PARIS – European regulators pondering the possibility of allowing EU retail investment funds to purchase derivatives on hedge fund indices have issued a consultation paper on their proposals. Whether such indices should be an eligible form of investment for the popular retail funds known as UCITS, or undertakings for the collective investment of transferable securities (called unit trusts in Britain), remains a vexed question.

By Melvyn Westlake Declining capital ratios put more banks at risk. Nationalisation fears grow. Government gropes for re-capitalisation route

BASEL, Switzerland – The International Association of Insurance Supervisors (IAIS) in February elected Michel Flamée as chairman of the IAIS executive committee, the body that heads the organisation which represents insurance regulators in some 180 jurisdictions around the world.

HERZLIYA, Israel –Rony Hizkiyahu, the new man charged with kick-starting Israel’s stalled Basel II implementation programme, has named 2009 as the year for applying the bank capital adequacy rules aimed at bolstering the safety of the country’s banks.

LONDON - Software provider Raft International said in May that UK banking group Abbey National has chosen its Raft Radar product to manage the bank\'s operational risk.

BRUSSELS – The European Commission, executive arm of the EU, is instigating a second fact-finding investigation of pre- and post-trade transparency in the bond market. This fact-finding exercise, described as a “call for evidence,” comes less than three months after the Commission reported on the results of its first such exercise.

NEW YORK – Anxiety over the declining competitiveness of US capital markets touched a new intensity in late January with the publication of yet another report, and dire warnings about the consequences if corrective action is not taken. This latest report,* released by Senator Charles Schumer and New York City Mayor Michael Bloomberg, suggested the city could lose its status as a global financial market without a major shift in public policy. Schumer and Bloomberg, together with New York Governor Eliot Spitzer, warned that New York financial markets, stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating today’s largest financial centre in the world to regional market status, and adversely impacting the U.S. economy.

WASHINGTON – US proposals for implementing the Basel II capital rules would give foreign banks a competitive advantage over American banks, which could only be alleviated by harmonising the US proposals with the international Basel II framework, four of America’s biggest banks, already prominent in the debate, say in joint comment in early February.

KARACHI – Pakistan central bank governor Shamshad Akhtar has created a working group to speed up implementation of the Basel II bank safety rules in Pakistan, according to press reports.

LONDON - A veil of uncertainty still surrounds Pillar 2 of the proposed Basel capital accord.