Transcript STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY …

Twinning project funded by The European Union
Initiatives regarding the capital and
pension insurance markets after the
crisis
15 December 2009
PETAR CHOBANOV, CHAIRMAN
FINANCIAL SUPERVISION COMMISSION
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
Page 1
Shortcomings of the present system, revealed
by the financial crisis
• Lack of early warning mechanisms;
• Not enough adequate macro-prudential supervision;
• Diversity of the supervisory rules and powers within the
Member States;
• Insufficient resources in the Lamfalussy Level 3
committees;
• Significant impact of the financial crisis for pension
insurance schemes’ members close to retirement.
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Regulatory Initiatives: New Architecture
+
European Systemic Risk Board (ESRB)
Governors of
NCBs
+
ECB President
and VicePresident
+
Chairs of EBA,
EIOPA &
ESMA
+
European
Commission
+
Non-voting:
One
representative of
the competent
national
supervisor(s) per
Member State +
EFC President
European System of Financial Supervisors (ESFS)
European
Banking
Authority
(EBA)
National Banking
Supervisors
European
Insurance and
Occupational
Pensions
Authority
(EIOPA)
European
Securities and
Markets Authority
(ESMA)
National
Insurance and
Pension
Supervisors
National
Securities
Supervisors
Page 3
Regulatory Initiatives 1
Strengthening Supervision
• Colleges of supervisors - providing more
effective supervision of cross-border financial
groups;
• Including of EU dimension in the mandates of
the national supervisors:
– considering financial stability concerns in other
Member States;
– applying guidelines and recommendations
adopted by the level 3 committees;
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Regulatory Initiatives 2
Strengthening Supervision
• Review of existing directives - MiFID, MAD, Prospectus Directive;
• Setting principles on management remuneration – limiting
incentives to take excessive risk;
• Derivatives – future policy actions to increase transparency of the
derivatives market and to reduce counterparty and operational risk
in trading;
• Proposal for regulation of the Alternative Investment Funds;
• Credit Rating Agencies Regulation:
– introducing a common regulatory approach to enhance the
integrity, quality and transparency of the credit ratings;
– ensure smooth functioning of the EU market while achieving a
high level of investor protection.
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Regulatory Initiatives 3
Investors’ Protection
•
Packaged Retail Investment Products (PRIPs) – workstream aimed
at ensuring adequate comparable requirements for disclosure and
selling practices for PRIPs, irrespective of their legal form.
•
Proposal for an equivalent of the Key Information Document to be
required for all Packaged Retail Investment Products;
•
Amendments to IAS 39 and IFRS 7 concerning the fair value method
for measurement of financial assets;
•
Amendments to the Capital Requirements Directive in order to
strengthen the rules on stability;
•
Multi-pillar pension strategy confirmed in almost all countries
(diversifying risks across public and private pensions);
•
Focus on improving governance and risk management of the
pension insurance companies.
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Current situation in Bulgaria
• The financial crisis caused large-scale pulling out of
foreign investments from smaller and developing
markets, including the Bulgarian capital market;
• Bulgaria has a very powerful tool against the financial
crisis – consolidated supervision over the capital,
insurance and social insurance market (the Financial
Supervision Commission);
• Pension funds were more resilient to the crisis than other
financial intermediaries (no liquidity concerns) and are
recovering in 2009;
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Capital & Pension Insurance markets statistics
In millions
30 Sept 2008
Market Capitalization of the
Bulgarian Stock Exchange-Sofia
30 Sept 2009
Change
EUR 8,476.1
EUR 6,240.6
-26.37%
Trading Volume on BSE-Sofia
356.05 lots
263.90 lots
-25.88%
Turnover on BSE-Sofia
EUR 844.4
EUR 347.2
-58.88%
Main Indexes of the Bulgarian Stock Exchange-Sofia
1 Jan 2009
1 Dec 2009
Change
SOFIX
359.58
452.23
25.77%
BG 40
108.16
122.71
13.45%
Pension Insurance Companies
In millions
Net assets
1 Jan 2009
EUR 1,174.2
30 Sept 2009
EUR 1,503.7
Change
27,72%
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Undertaken Initiatives by the FSC
• Creating Financial Stability Task Force:
- Identifying and assessing potential risks in the financial sector;
- Analyzing and assessing the macroeconomic situation in Bulgaria
and the influence of the EU regulatory measures over the country’s
stability;
- Creating an early warning system (indicators for potential
problems);
- Conducting stress-tests with the supervised entities;
- Exchange of information with the relevant task forces within the
Ministry of Finance and the Bulgarian National Bank.
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Undertaken Initiatives by the FSC
• Capital market:
-
More thorough screening of short selling;
-
Requiring to submit information regarding additional financial indicators;
-
Increasing the frequency for reporting to the FSC;
-
Requesting additional information from the key investment intermediaries;
• Pension insurance market:
-
Requiring an Action Plan from each of the pension insurance companies;
-
Giving recommendations for more profound analysis in case of large expositions
of the companies;
-
More frequent submitting of the Capital Adequacy Report in case of a potential
risk.
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Perspectives after the financial
crisis
• A genuine and complete reform of the world’s financial
architecture;
• More active supervisory intervention on the market and closer
monitoring of risk exposures;
• Improving of the risk management systems of the pension
insurance companies;
• More comprehensive regulation over wider range of financial
market players (including unregulated entities such as hedge
funds, private equity funds, credit rating agencies, etc.);
• Intensive day-to-day cooperation and coordination between
supervisors on national, European and global level (joint risk
assessment).
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Conclusion
This is a time of great challenges, both
short and long term. To respond to
those challenges, we must act on all
possible fronts, which requires a global
strategy of reforms and restructuring!
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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Looking forward to working with you!
Thank you!
STRENGTHENING THE REGULATORY AND SUPERVISORY CAPACITY
OF THE FINANCIAL REGULATORS
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