Divided agencies struggle to craft rule banning banks from proprietary trading. Industry remains implacably opposed

A selection of news items generated by the American regulatory reform agenda

LONDON/STOCKHOLM – Two EU central bank governors have effectively challenged a cardinal principle of the proposed Capital Requirements Directive (CRD IV) put forward in July by the European Commission’s head of internal markets, Michel Barnier. CRD IV is the EU version of the Basel III capital and liquidity reforms aimed at making banks around the world safer and more resistant to crises.

NASHVILLE, Tennessee – America’s top accounting standard-setter backs the so-called “condorsement” approach to the country’s possible adoption of international accounting rules as it would show US support for the development of global rules.

BERLIN/BASEL – As global regulators stressed that effective macroprudential policy requires arrangements tailored to national circumstances, a top European central banker warned that tension between systemic risk watchdogs and national authorities could increase the risk of future financial crises and hamper effective crisis management.

WASHINGTON – America’s new voice on the international insurance stage, the Federal Insurance Office (FIO), is already engaging with European counterparts as Europe confirmed that US regulations would not be recognised yet as equivalent to those of the Solvency II regime.

BASEL – Although largely technical, the changes affecting capital requirements for trade finance announced in late October by the Basel Committee look likely to be quite significant for low income countries. The trade finance lobby has been pressing for some time for concessions on the grounds that Basel II and Basel III do not take account of the particular characteristics of trade finance and, therefore, hit this business especially hard.

BASEL/WASHINGTON – Global regulators agree with the banking industry that good progress has been made towards implementing the pay and rewards code demanded of financial firms by the Group of Twenty (G20) biggest economies in the wake of the 2007-09 global financial crisis.

BASEL – With the deadline barely a year away, few countries have the necessary legislation or regulations in place to meet their commitments to reform the vast over-the-counter (OTC) market for privately-negotiated derivatives, according to the latest progress report from the Basel-based Financial Stability Board (FSB). The mid-October progress report concludes that countries should now “aggressively push forward to meet the end-2012 deadline in as many reform areas as possible.”

MANAMA, Bahrain – Practical difficulties exist in applying the Basel III bank reform package to Islamic financial firms, but they should not get in the way of the fact that Islamic institutions need to take liquidity risk just as seriously as conventional firms, according to a top Middle East central banker.