Cypriot lawmakers reject levy on depositors and aid package | Global banks boosted reserves during first half of 2012 | UBS plans to withdraw from Euribor-setting panel
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20 March 2013
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News on the global financial markets

Morning Bell
ECB's transition into bank supervisor moves forward
EU lawmakers have struck a deal with national governments on legislation to give the European Central Bank authority as a banking supervisor. "This is the largest step toward integration since the euro," said Sven Giegold, a member of the European Parliament involved in the negotiations. "It will break with the culture of soft-touch regulation." The deal also bolsters the European Banking Authority's power to ask national regulators for information. Bloomberg (19 Mar.), The Washington Post/The Associated Press (19 Mar.), Reuters (19 Mar.), The Wall Street Journal/Dow Jones Newswires (19 Mar.)
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Industry News
Cypriot lawmakers reject levy on depositors and aid package
The Cypriot parliament has overwhelmingly rejected terms of a rescue by the EU and the International Monetary Fund. The terms included a levy on bank depositors. Accounts with €20,000 or less would have been exempt, but that wasn't sufficient for lawmakers. (France) (19 Mar.), Spiegel Online (Germany) (19 Mar.), European Voice (Brussels) (free registration) (19 Mar.), The Moscow Times (20 Mar.)
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Global banks boosted reserves during first half of 2012
During the first six months of 2012, the largest 101 banks in the world raised their core reserves by about €166 billion, according to the Basel Committee on Banking Supervision. Had Basel III been in force, the banks would have needed an additional €208.2 billion to meet capital rules. Christine Lagarde, managing director of the International Monetary Fund, says the pace of Basel III implementation "has been adjusted intentionally to support banks on the mend". Bloomberg (19 Mar.), Financial Times (tiered subscription model) (19 Mar.), The Wall Street Journal (19 Mar.)
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UBS plans to withdraw from Euribor-setting panel
UBS says it will withdraw from the panel that sets the Euro Interbank Offered Rate. "We have decided to withdraw from the Euribor panel and to focus on our core funding markets, Swiss franc and US dollar," a spokesman said. UBS previously pulled out of the Australian rate panel, while Rabobank announced in January that it would no longer participate on the Euribor panel. Reuters (19 Mar.), Bloomberg (19 Mar.), The Wall Street Journal (19 Mar.)
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Regulatory Roundup
Derivatives groups want IOSCO to take lead in overhaul
Officials from major derivatives associations are calling on the International Organisation of Securities Commissions to take a leading role in resolving concerns about cross-border application of certain rules. Financial Times (tiered subscription model) (19 Mar.)
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Transaction tax wouldn't hurt UK, EU official says
A financial-transaction tax under consideration for 11 euro-zone countries would not hurt the London banking sector, says Manfred Bergmann, the European Commission's director of indirect taxation. "There is no extra burden on nonparticipating member states to collect the tax," he told a UK parliamentary panel. "Will the City of London be forced to collect tax for Germany and France? No." Reuters (19 Mar.)
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ESMA reportedly will gain power to force banks to set benchmarks
The European Securities and Markets Authority might become the first EU institution that can force banks to submit prices to help set benchmarks such as the London Interbank Offered Rate. The move comes as banks exit rate-setting panels in the wake of manipulation investigations. Financial News Online (U.K.) (subscription required) (18 Mar.)
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Draghi discusses fragmentation of Europe's financial market
European Central Bank President Mario Draghi says the central bank's single monetary policy has become fragmented because of fragmentation in the financial market. "As you will be aware, the disruptive effects of severe fragmentation in the single financial market have tangible consequences, such as diverging funding costs for banks," Draghi said. "This has resulted in the uneven transmission of our interest-rate reductions to firms and households across the euro area. For this reason, the ECB has had to identify the most effective policy tools for repairing these disruptions, while remaining within its mandate." Reuters (19 Mar.)
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Banks want BoE's Funding for Lending Scheme widened
UK Business Secretary Vince Cable recently asked the industry about ways to improve the Bank of England's Funding for Lending Scheme. Banks say they would like the initiative broadened to include more collateral and an expanded range of companies. Bloomberg (19 Mar.)
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Spotlight on China
FDI is back on the upswing in China
Foreign direct investment in China increased 6.3% last month compared with February 2012, and more gains are projected after nine months in which FDI stagnated. Economist Stephen Roach says China is witnessing an economic rebound after reaching a nadir in September. "I expect progressive strengthening over the course of the year, especially if the external climate starts to improve on the heels of a gradual pickup in global growth," Roach said. Bloomberg (18 Mar.), (China) (19 Mar.), China Daily (Beijing) (19 Mar.)
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GFMA webinar: "Global LEI Developments and Deadlines" -- 8am Eastern on THURSDAY
GFMA will host a webinar to help financial-market participants prepare for the critical implementation of a global legal-entity identifier. Recently, there have been important developments from the US Commodity Futures Trading Commission, global regulators and the LEI Regulatory Oversight Committee. Further, important deadlines under the CFTC's reporting and record-keeping rule for swaps are quickly approaching. Participate in this timely webinar to receive expert summary and analysis of the latest regulatory developments and initiatives.
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Early-bird registration is open: AFME 6th Annual European Post-Trade Conference
Registration is open for AFME's 6th Annual European Post-Trade Conference, scheduled on 23 May at the Lancaster London hotel. This event brings together eminent speakers from across the industry, including senior operations executives and key regulators, and offers insights into crucial developments in the post-trade space and their impact on the industry.

Register to secure your place.
  • Early-bird member rate (available until 11 April): £299
  • Early-bird nonmember rate: (available until 11 April): £609
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Quality is not an act, it is a habit."
-- Aristotle,
Greek philosopher
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