headlines
CESR: FAQ on credit rating agencies
The new regulation on credit rating agencies was published on 16 September 2009 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:302:0001:0031:EN:PDF) and entered into force on 7 December 2009. CESR now issued a document including questions and answers (http://www.cesr.eu/popup2.php?id=6490
), to provide clarity to market participants in a quick and efficient manner. The responses do not contain standards, guidelines or recommendations, and therefore no prior consultation process has been followed.
The FAQ document will be updated regularly. After each question an indication of the date of its first publication (or latest amendment) will be included to ease the identification of the new Q&A.
CESR Members meet regularly to discuss the questions that have been raised by competent authorities and market participants. Market participants that have identified a question of general importance may send it directly to the relevant competent authority they deal with or to the CESR secretariat (secretariat@cesr.eu). Furthermore, CESR would welcome feedback from market participants on those issues already identified in the document as common positions among its members. The frequency of the future publications will depend on the number of new questions identified and the time it takes to analyse the issues raised and to find common positions.
The German Federal Ministry of Finance published supplementing and clarifying amendments to the BMF-Circular dated 18 August 2009
Income equalisation
The German Federal Ministry of Finance confirmed through a letter dated March 9, 2010 that income equalisation is “carried out effectively” for German domestic and foreign investment funds even if calculated for tax purposes only as far as the following criterias are met:
- Income equalisation must be calculated continually on interim profit as well as distributed, respectively deemed distributed income;
- A retroactive calculation started after the financial year end is not allowed;
- The income equalisation has to be shown as a separate figure of the tax reporting according to Article 5 Investment Tax Act (ITA);
- The auditor certificate (“Berufsträgerbescheinigung”) has to include at the information that income equalisation was calculated for tax purposes.
Thus, the unfavourable regime regarding the acceptance of income equalisation in case of foreign funds, as included in the current version of the circular, has been abolished. Income equalisation does not need to be shown in the annual reports of foreign funds in order to be accepted for tax purposes.
Interim Profit & income equalisation
Consequently, income equalisation calculated for tax purposes only will now be seen as a condition for the recognition of interim profit as negative income. This ensures a playing level field for German domestic and foreign funds.
Furthermore, ALFI will increase its efforts to clarify in close cooperation with the German tax authorities the remaining open issues:
- Grandfathering rules for the supplementing and clarifying amendments with regard to the BMF-Circular dated 18 August 2009;
- Specifying details of the presentation of the income equalisation within the tax reporting figures according to Article 5 ITA;
- Specifying how to treat adjustment items (“Ausgleichsposten”).
For further details please read the letter (PDF) from the German Federal Ministry of Finance.
BaFin introduces short selling disclosure regime
On 4 March 2010 the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) issued a general decree introducing a short selling disclosure regime in Germany. The disclosure regime will come into force on 25 March 2010 and will end on 31 January 2011. It applies to net short positions held in the shares of a number of financial institutions which had already been subject to a general prohibition of naked short sales that expired on 31 January 2010.
The disclosure regime is based on the proposal set out in a report of the Committee of European Securities Regulators (CESR) published on 2 March 2010. It provides a two-tier system for the disclosure of significant net short positions in the aforementioned shares.
The decree is addressed to holders of a net short position being an individual, a legal entity or an investment fund. A net short position is given if the balance of all financial instruments held by a person leads to an economic exposure to a particular share which is comparable to a short sale position in such share.
When the net short position reaches, exceeds or falls below 0.2 per cent of the issued share capital, the position holder is obliged to make a private disclosure to BaFin within one trading day. If the position reached a second-tier threshold of 0.5 per cent, the position holder is required to make also a public disclosure on a no name basis via BaFin. BaFin will publish these disclosures on a no name basis on its website.
Moreover, for both, the private and the public disclosure requirement, steps of 0.1 per cent are used as incremental threshold bands to trigger further disclosure obligations in case of a change of the net short position after the initial disclosure (either exceeding or falling below the 0.1 per cent or 0.5 per cent threshold).
Press release
CSSF: Impact study of the financial industry on the Luxembourg economy (French only)
Based on 2008 figures. Download the full study here (only available in French).
IFBL - Training in Islamic Finance: Foundation Certificate and New Advanced Modules (Diploma)
Islamic Finance in Luxembourg continues to gain ground as an attractive alternative to conventional finance. The framework in Luxembourg makes it an attractive centre for Islamic Finance in Europe, whilst the authorities and key market players continue to drive and support the development of this activity.
Read more and download the registration form (PDF).
ALFI Recommendations: NAV calculation on closed/half-closed business days that are not public holidays in Luxembourg – March 2010
Read ALFI’s recommendation (PDF).
Luxembourg for Finance Mediawatch
Read the latest LFF Mediawatch for:
- Relevant news for the Luxembourg financial centre
- Financial centre media coverage
- Financial centre coverage by country
- Statements about Luxembourg
- Financial centres monitoring
Download the latest LFF mediawatch (PDF).
European Commission consults on possible changes to the Capital
Requirements Directive
The European Commission has published a consultation paper entitled “Possible further changes to the Capital Requirements Directive” (CRD). It is aimed at strengthening the resilience of the banking sector and the financial system as a whole. The proposed changes (a.k.a. “CRD IV”), relate to seven specific policy areas, most of which reflect commitments made by G20 leaders at summits in London and Pittsburgh during 2009.
