Brussels is pushing for convergence in the regulatory treatment of hybrid capital. Banks see an opportunity to manage for themselves By Melvyn Westlake

LONDON – The Financial Services Authority (FSA), Britain’s regulator, has had a mixed response from the European Commission to its attempt to “goldplate” aspects of the sweeping new law aimed at opening up the EU financial markets. The Markets in Financial Instruments Directive (MiFID), which comes into effect across the 27-country bloc at the beginning of November, makes the practice of “gold plating” – where governments embellish EU laws with extra provisions to achieve some, often more onerous, local requirement – intentionally difficult. This is because Commission officials are concerned to prevent countries from goldplating the new law for fear that such moves will create local differences that undermine the objective of an open and competitive single market in financial services (see GRR, April 2007).

BERLIN – Tired debates between financial firms and their regulators on issues such as “principles versus rules” need to be dropped and new ones taken up on more fruitful issues, a top French regulator told the annual International Capital Markets Association meeting in Berlin.

LONDON – Plenty of scope remains to improve the approach to new regulation, to slim down legacy rulebooks and to supervise the financial services industry in a less intrusive but more effective way, according to a London-based think tank.

PARIS – Third-country accounting rules should be accepted as equivalent to European standards where there are no significant differences between the two sets of rules, European Union securities regulators advised in late May. The Committee of European Securities Regulators (CESR), the Paris-based body of top investment market supervisors from EU countries that advises on securities regulation, suggested that national accounting standard setters in member states assess whether the generally accepted accounting principles, or GAAP, of a non-EU country are materially the same as the International Financial Reporting Standards (IFRS) used in the EU.

LONDON – Commodities trading can give rise to risks to the financial system, but their magnitude appears significantly smaller compared to the systemic risks posed by banks and investment firms, Europe’s banking regulators concluded in a key report issued as GRR went to press.

SYDNEY, Australia – In June Australian regulators issued papers on Pillar 3 disclosure requirements and gave their responses to comments on their plans to implement the advanced risk measurement approaches under the Basel II bank safety rules.

Guidelines issued in four key areas of new financial markets regime are eliciting both satisfaction and disappointment By Melvyn Westlake

Costs of MiFID for mid-sized firms could mean less choice for investors, not more. But the biggest costs could accrue to firms with ambitions to trade on a pan-European basis

The fact that hedge funds were even on the agenda of the summit of the Group of Eight wealthy nations is evidence that financial firms and markets “have entered a period of great confusion” in terms of regulation, the leading international banker who chairs ICMA told the conference. Barclays Capital chairman Hans-Joerg Rudloff said that hedge funds form an “infinitely small part” of the world’s capital markets. He was speaking ahead of the early-June G8 summit hosted by Germany at the Baltic coast resort of Heiligendamm.