UNI Europa to Discuss Shadow Banking with European Commission
On behalf of UNI Europa Oliver Röthig will be on the panel in the conference along with
Adam Farkas, Executive Director, European Banking Authority and Leena Mörttinen, Head of Group European Affairs, Nordea Bank to address the questions:
§ Are prudential banking regulations sufficiently taking into account shadow banking issue?
§ How securitization markets have evolved since the financial crisis?
§ What can be done to improve consistency on supervisory practises between different jurisdictions?
The conference serves to address the European Commission’s Green Paper on Shadow Banking released on March 19th. The Green Paper is founded in the FSB’s October 2011 report which prioritized developing regulation of shadow banking, defined as “the system of credit intermediation that involves entities and activities outside the regular banking system.” The Green paper aims to define what shadow banking is, along with its risks and benefits. It then covers the current regulation, its challenges, and the key issues that still need to be addressed through regulation.
The key regulatory issues raised are:
1) Banking regulation: aiming to limit “flawed risk transfer towards shadow banking entities, identify the channels of exposure, limit excessive exposure to shadow banking entities, improve disclosure requirements of banks towards exposures to such entities, and ensure that banking regulation covers all relevant activities.”
§ In particular it will examine consolidation rules to ensure they are fully subject to Basel III and is currently studying the
merits of extending certain provisions of CRD IV to non-deposit taking financial institutions.
2) Asset management regulation
§ The Commission is particularly looking at the “evolution of Exchange Traded Funds (ETFs) and Money Market Funds
(MMF) in the context of shadow banking.”
3) Securities lending and repurchase agreements
§ Securities lending and repurchase agreements are often used to rapidly raise funds and increase leverage.
§ In this area, “the Commission and the FSB are examining the current practices, identifying regulatory gaps in existing
regulation and looking at inconsistency between jurisdictions.”
4) Securitization
§ This raises the question of evaluation of whether the EU’s recent measures to regulate securitization have been
effective and how similar measure can be taken in other sectors.
5) Other shadow banking entities
§ Much of the work to be done here involves data collection to identify entities to be cover, mapping existing regulatory
and supervisory regimes, identify gaps and suggest additional prudential measures.
Stakeholders are invited to respond to the consultation before June 1st 2012.
For more information: http://ec.europa.eu/internal_market/bank/shadow_banking/index_en.htm
http://ec.europa.eu/internal_market/bank/docs/shadow/green-paper_en.pdf