ECOFIN Roadmap of financial reform (October 2009)

30 October 2009

ECOFIN agreed a timetable for reform of financial supervision, stability, regulation and integrity of financial markets

The ECOFIN Roadmap will be a major indicator of the forthcoming work programme in the EU. We will link the items in this roadmap to the events that have already occurred and keep the map updated as consultations and proposals come out.
 
1. Supervisory framework
2. Framework for crisis prevention, management and resolution
3. Regulatory Framework
4. Promoting integrity of financial markets
 
 
 
1. Supervisory framework

1. Follow-up to the de Larosière Report
Action
Timetable
Actors
State of progress
Revision of EU supervisory framework by:
September
2009
Commission
Legal Proposals
by Commission
1. adopting a general approach on the a macro-prudential framework (creation of the ESRB)
October
2009
Council
 
2. adopting a general approach on a micro-prudential framework (creation of ESFS)
European Banking Authority EBA
European Securities and Markets Authority ESMA
European Insurance and Occupational Pensions Authority EIOPA
 
December
2009
Council conclusions Dec
 

          

2. Colleges of supervisors
Action
Timetable
Actors
State of progress
Establishment of colleges of supervisors for large cross-border financial groups - Principles
                                                       CEBS’ report
As soon as possible and at the latest end 2009
CEBS-CEIOPS
Ongoing for CEBS, fulfilled for CEIOPS
Operational guidelines for the colleges of supervisors
End 2009
CEBS-CEIOPS
Ongoing: CEBS guidelines to be published end 2009; fulfilled for CEIOPS
Establishment of CEBS and CEIOPS risk assessment methodology within colleges
End 2009
CEBS-CEIOPS
Ongoing: both CEBS and CEIOPS respectively working on a common methodology

 

3. Reports/analysis of operational aspects to EU supervision
Action
Timetable
Actors
State of progress
Explore ways to strengthen national application of guidelines of EU Committees of supervisors
 
EU Committees of supervisors
Completed by CEBS and CESR. Ongoing in CEIOPS (to be finalised by end 2009)
Study on sanctioning powers
Autumn 2009
Commission, based on input from EU supervisory Committees
Postponed Input by the EU Committees of Supervisors has been delivered.
Report on supervisory Cooperation and information exchange
Autumn 2009
Commission
Ongoing (will be released
after finalisation of the Supervision package)
Report on delegation of tasks and responsibilities
Autumn 2009
Commission
Input by the EU Committees of Supervisors has been delivered.

 

4. Transparency
Action
Timetable
Actors
State of progress
Financial institutions provide full risk disclosure in reporting and disclosure of all losses on an ongoing basis
Ongoing
Financial institutions, Commission with input from EU Committees of Supervisors
The CEBS Reports on Financial Statements respectively on Pillar 3 disclosures were published in June 2009; follow-up work is ongoing CEIOPS to develop Level 3 guidance on reporting and disclosure (follow up to Level 2 advice in 2009)

 

5. Taking account of the EU dimension
Action
Timetable
Actors
State of progress
Enable supervisory authorities to take account of the EU dimension
Mid-2009
Member States, taking into account recent legislation on banking and insurance and securities
Ongoing
End-2009
FSC to follow up on implementation
Ongoing

 
2. Framework for crisis prevention, management and resolution

1. Bank resolution framework
Action
Timetable
Actors
State of progress
Bank resolution framework (including early intervention tools) of the EU
June 2009
(Poss. Follow up: Consultation and legislative proposals in 2010)
Input from the EFC -
Ongoing
Scheduled for October 2009
ECOFIN December 2009
Resolution plans for financial institutions (‘living wills’), ensuring consistency and coordination in implementation.
2010
Commission, Council with input from Level 3 Committees /ESAs
 

 