- Introducing liquidity standards that include a liquidity coverage ratio
requirement underpinned by a longer-term structural liquidity ratio.
- Raising the quality, consistency and transparency of the capital base.
- Introducing a leverage ratio as a supplementary measure to the Basel II risk
based framework based on appropriate review and calibration.
- Strengthening the capital requirements for counterparty credit risk exposures
arising from derivatives, repos and securities financing activities.
- A countercyclical capital framework that will contribute to a more stable
banking system and help dampen economic and financial shocks.
- The Commission is consulting on appropriate measures to deal with the risk
posed by systemically important financial institutions.
- Following the Commission’s commitment to create a single rule book in
Europe, the Commission is consulting on areas where more stringent
requirements might be necessary. The Commission is also consulting on the
appropriate prudential treatment of real estate lending.
The purpose of the CRD (2006/48/EC and 2006/49/EC) is to ensure the financial
soundness of banks and investment firms. Together they stipulate how much of
their own financial resources banks and investment firms must have in order to
cover their risks and protect depositors.
The deadline for comments on this consultation is 16 April 2010. The feedback
to the consultation will feed into a legislative proposal scheduled for the second
half of 2010. FAQs and press release.
New compromise proposal for Alternative Investment Fund Managers
Directive
The Presidency of the Council of the European Union has published a new Compromise proposal (dated 1 March 2010) relating to the European
Commission's proposal for an Alternative Investment Fund Managers Directive.
The new proposal contains a mark-up of the changes that are proposed.
http://register.consilium.europa.eu/pdf/en/10/st06/st06795-re01.en10.pdf
Report on the Alternative Investment Fund Managers Directive
The General Secretariat of Council has also published a report (dated 26
February 2010) on the proposal for Alternative Investment Fund Managers
Directive which was addressed to the Permanent Representatives Committee.
http://register.consilium.europa.eu/pdf/en/10/st06/st06800.en10.pdf
CESR recommends the European Institutions introduce a pan-
European short selling disclosure regime
On 2 March 2010, CESR submitted a report as technical advice to the European
Institutions and recommended the introduction of a pan-European disclosure
regime for net short positions in shares. Those CESR Members that already
have powers to introduce a permanent disclosure regime, as elaborated in the
report, will begin the process of implementing this regime. Those CESR
Members who do not have the necessary legal powers will aim towards
implementing this regime on a best efforts basis, until an EU regime is
adopted.
Following the recent financial turmoil, it was widely recognised that for a short
selling disclosure regime to be efficient and to ensure transparency for market
participants, a convergent pan-European regulatory approach is necessary.
By proposing a pan-European harmonised disclosure regime for short selling to
the European Institutions, CESR seeks to enhance supervisory convergence,
improve market transparency and promote market efficiency and integrity.
CESR will continue to work in the coming months on this issue, to ensure
greater clarity on the technical details necessary to implement such a regime.
CESR protocol on the operation of MiFID database
The Committee of European Securities Regulators (CESR) has published a
document entitled “Protocol on the Operation of CESR MiFID Database”. Under
the market transparency regime of the Markets in Financial Instruments
Directive (MiFID) certain information relating to shares admitted to trading
must be made available to market participants. The regime requires CESR
members to make calculations in connection with shares admitted to trading
on a regulated market, and to some extent “liquid shares”. The results of these
calculations will be published by CESR. The protocol is designed to facilitate
harmonised calculations and the publication of such information. It describes
the tasks and responsibilities of CESR members and the CESR Secretariat and
contains practical guidance on how to conduct the calculations.
http://www.cesr.eu/popup2.php?id=6485
International regulators publish systemic risk data requirements for
hedge funds
The Technical Committee of the International Organization of Securities
Commissions (IOSCO) has published details of an agreed template for the
global collection of hedge fund information intended to assist in assessing
possible systemic risks arising from the sector.
The template is designed to allow the collection and exchange of consistent
and comparable data between regulators and other competent authorities in
order to facilitate international supervisory cooperation in identifying possible systemic risks in this sector. IOSCO is of the opinion that
participants are best monitored through their trading activities, the markets in
which they operate and funding and counterparty information, amongst others.
http://www.iosco.org/news/pdf/IOSCONEWS179.pdf
OECD on Corporate Governance and the financial crisis: Conclusions
and emerging good practices to enhance implementation of the
Principles
This report builds on the report “Corporate Governance Lessons from the
Financial Crisis" and the subsequent report “Corporate Governance and the
Financial Crisis: Key Findings and Main Messages”.
The OECD Steering Group’s first two reports found that corporate governance
weaknesses in remuneration, risk management, board practices and the
exercise of shareholder rights had played a key role in the development of the
financial crisis and that these weaknesses extended to companies more
generally. The Steering Group also found that the OECD Principles of
Corporate Governance provided a good basis to address the main concerns
that had been raised. This report with its conclusions and emerging good
practices is designed to assist companies and policy makers in implementing
the OECD Principles more effectively. The conclusions and emerging good
practices are complementary to the OECD Principles.
http://www.oecd.org/dataoecd/53/62/44679170.pdf
Spain approves new tax exemptions over dividends paid to certain EU
Collective Investment Schemes and Pension Funds
TOn Tuesday, 2 March 2010, the Spanish Official Gazette published the Law
2/2010 of 1st March 2010, implementing certain EU Directives on indirect
taxation and modifying Non Resident Income Tax Law (hereinafter, Law
2/2010).
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