14

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Ημερομηνία

Contingent convertible securities: Is a storm brewing?

09-05-2016

Contingent convertible securities, otherwise known as 'CoCos', are hybrid securities issued by banks as debt instruments (e.g. bonds) and automatically converted into equity shares if a contractually pre-defined 'trigger event' occurs. Their defining characteristics are a loss-absorption mechanism (conversion or write-down) and an activation trigger, either based on a mechanical rule or on supervisors’ discretion. CoCos are regarded positively both by the industry and by regulators. Banks appreciate ...

Contingent convertible securities, otherwise known as 'CoCos', are hybrid securities issued by banks as debt instruments (e.g. bonds) and automatically converted into equity shares if a contractually pre-defined 'trigger event' occurs. Their defining characteristics are a loss-absorption mechanism (conversion or write-down) and an activation trigger, either based on a mechanical rule or on supervisors’ discretion. CoCos are regarded positively both by the industry and by regulators. Banks appreciate the fact that this instrument allows them to fund themselves and satisfy their regulatory capital requirements at a lesser cost than with equity. Regulators note positively the fact that the instrument is designed to facilitate balance-sheet repair, or the orderly resolution of a bank, without the bank having to seek to issue extra equity under stressful conditions. Although the size of CoCos issued until now is still small in comparison with other financial instruments, they attracted media attention in early 2016, when they contributed to increasing market volatility around some EU issuing financial institutions. While the 'incident' was contained, its importance should not be downplayed. The possible systemic implications for European markets of a more serious episode should be considered. This raises questions about how investors understand CoCos, as well as the robustness of models that estimate their risks. CoCos are also likely to feature in discussions on possible regulatory changes to banks' capital requirements.

Reforming the structure of the EU banking sector

13-11-2014

The financial and economic crisis has been marked by the 'Too big to fail' problem – a number of financial institutions of a size large enough to pose a systemic problem to the economy required public support to continue operations. According to economic research this has led to implicit subsidies and a distortion of competition in banking markets. As part of major reforms of the financial markets, the European Commission has launched a structural reform of the banking sector. In particular, this ...

The financial and economic crisis has been marked by the 'Too big to fail' problem – a number of financial institutions of a size large enough to pose a systemic problem to the economy required public support to continue operations. According to economic research this has led to implicit subsidies and a distortion of competition in banking markets. As part of major reforms of the financial markets, the European Commission has launched a structural reform of the banking sector. In particular, this will ban Europe's largest banks from carrying out risky proprietary trading activities, and empower national banking supervisory authorities with the ability to carry out systematic reviews of banking activities. The Commission's proposal has divided stakeholders' opinion with the financial sector fiercely opposing it, while consumer groups and financial watchdogs consider the measures are not strong enough. A few Member States have already undertaken reforms of their banking sectors, raising questions of conformity with the Single Market under the new proposed rules.

Financial Instruments and Legal Frameworks of Derivatives Markets in EU Agriculture: Current State of Play and Future Perspectives

15-07-2014

For the first time, new EU laws regulate the agricultural commodity derivatives markets and their participants. By 1st July 2014, some important technical standards and other instruments that determine the effectiveness and the enforcement of these laws still needed to be decided. This study finds that the price discovery and hedging functions of European agricultural commodity derivatives markets and their related infrastructure in the physical agricultural markets need improvements from the perspective ...

For the first time, new EU laws regulate the agricultural commodity derivatives markets and their participants. By 1st July 2014, some important technical standards and other instruments that determine the effectiveness and the enforcement of these laws still needed to be decided. This study finds that the price discovery and hedging functions of European agricultural commodity derivatives markets and their related infrastructure in the physical agricultural markets need improvements from the perspective of European farmers and the agricultural sector.

Bitcoin: Market, economics and regulation

11-04-2014

Bitcoin is a digital currency which started circulating in 2009. It was the first form of virtual money to become relatively popular. Bitcoin is public in nature as it maintains a log of all transactions. These are verified by its users in a process called mining. The extent of computing power and energy needed to mine bitcoins is set to increase over time.

Bitcoin is a digital currency which started circulating in 2009. It was the first form of virtual money to become relatively popular. Bitcoin is public in nature as it maintains a log of all transactions. These are verified by its users in a process called mining. The extent of computing power and energy needed to mine bitcoins is set to increase over time.

Research on: Regulating Agricultural Derivatives Markets

15-11-2013

After years of financial deregulation, the agricultural commodity price shocks of 2007/2008 and 2010/2011 acted as a catalyst for governments to strengthen the regulation of derivatives markets. It is increasingly recognised, at national and international levels, that financial players influence the volatility of commodity prices on exchanges and in spot markets. Reforms of the legal framework of futures markets are being carried out to: - Provide additional transparency requirements in agriculture ...