2. Guarantee Schemes
Action
Timetable
Actors
State of progress
Review the adequacy of existing guarantee schemes in banking, securities and insurance and make appropriate legislative proposals
July 2009- mid 2010
Commission Consultation in July, possible legislative proposal in early 2010
Ongoing
Pre-consultation
Assessment of the need for a pan-EU guarantee scheme
2010
FSC, with inputs from Commission, BSC, CEBS, CEIOPS and CESR/ESAs
 

 

3. EU-wide framework for policy coordination on financial stability
Action
Timetable
Actors
State of progress
Creation of a comprehensive EU-wide framework for closer policy coordination on financial stability, including:
2010
EFC
 
regular transmission of risk assessments,
2010
ESRB
 
carrying out EU-wide stress tests in cooperation with the Commission and the ESAs as appropriate;
2010
ESRB
 
further enhancing policy coordination between relevant authorities in the EU, (CBSGs or the ECOFIN/EFC for the EU as a whole), taking into account as appropriate, the links to the ESRB and ESFS , by developing practical arrangements and carrying out further work on burden sharing
2010
End 2009
EFC based on a reflection paper from the EFC AHWG
 

 

4. Memorandum of Understanding
Action
Timetable
Actors
State of progress
Implementation of the 2008 MoU
 
2009
Supervisory authorities, Ministries, Central Banks
Ongoing
FSC to report on implementation to the November EFC (in particular on the establishment of CBSGs)
(Poss) revision of the need to revise the 2008 MoU beyond the adjustments for new developments
2010
EFC
 

 

5. Home –Host
Action
Timetable
Actors
State of progress
Consider the need and possibility of introducing a number of changes in EU legislation to enhance the functioning of the EU single Passport
2009
Commission
Poss. Legislative changes to be discussed in EBC on 23 October

 
3. Regulatory Framework

1. Valuation and accounting standards
Action
Timetable
Actors
State of progress
Replacement of IAS 39 (covering level playing field
issue following the FASB's
decision of April 2009)
 
 
 
 
IASB (Commission
and EU Committees of
Supervisors closely
monitoring progress)
Ongoing
measurement (phase I)
July 2009
(standard in October 2009)
 
 
accounting (phases II and III)
Oct. (phase II)
and Dec. (phase III) 2009
(standards
H1/2010)
 
 
2009
 
 
Commission
Phase II of
constitutional
review ongoing
Refinement of the accounting rules in respect of through the cycle provisioning
Oct.2009
(standards
H1/2010)
IASB (Commission
closely monitoring
progress)
Ongoing

 

2.  Capital requirements for banks (CRD)
Action
Timetable
Actors
State of progress
 Enhance liquidity risk assessment and
management by banks
 
2009
 
CEBS
Guidance on liquidity will be published in
2009.
CEBS
Consultation ongoing with
deadline 31 Oct.
Coordinated with Basel Committee process
 
2010
BASEL/ COM to propose global liquidity standards
 
Removal of national options and Discretions
October 2009
Commission
Proposal following
CEBS advice.
Ongoing, CEBS
2010
Commission
Basel Committee
process, CEBS

 

3.  Pro-cyclicality
Action
Timetable
Actors
State of progress
Follow-up to the report of the EFC-WG on Pro-cyclicality and the July Ecofin Conclusions Possible measures to address pro-cyclicality of capital
September
EFC with input from
Commission and FSC discussion
Ongoing; (the Commission proposal in July addressed one of the perceived drivers of procyclicality: remuneration policies)
o Dynamic provisioning
October 2009
Commission
proposal
Ongoing (linked to Basel process), CEBS
o Proc-cyclicality of CRD
End 2009
Commission report
Expected in early 2010

 

4.  Credit rating agencies
Action
Timetable
Actors
State of progress
Credit rating agencies to adopt standards for compliance with EU regulation based on the IOSCO code of conduct
 
CESR- CEBS (CRD)
Ongoing
o EU regulation
Autumn 2009
based on IOSCO Works
 
Registration and oversight of CRAs
2010
 
 

 

