Financial Regulatory Developments (FReD) - 30 August 2013

Headlines

ESMA writes to Commission on types of AIFM

BoE speaks on recovery and announces liquid asset requirement reduction

FCA outlines mobile banking risks

Basel Committee reports on Basel III implementation

AIFMD Implementation Breakfast Briefing

European Union and International

Financial Stability Board (FSB)

FSB welcomes better bank disclosures: FSB has welcomed the Enhanced Disclosure Task Force (EDTF) report on the level and quality of the implementation of the EDTF's recommendations on enhancing the risk disclosures of banks in major banks' 2012 annual reports. Banks consider they implemented 50% of the recommendations in their 2012 reports, a significant improvement on the previous year, and expect to implement over 70% next year. (Source: FSB Welcomes Better Bank Disclosures)

FSB reports on compensation practices: FSB has published its second progress report on implementation of its Principles for Sound Compensation Practices and their Implementation Standards. It is pleased with progress, but says it needs more evidence that implementation is effectively leading to more prudent risk-taking behaviour. It acknowledges this will take time, and highlights some emerging trends and practices. All but two FSB member jurisdictions have now implemented the principles and standards and are focusing on effective supervision and oversight of implementation by relevant firms. FSB noted the need for further work on the identification criteria for material risk-takers and other "level playing field" concerns. Generally, it says disclosure has improved, although access to and transparency of data is still often difficult. FSB will continue to monitor compliance and develop guidelines for good practice, although it also acknowledges that certain current regulatory initiatives could materially change compensation structures. (Source: FSB Reports on Compensation Practices)

European Parliament (EP)

EP creates OEIL files for payment services proposals: EP has set up in its OEIL legislative observatory files for the Commission's initiatives on the review of the Payment Services Directive (PSD) and on interchange fees for card-based payments. (Source: OEIL File on PSD Review and OEIL File on Interchange Fees)

European Banking Authority (EBA)

EBA publishes risk-taker responses: EBA has published the responses it received to its consultation on draft Regulatory Technical Standards (RTS) on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile. It needs to submit the draft RTS to the Commission by the end of March 2014. (Source: EBA Publishes Risk Taker Responses)

European Securities and Markets Authority (ESMA)

ESMA writes to Commission on types of AIFM: ESMA has written to the Commission in response to the Commission's criticism of the draft RTS ESMA had submitted in respect of types of alternative investment fund manager (AIFM) under the Alternative Investment Fund Managers Directive (AIFMD). The Commission said the draft risked being incompatible with the AIFMD and invited ESMA to submit revised standards. ESMA does not agree with the Commission's views, and comments that only in "restricted and extraordinary circumstances" should the Commission amend ESMA's draft RTS. However, it has submitted a revised draft, so as not further to delay the final standards. (Source: ESMA Writes to Commission on Types of AIFM)

UK Government and Parliament

Bank of England (BoE)

BoE speaks on recovery and announces liquid asset requirement reduction: Mark Carney has spoken on how the UK is recovering from the financial crisis and how BoE is restoring the stability of, and the public confidence in, banks. He outlined the new requirements for banks to repair their balance sheets so that their capital ratios at least reach a threshold of 7% by the turn of the year. He announced that, for major banks and building societies meeting the minimum 7% capital threshold, BoE will reduce the level of required liquid asset holdings. He said the effect of this will be to lower total required holdings by £90 billion, once all eight major banks and building societies meet the capital threshold. He stressed there is also ongoing work at international and UK levels to meet requirements for systemically important institutions and the Vickers recommendations. The Prudential Regulation...