The European Securities and Markets Authority (ESMA), the EU securities markets regulator, has on April 29th advised the European Commission on certain aspects relating to retail investor protection. In the advice ESMA puts forward, proposals that will make it easier for investors to get the key information they need to take well-informed investment decisions, whilst also protecting them from aggressive marketing techniques and detrimental practices.  Continue reading…

Philip R. Lane, Member of the Executive Board of the European Central Bank, recently gave a speech at Bruegel, Brussels, on 5 May 2022. There are three main analytical challenges in assessing the economic and inflation outlook for the euro area. First, the pandemic remains a first-order driving force. Over the winter, pandemic restrictions still limited economic activity in the euro area. While these restrictions are currently being lifted and case numbers are declining, the current set of restrictions in China is contributing to a further wave of bottleneck pressures in global supply chains and limiting domestic demand in a major region of the world economy. At the same time, the re-opening of the European economy and the prospects for a more normal summer tourist season are set to provide significant momentum in the coming months, especially for services sectors and tourist-intensive countries. Continue reading…

On May 11, Klaas Knot spoke at the International Swaps and Derivatives Association in Madrid in his capacity as chairman of the Financial Stability Board (FSB). He talked about the current challenges to global financial stability and the measures being taken by the FSB to address them. I am delighted to be here, speaking in my capacity as Chair of the Financial Stability Board (FSB). The work of the FSB has benefitted from long-standing and constructive interactions with ISDA on a range of important areas. Two such examples of our collaborative efforts immediately spring to mind. First, thanks to the concerted effort undertaken by market participants and regulators, we have made huge progress in the transition to robust alternative reference rates across key global markets. Thirty LIBOR settings successfully ceased at the end of last year, and only five USD LIBOR settings remain in use. But, this work is not yet complete. In particular, it is essential that firms prepare for the cessation of the remaining USD LIBOR panels and that the new use of USD LIBOR is avoided. Continue reading…

The Financial Conduct Authority (FCA) is using emergency powers to prevent financial advice firms, who advised members of the British Steel Pension Scheme (BSPS), from disposing of assets to avoid paying compensation. The FCA has introduced these emergency rules, without consultation, in light of the risk that some firms will take steps to get rid of their assets if the rules were consulted on first. The measures will apply from the 27 April 2022. The FCA previously announced proposals for a redress scheme for former BSPS members which the FCA estimates will deliver £71.2 million of redress to consumers who were wrongly advised to transfer their pension.  Continue reading…

The Financial Stability Board (FSB) has recently published a letter from its Chair, Klaas Knot, to G20 Finance Ministers and Central Bank Governors ahead of their meeting. The letter discusses the current outlook for financial stability and sets out the FSB’s plans over the coming months to assess and address emerging vulnerabilities. The letter notes that the Russian invasion of Ukraine triggered large price fluctuations in global financial markets. Continue reading…

by Elena Pykhova

The three-year priorities published by the European Central Bank1 is a must-read document for risk practitioners. It outlines important areas of focus for the supervisors – and, equally, banks and their risk teams, who should be analysing and leading the organisational thinking by ensuring maximum awareness of the environment, comprehension of its impact and hence enhanced preparedness necessary to withstand the next crisis. In the post-pandemic environment, it is not surprising to see credit risk and market risk high on the regulatory agenda. As it relates to Operational risk, while it is explicitly mentioned only in relation to IT Outsourcing and Cyber resilience, it has in fact multiple touch points and direct correlation with other areas, whether linked to business model, governance or climate and environmental risk.  Continue reading…

The Financial Stability Board (FSB) has on April 26th published a report on the interaction between US dollar funding and external vulnerabilities in emerging market economies (EMEs). The report has been prepared in collaboration with the IMF and forms part of the FSB’s work programme on non-bank financial intermediation. The report proposes policy measures to address EME vulnerabilities arising from foreign currency borrowing. These include measures to tackle the build-up of foreign exchange mismatches; enhance crisis management tools; and address data gaps to facilitate risk monitoring and the timely adoption of policies. The report also stresses the importance of ongoing work to address vulnerabilities from liquidity mismatches in open-ended funds, which would also help bolster the resilience of EMEs’ financial systems. Continue reading…

The financial fragmentation in the euro area that occurred at the start of the coronavirus (COVID-19) pandemic was reversed relatively quickly, the European Central Bank (ECB)’s latest report on Financial Integration and Structure in the Euro Area shows. Once pre-pandemic levels of integration were regained, financial integration increased further and remained resilient to pressure from further waves of infections. The most influential policy interventions that initially kept fragmentation contained, and then brought integration back to pre-pandemic levels, were the series of ECB monetary policy measures and the European Union (EU) agreement on a sizeable coronavirus recovery fund. Continue reading…

Akshata Murthy, the wife of British finance minister Rishi Sunak, said on Friday that she would stop avoiding British tax on her foreign income — bowing to pressure which her husband had earlier dismissed as a political smear. The public anger over Murthy’s tax status has been heightened by her husband’s decision to increase payroll taxes at a time when surging inflation leaves Britons facing the biggest cost-of-living squeeze since records began in 1956. Murthy, an Indian citizen, is eligible for so-called “non-domiciled” status in Britain, something available to foreign nationals who do not regard Britain as their permanent home. That in turn allowed her to opt to pay UK tax only on income she earned in or transferred to Britain. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has on 28 March published its Final Report on the European Union Carbon Market (EU carbon market). The Report’s analysis did not find any current major deficiencies in the functioning of the EU carbon market based on the data available. However, ESMA’s analysis of the market has led it to put forward a number of policy recommendations to improve market transparency and monitoring. Continue reading…