I welcomed the 84 registered participants (even after turning away many applications) to 2015 and hoped they had enjoyed reading ‘000s of pages of technical standards and advice from ESMA and EBA over the holidays! These details will be the hallmark of our discussions this year (and probably forever - as a `voice’ kindly pointed out!). The major topics included:
The size/implications of the UK’s current account deficit
The figure for Q3 2014 was announced just before Christmas – taking the rolling 12-month deficit to a shade below £100 billion (6% of GDP). This massive deficit is after taking account of the £60 billion foreign income generated by “the City”. This data underlines the massive importance to the UK of the City’s continuing ability to succeed in Europe.
See my recent article: “Spot the difference between Brown and Osborne: Rivers of national tears to flow abroad”
The scale of the technical details that must now be filled in at Level 2
EBA published 14 items in the week before Christmas. Some of the details of the BRRD are such that it now seems unlikely that, in the future, Boards of Directors of banks will agree to take over other banks in difficulty. Instead, they will buy parts from the Resolution Authority – at the risk of leaving some customers without service.
ESMA only published 4 items but they ran to more than 1600 pages, including a 458 page Cost /Benefit analysis. No-one at the meeting was against such CBAs but only 6 had opened it (including GPB). However, only one person had read the CBA in depth – and he helped write it!
ESMA’s Technical advice on unbundling research is likely to be a major challenge to the idea of an integrated investment house.
The forthcoming Commission Green Paper on CMU
The Green Paper is likely to amount to little more than a list of questions to the market – and other interested parties. However, a number of examples came up in the discussion about the natural (and now actual, in some cases) consequences of the existing rush of legislation. In some instances, the capital markets are no longer able to provide the liquidity that is key to citizen investors to put their savings into such investments. There are still some low-hanging fruits to be plucked but very difficult actions lie ahead.
Next meeting of `Brussels for Breakfast’: 17th February 2015
Graham's recent articles: Legal Underpinnings of CMU and A day to shake the financial markets
© Graham Bishop
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