5.  UCITS regulation
Action
Timetable
Actors
State of progress
Assess risk management in non-bank investors, particularly for illiquid assets
Autumn 2009
Commission,
CESR and
industry
Expected level II
 
Provisions of the UCITS directive
Any further initiative as a follow-up to the Madoff case
 
 
CESR draft advice under public
consultation
 
 
 
 

 

6.  OTC Derivatives
Action
Timetable
Actors
State of progress
Increasing the safety for "over the counter" derivatives markets , by  :- the clearing of standardized OTC derivative contracts through central
counterparties and, if not, higher capital requirements ;
- the reporting of non-standardized derivative contracts to trade repositories
Autumn/end 2009 (political
orientations)/ 2010 (potential
legislation)
Commission to examine possible future solutions.
 
 
 
CESR report on trade repository/“warehouse” starting with consultation
Ongoing
Improve transparency in use of
derivatives
June 2009 + MIFID review
Commission presented a report
Ongoing
8.  Other actions
Action
Timetable
Actors
State of progress
Extend the scope of regulation to all to date still unregulated instruments, institutions, markets in respect of systemic institutions
Overview By September 2009 and Mifid review in 2010
EFC, FSC, Commission
Ongoing. Initiated for
hedge funds managers, CRAs, OTC derivatives.
Member States' common format to disclose national transposition of EU legislation
 
MS and EU
Committees of
Supervisors
CEBS completed
CESR-CEIOPS ongoing
Autumn 2009
Commission
proposal
Ongoing
Cross sectoral consistency checks of terminology of EU legislation
September 2009
Commission
Ongoing
Harmonization of reporting formats for financial institutions
2012
EU Committees
of Supervisors,
Commission, FSC
Ongoing
Autumn 2009
Commission
proposal
Ongoing

 
4. Promoting integrity of financial markets

1.  Retail policies
Action
Timetable
Actors
State of progress
Ensure responsible lending and borrowing
Autumn 2009
Commission
Public consultation launched in June 2009 with a deadline of 31 August, public hearing
took place on 3 September 2009. Analysis of the results of the consultation and hearing ongoing.
Promote best practices for pre-foreclosures arrangements
October 2009
Commission
Responses to questionnaires to national supervisory
authorities on pre-foreclosure
practices are being analysed by
the Commission
Empowering retail clients
Early 2010
Council, Commission
 
Packaged Retail Investment Products (PRIPs)
End 2009
Commission
Orientation paper subject to public consultation. EC communication
 
 
EU Committees of Supervisors
Input to the Commission from
CESR, CEIOPS and CEBS on issues relating to “scope”,
product disclosure and selling practices by end Oct 2009.
Strengthen financial services consumer inputs to EU policy
End 2009
Commission
Internal deliberations on the best approach to strengthen
Simplify and harmonize national substantive law on
securities holding and
transactions
Early 2010
Commission proposal
Ongoing
Short Selling
End 2009
CESR
Complete the Single Euro Payment area
Mid-2009
Commission
September 2009

 

2.  Remuneration policies and governance
Action
Timetable
Actors
State of progress
Link capital requirements of banks to remuneration
policies and give enforcement powers to supervisors on
remuneration issues
End 2009
Commission
 
 
Inputs from CEBS
Proposal tabled in July
(CRD III)
 
Examine additional measures on remuneration and risk
management in relation to non-banking institutions
2010
Commission Report
Ongoing,
(also input from Basel Committee). CEBS work on internal governance and risk management. CEIOPS work on Level 3 guidance on governance as a follow up on Level 2 advice to EC in 2009.

 

3.  Non co-operative jurisdictions
Action
Timetable
Actors
State of progress
Implement the agreed strategy in the context of the G-20 on non-cooperative jurisdictions based on:
Various dates.
Commission and Member States in the context of the FSB
Ongoing
- Criteria for identifying non cooperative jurisdictions
 
 
 
- Developing a process for evaluating compliance
 
 
 
- Developing a toolbox of dissuasive measures to promote adherence to international prudential standards