Reporting the progress in the implementation of the Single Supervisory Mechanism SSM

The European Central Bank (ECB) is preparing to take on new banking supervision tasks as part of a Single Supervisory Mechanism (SSM). The ECB will assume its new banking supervision responsibilities in November 2014, 12 months after SSM Regulation creating the supervisor entered into force. The main objectives of the SSM are to ensure the safety and soundness of the European banking system and to increase financial integration and stability in Europe.

The Single Supervisory Mechanism creates a new system of banking supervision that includes the national competent authorities of the participating European Union countries and the ECB.  However, is the ECB the one responsable for the effective and consistent functioning of the SSM, cooperating with the national competent authorities of participating EU countries. 

The European Central Bank (ECB) has issued several reports about the progress in the implementation of the SSM. The last report of may 2014 assured that the establishment of the SSM governance structures, including the related organisational rules and arrangements, has largely been completed.  Moreover, complying with the deadline of 4 May 2014, the SSM Framework Regulation was adopted by the Governing Council on a proposal of the Supervisory Board and published on 25 April 2014, together with a Feedback Statement on the outcome of the consultation and the amendments, which had been introduced. (SSM Quarterly Report 2014 / 2).

Additionally, the establishment of Joint Supervisory Teams (JSTs), which will be the main operational structure for the conduct of supervision by the SSM, has been initiated. It is also reported that there has been significant progress in the conduct of the comprehensive assessment, which required the selection of portfolios subject to examination in the asset quality review. The details of the scenario of the stress test, as decided by the European Banking Authority (EBA), and prepared in cooperation with the European Systemic Risk Board (ESRB) and the ECB, were released on 29 April 2014.  The Supervisory Board approved a Supervisory Reporting Manual, which will provide the data framework to support the conduct of supervision. (SSM Quarterly Report 2014 / 2)

See European Central Bank, SSM Quarterly Report: Progress in the Operational Implementation of the Single Supervisory Mechanism Regulation 2/2014 http://www.ecb.europa.eu/pub/pdf/other/ssmqr20142en.pdf

The Super-Regulator in Europe

The European Central Bank (ECB) is preparing to take on new banking supervision tasks as part of a single supervisory mechanism (SSM). In a joint work with national regulators the ECB seek to ensure the safety and soundness of the European banking system and to increase financial integration and stability in Europe. It is expected that the ECB will assume its new banking supervision responsibilities in autumn 2014.

Last 7th february the ECB launched a public consultation on draft ECB SSM Framework Regulation. Available here

The Report on the proposal for a Council regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (COM(2012)0511 – C7-0314/2012 – 2012/0242(CNS)) can be consulted here.

Some recent news about the first expected measures to be taken by the new regulator: FT

Impacto de la Regulación Privada Transnacional Unidad Latinoamericana. Tercera Reunión Anual. Universidad Externado de Colombia

Impacto de la Regulación Privada Transnacional Unidad Latinoamericana. Tercera Reunión Anual. Universidad Externado de Colombia- Agosto 15 de 2013.

El programa en el siguiente enlace

https://www.dropbox.com/sh/gxyt81dkz3hzio5/fo5afHKaya/Impacto%20de%20la%20Regulaci%C3%B3n%20Privada%20Transnacional%20%20III%2006082013.pdf

OTC Derivatives: Central Counterparties CCPs and its loss-allocation rules

The implementation of post-trading market infrastructure is the leading policy in the OTC Derivatives Market reform. In particular the introduction of Central Counterparties (CCPs) as intermediaries in every OTC derivatives transaction. 

Although there are some expected benefits in terms of greater transparency and better risk management, the major concern is how to regulate the CCP's insolvency. Therefore, effective loss-allocation rules are fundamental to ensure the success of the new post-trading infrastructure. 

Two illustrative documents discussing the topic:

Bank of England Paper on Central Counterparty Loss-allocation Rules

Financial Times Article

LEI - Legal Entity Identifier

The  LEI - Legal Entity Identifier is a new tool to identify legal entities involved in financial transactions. Arguably, it will provide major benefits to international financial market and regulators in terms of information reporting and risk management.

http://www.treasury.gov/initiatives/ofr/data/Documents/LEI%20Primer_June2013_FINAL.pdf

Triumph of Wall Street?

Lack of independence of regulators has been largely recognised as a factor of inefficient financial regulation. The new rules on transparency of derivatives market -recently issued by the CFTC- do not seem to pose a different  debate. The level of complicity and complaisance between dominant market actors and national regulators, continues determining the content and enforceability of the new regulation.

http://www.nytimes.com/2013/05/20/opinion/derivatives-reform-on-the-ropes.html?_r=0

Internationally driven regulation is harming national derivatives markets

Asian markets are not particularly optimistic with the new system of international rules being implemented on financial derivatives markets. The main concern lies on the applicability of the new clearing and reporting regulations for cross-border transactions. The lack of consistency and what is worse, the conflicting rules would adversely affect the OTC derivatives market itself.

More information available on
http://www.ft.com/cms/s/0/6b6d30b8-b0a9-11e2-9f24-00144feabdc0.html#axzz2S2GVOmgK