English in Banking blog
Whilst the EU Benchmark Regulation (“BMR”) came into effect on 1 January 2018 many benchmark, users have not fully assimilated the impact of the BMR on their business. Firms may have concluded that they would not be impacted by the BMR, simply because they are not benchmark administrators1 . However, unlike the IOSCO Principles for Financial Benchmarks, the BMR also impacts benchmark users.
Thirty months after the Swiss Federal Council adopted the dispatch on FIDLEG (Finanzdienstleistungsgesetz) and FINIG (Finanzinstitutsgesetz), on 12 June 2018 the National Council resolved the final outstanding open points and adopted FIDLEG & FINIG on 15 June 2018. A consultation draft for the ordinances of the two regulations is expected in autumn 2018. FIDLEG & FINIG are the Swiss counterparts of the European MiFID II & PRIIPs regulations, which came into force in January 2018. Both sets of regulations (MiFID II/PRIIPs and FIDLEG/FINIG) seek to improve client protection and create a level playing field for financial intermediaries.
With players in the financial services industry already having undertaken a major effort to implement MiFID II and PRIIPs, they may now face similar challenges with FIDLEG. This first blog post in our FIDLEG series draws parallels with the most challenging requirements already experienced during the MiFID II implementation journey.
European business climate cooling but still optimistic: slightly above average outlook for financial services
This year looks likely to continue the titanic battle between risk and growth. Just when growth seemed to be winning, risk made a come-back and at the moment both seem pretty evenly matched. Business sentiment among European CFOs has cooled compared to autumn 2017, but it remains optimistic, as the latest results of the European CFO Survey show. Optimism among financial service (FS) CFOs is slightly above the European average, but is slightly below for Swiss CFOs from all industries.
The European Union’s (EU) Market Abuse Regulation (MAR) came into effect on 3 July 2016. MAR strengthened the EU’s previous market abuse framework by extending its scope to new markets, new platforms and new behaviours and the significant introduction of monitoring trade orders as well as executions. It contained prohibitions of insider trading, unlawful disclosure of insider information and market manipulation, alongside provisions to prevent and detect these behaviours.
When IFRS9 came into force in January 2018, many in the credit risk world thought the hard part was over. After all, conventional wisdom suggested the new standard would cause a one-off shift in expected loss provisioning and life would return to normal.
However, as firms are now rapidly gaining experience with the first generation of models, a number of practical implications have sprung up with far reaching consequences on business models beyond the challenge of accounting for potential credit losses. One such challenge is the adequate pricing of the implied economic costs of credit under the new standard.
There are various elements of corporate governance that interact with each other and influence the organization’s performance. Our research1 indicates that the most effective elements of ‘good’ governance are independence and diversity of the Board of Directors, remuneration of senior executives, characteristics of the CEO, and the organization’s oversight and ownership structure. Here are six relevant drivers of corporate governance that should be essential to any Financial Services Firm.
After three years of negative interest rates, three out of four Swiss banks manage only to a limited extent the interest rate risks in their balance sheet.
A Treasury pulse check by Deloitte Switzerland has revealed that only a few banks factor interest rate risk in by adjusting short-term tenors or variable interest rate products in their lending business or by offering off-balance sheet products to offset the impact of low or negative margins on their deposit business.
While banks have deployed compliant MiFID II solutions, there are several cases where the implementations remain reliant on manual processes, in particular where requirements or interpretations changed at a late stage.
In this blog, we take a look at the road ahead and how a future-proof solution can be accomplished as part of the Day 2 activities. Focusing on the strategic optimization of the operating model and considering new technologies such as Process Mining, Robotic Process Automation (RPA), Big Data and Blockchain is crucial to gain efficiency while remaining fully MiFID II compliant.
Only a few years ago, human beings were needed to understand text and recognise images. It is now becoming increasingly possible to automate these functions using cognitive technologies, such as machine learning. In fact, one of the first practical deployments of machine learning, the automated processing of handwritten cheques, began in banking in the early 1990s.
Twenty months after the European Banking Authority (EBA) issued the first draft, on 13 March the regulatory technical standard (RTS) on strong customer authentication (SCA) and Common Secure Communication (CSC) under revised Payment Services Directive (PSD2) was finally published in the Official Journal of the European Union.
The length of the process and the number of iterations required to finalise the standard evidence the complexity of developing rules to establish a level playing field between different market participants, while at the same time ensuring technological neutrality, consumer protection, and enhanced security in payments services.
The finalisation of the RTS is an important milestone which will give firms much more clarity and certainty on how to push forward their PSD2 compliance and strategic programmes. Nevertheless, the final RTS still leaves a number of important questions open, particularly in relation to the development and testing of access interfaces for Third Party Providers (TPPs).