3 January 2018. This is an important development. The delay will apply to the package in full, rather than in part, and is deemed necessary due to the “magnitude” of the data challenges.

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Posted on 11/02/2016 | 0 Comments

Fund distribution under MiFID II | Building the optimal model

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New investor protection rules under MiFID II are set to reshape investment managers’ product and distribution strategies in Europe. As the impact of the changes will vary across countries and distribution channels, there is no single optimal approach for firms to adopt. Investment managers distributing funds across the EU will need to think carefully about their strategy in each market. Innovative solutions around online platforms and robo-advice may offer some answers. While the final details of the rules are still pending, policymakers are considering a potential delay of the MiFID II go-live date until 2018. But firms still need to prepare now to be ready in time.

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Posted on 8/02/2016 | 0 Comments

Review of CRD IV for investment firms | A big win for the industry?

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Just in time for Christmas, the EBA published its long-awaited report setting out recommendations for a review of the current prudential regime for investment firms. Produced at the request of the European Commission, and in cooperation with ESMA, the report identified a number of issues in the current application of the CRD/CRR requirements to investment firms (including a lack of adequate risk sensitivity and the complexity of the framework stemming from the current categorisation of firms based on MiFID definitions) and suggested a new approach to their categorisation. The latter would distinguish between systemic and "bank-like" investment firms, to which full CRD/CRR requirements should apply, and other investment firms namely those that are not considered ‘systemic’ or ‘interconnected’. For the ‘non-systemic’ firms, the EBA recommended that requirements should be tailored to reflect the risks specific to their activities.

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Posted on 25/01/2016 | 0 Comments

All I want for Christmas is an MREL

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On 11 December the Bank of England (the Bank) laid out its plans for setting the minimum requirement for own funds and eligible liabilities (MREL) – loss absorbing capacity requirements introduced in the EU by the Bank Recovery & Resolution Directive (BRRD).

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Posted on 16/12/2015 | 0 Comments

The Single Resolution Board | New Year’s resolution

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From 2016, new regulation and a new resolution authority – the Single Resolution Board (SRB) – stand to reshape resolution planning in the Banking Union.

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Posted on 10/12/2015 | 0 Comments