After years of financial deregulation, the agricultural commodity price shocks of 2007/2008 and 2010/2011 acted as a catalyst for governments to strengthen the regulation of derivatives markets. It is increasingly recognised, at national and international levels, that financial players influence the volatility of commodity prices on exchanges and in spot markets. Reforms of the legal framework of futures markets are being carried out to: - Provide additional transparency requirements in agriculture derivatives market - Guarantee broad market information on the physical (spot) markets - Impose position limits on several agricultural commodities - Reinforce regulators' powers

Shadow Banking - Minimum Haircuts on Collateral

15-07-2013

The Financial Stability Board proposes to dampen the pro-cyclicality that may be caused by changes in haircuts in repo and securities lending during a crisis, by introducing minimum standards for the calculation of haircuts, in order to stabilise them across the cycle. They are also considering putting a floor under calculations, at least on risky assets that exhibit pro-cyclicality. Higher haircuts would also help curtail the build-up of excessive leverage.

The Financial Stability Board proposes to dampen the pro-cyclicality that may be caused by changes in haircuts in repo and securities lending during a crisis, by introducing minimum standards for the calculation of haircuts, in order to stabilise them across the cycle. They are also considering putting a floor under calculations, at least on risky assets that exhibit pro-cyclicality. Higher haircuts would also help curtail the build-up of excessive leverage.

Εξωτερικός συντάκτης

Richard COMOTTO (ICMA Centre, Henley Business School, University of Reading, the UK)

A financial transaction tax in 11 Member States

27-06-2013

Under the EU's enhanced cooperation procedure, 11 Member States are discussing plans to introduce a financial transaction tax in 2014. However, a substantial number of clarifications and agreements have yet to be found, raising the risk of missing the deadline.

Under the EU's enhanced cooperation procedure, 11 Member States are discussing plans to introduce a financial transaction tax in 2014. However, a substantial number of clarifications and agreements have yet to be found, raising the risk of missing the deadline.

Reforming European banks' structures

27-06-2013

Complementing ongoing regulatory reforms in the European banking sector, the EU has started to consider possible changes to banks' structures.

Complementing ongoing regulatory reforms in the European banking sector, the EU has started to consider possible changes to banks' structures.

Shadow Banking: Legal Issues of Collateral Assets and Insolvency Law

14-06-2013

In many financial markets repurchase agreements (repos) and securities lending agreements benefit from special insolvency treatment which - broadly speaking consists of an exemption from a number of insolvency law mechanisms. In line with FSB Recommendation 13 on repos and securities lending, insolvency treatment of these transactions should not be changed. Instead, the regulators should be given the power to temporarily stay close-out netting, as in bank resolution proceedings. Regulatory haircuts ...

In many financial markets repurchase agreements (repos) and securities lending agreements benefit from special insolvency treatment which - broadly speaking consists of an exemption from a number of insolvency law mechanisms. In line with FSB Recommendation 13 on repos and securities lending, insolvency treatment of these transactions should not be changed. Instead, the regulators should be given the power to temporarily stay close-out netting, as in bank resolution proceedings. Regulatory haircuts (FSB Recommendations 6 and 7) may buffer systemic consequences but are unable to act as a circuit breaker. Repo and securities lending collateral assets face increased enforcement difficulties in cross-border settings, stemming from different national rules regarding good-faith acquisition and close-out netting. Haircuts are not an appropriate solution. Instead, only harmonisation of securities law and of the relevant insolvency rules can guarantee a consistent cross-border framework.

Εξωτερικός συντάκτης

Philipp PAECH (London School of Economics and Political Science)

Regulating bankers' bonuses

28-02-2013

Bankers' bonuses have been under debate with the review of the Capital Requirements Directive (CRD IV). The Directive, meant to regulate the amount of capital banks hold, already includes guidelines on the remuneration of bankers, but the European Parliament has sought to introduce a fixed cap on bankers' variable pay proportionate to their fixed pay.

Bankers' bonuses have been under debate with the review of the Capital Requirements Directive (CRD IV). The Directive, meant to regulate the amount of capital banks hold, already includes guidelines on the remuneration of bankers, but the European Parliament has sought to introduce a fixed cap on bankers' variable pay proportionate to their fixed pay.

Προσεχείς εκδηλώσεις

01-12-2020
FISC Public Hearing on 1st December 2020
Ακρόαση -
FISC
01-12-2020
Inter-parliamentary Committee meeting on the Evaluation of Eurojust Activities
Άλλη δραστηριότητα -
LIBE
02-12-2020
Public Hearing on AI and Health
Ακρόαση -
AIDA

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