This report notes recent progress on CRD 4, CRA 3, Mortgage Credit Directive and a draft directive on the harmonisation of transparency requirements for listed companies. With regard to the financial transaction tax, it is noted that “support for an FTT as proposed by the Commission was not unanimous. It also noted the support of a significant number of delegations for considering enhanced cooperation, which would allow a limited number of member states to proceed amongst themselves, making use of the EU institutions. The presidency noted that formal requirements for enhanced cooperation would have to be met, and that next steps will be handled by the incoming Cyprus presidency”

FSA has published the texts of letters dated 20 June 2012 sent to compliance officers to firms providing UCIS or advising/arranging UCIS for retail clients. Compliance officers must respond to FSA with information in relation to current UCIS activities by 27 June 2012. FSA notes that it intends to consult on new rules for UCIS later this year “which will give effect to our view that UCIS are niche products and generally unsuitable for those investors of ordinary means and experience who make up the vast majority of the retail market in the UK”.

IMA’s second annual survey on adherence to the Stewardship Code by asset owners, asset managers and service providers has found that institutional investors have increased their engagement with investee companies, leading to a positive influence over corporate behaviour. It notes that all managers and owners of those surveyed now have a public policy statement outlining their responsibilities under the FRC Code. In 2010, six respondents only had a statement that they intended to commit to the Code

This modification allows any firm that is required to provide a KII document to a client to do so after the transaction has taken place (as opposed to before), in circumstances where the client has given instructions by a means of distance communication and the firm is not able to provide the document in good time before the transaction is concluded. It is available to authorised fund managers of UCITS schemes, ICVCs that are UCITS schemes and to firms which sell, personally recommend or arrange the sale of units in a UCITS scheme or an EEA UCITS scheme that is a recognised scheme. This modification is valid until 30 June 2014 unless subsequently withdrawn. FSA notes that firms should be aware that the forthcoming PRIPs initiative may affect this modification.

EBA has published a number of consultation papers on supervisory reporting requirements for own funds; leverage ratio and liquidity coverage/stable funding;. These ITS, which will be part of the EU single rulebook, intend to specify the main features (formats, frequencies, IT solutions) of prudential reporting to be applied by financial institutions in Europe. Responses are required by 27 August 2012.

This document has been updated, with new items shown in red.

This consultation covers three broad areas where advice is sought by the EC: the scope of application, the group wide internal governance requirements and sanctions and supervisory empowerments under the Directive. Responses are required by 13 August 2012.

FSA has launched this consultation on establishing a consumer redress scheme, which could deliver around £110m compensation to investors who were mis-sold the CF Arch cru Investment and Diversified funds. This is in addition to the £54m payment scheme announced last year, involving Capita Financial Managers Limited, BNY Mellon Trust & Depositary (UK) Limited and HSBC Bank plc. All firms which sold Arch cru funds would have to contact their customers within four weeks of rules being made, indicating whether or not their case falls within the scope of the scheme; where redress is due, firms would be able to use an FSA online calculator to calculate each payment – taking account of how much money each investor is able to claim from the separate voluntary payment scheme; and investors should receive notification of how much redress is due within six months of the scheme starting, and would receive payment within 28 days of accepting. Responses to the consultation are required by 31 July 2012. FSA intends to publish a PS, including made Handbook text if approved, in November 2012.

The FT reports that some insurance companies and asset managers may struggle to obtain the data on assets needed to comply with Solvency II transparency and reporting requirements. There are also concerns that disclosure of trading positions may affect corporate confidentiality.

Text of a speech given at an EU conference follows. He puts forward specific policy recommendations, including suggestions that shadow banking vehicles or funds that are sponsored or operated by banks should be consolidated on to bank balance sheets; that banks should hold more liquid assets against such exposures; that money market funds should be required to choose between being variable or constant NAV funds; that non-bank financial intermediaries which finance themselves externally in the market be “subject to bank-type regulation and supervision of the resilience of their balance sheets”; that only banks should be able to use client moneys and unencumbered assets to finance their own business to a material extent; and that should be a clear principal relationship .. for non-banks, any client moneys and unencumbered assets should be segregated and should not be used to finance the business to a material extent. It should, however, remain permissible for non-banks to lend to such clients on a collateralised basis to finance their holdings of securities”. Recommendations on securities and repo lending include greater transparency, that financial firms and funds should not be able to lend against securities that they are not permitted or proficient to hold outright; that non-bank financial firms should be regulated in how they employ cash collateral and that the authorities should be able to step in and set minimum haircut or margin levels for the collateralised financing markets (or segments of them)”.