The supervision of mixed financial services groups in Europe

Over time, the banking, insurance and securities sectors have become increasingly interlinked and one way through which this occurs is via financial conglomerates. Such groups, in particular those that combine banking and insurance, have over time become more important in Europe. They require an appropriate regulatory and supervisory set-up to deal with the specific risks they raise. In the EU, this regulatory set-up was introduced with the Financial Conglomerates Directive (2002) and which Member States are now implementing into national law. The Directive introduces a regime of supplementary supervision, in addition to the one that already exists for the regulated entities of the conglomerate. The Directive covers areas such a capital requirements, intra-group transactions, large exposures, organisational requirements and information exchange between authorities. The paper further compares the regime in the US and the EU. It concludes with issues that might require attention from authorities in the future.cross-sector risk, European Union, financial conglomerate, financial regulation, financial supervision.

Hedge funds and their implications for financial stability

The paper provides an overview of the hedge fund industry, mainly from a financial stability and European angle. It is primarily based on an extensive analysis of information from the TASS database. On the positive side of the financial stability assessment, hedge funds have a role as providers of diversification and liquidity, and they contribute to the integration and completeness of financial markets. Possible negative effects occur through their impact on financial markets (e.g. via crowded trades) and financial institutions (e.g. via prime brokerage). Several initiatives have been launched to address these concerns and most of them follow indirect regulation via banks. If any direct regulation were to be considered, it would probably have to be implemented in a coordinated manner at the international level. At the EU level there is currently no common regulatory regime, although some Member States have adopted national legislation.Asset management, crowded trades, financial regulation, financial stability, hedgefunds, prime brokerage, risk management.

Banking integration in the euro area

This paper provides an assessment of the degree of integration in banking services in the euro area. It diverges from the typical analysis on integration in the financial sector by focusing on the main financial products and services provided by banks to corporate and personal clients rather than on financial markets. As the “law-of-one-price” concept is often not applicable to banking products and services, a wide range of quantitative and qualitative indicators of integration is used in the analysis. Indicators of integration are reviewed for three product areas: wholesale (unsecured interbank loans and deposits, repo market) capital market-related (corporate finance services, asset management and trading) and retail (directed to households and small firms). The main conclusions are that while the market on wholesale banking services is strongly integrated and integration is advancing at a fast pace in capital market-related activities, market segmentation is still significant at the retail level.

The New Basel Capital Framework and its implementation in the European Union

Following the adoption by the Basel Committee of new capital rules for banks, a process is now taking place in the EU to transpose the rules into Community law and, ultimately, into national legislation. This paper gives an overview of the main issues that relate to the EU implementation, mainly from the perspectives of financial stability and financial integration. Although the EU rules are to a large extent based on the texts of the Basel Committee, modifications have been introduced to account for the specific legal and institutional setting, as well as for some features of the European financial system. The paper gives an overview of these modifications and deals in greater detail with a number of selected topics: the monitoring of procyclicality, the role of the consolidating supervisor and the treatment of real estate lending and covered bonds. The paper concludes with an outlook for the future.Banks, Basel II, capital requirements, financial regulation, financial stability, financial supervision, risk management.

Fair value accounting and financial stability

Accounting standard setters are considering the wider use of fair value accounting. This paper focuses on the financial stability implications of a move in the banking sector from the current accounting framework to full fair value accounting. A simulation exercise is performed on how various external shocks affect the balance sheet of an average European bank under the two frameworks. The paper further investigates the impact of the alternative framework on the main balance sheet items, and the interaction with banks’ risk management, supervisory tools and statistical requirements. It also examines how the application of fair value accounting to banks’ trading book has impacted their share price volatility. It is concluded that the introduction of full fair value accounting could have a significant effect in terms of income volatility, procyclicality of bank lending and more generally financial stability. Hence, any move towards this alternative accounting framework should be gradual.accounting, banks, fair value, financial regulation, financial reporting, financial stability, risk management.

EVI1 activation in blast crisis CML due to juxtaposition to the rare 17q22 partner region as part of a 4-way variant translocation t(9;22)

<p>Abstract</p> <p>Background</p> <p>Variant translocations t(9;22) occur in 5 to 10% of newly diagnosed CMLs and additional genetic changes are present in 60–80% of patients in blast crisis (BC). Here, we report on a CML patient in blast crisis presenting with a four-way variant t(9;22) rearrangement involving the <it>EVI1 </it>locus.</p> <p>Methods</p> <p>Dual-colour Fluorescence In Situ Hybridisation was performed to unravel the different cytogenetic aberrations. Expression levels of <it>EVI1 </it>and <it>BCR/ABL1 </it>were investigated using real-time quantitative RT-PCR.</p> <p>Results</p> <p>In this paper we identified a patient with a complex 4-way t(3;9;17;22) which, in addition to <it>BCR/ABL1 </it>gene fusion, also resulted in <it>EVI1 </it>rearrangement and overexpression.</p> <p>Conclusion</p> <p>This report illustrates how a variant t(9;22) translocation can specifically target a second oncogene most likely contributing to the more aggressive phenotype of the disease. Molecular analysis of such variants is thus warranted to understand the phenotypic consequences and to open the way for combined molecular therapies in order to tackle the secondary oncogenic effect which is unresponsive to imatinib treatment.</p

EFSA Panel on Biological Hazards (BIOHAZ); Scientific Opinion on public health risks represented by certain composite products containing food of animal origin

This Opinion reviews the factors that affect microbial survival and growth in composite products, and in foods in general. It concludes that the main factors to be considered are: water activity, pH, temperature and duration of storage, processing, and intensity and duration of other non-thermal physical processes applied. Prevalence and concentration of the pathogens in food are important to determine the risk for consumers. The opinion presents a review of the quantitative microbiology models and databases that can be used to provide quantitative estimations of the impact of the above factors on the survival and growth of the main bacterial pathogens. In composite products, migration and diffusion of moisture and substances among the ingredients may change their physico-chemical parameters, particularly at the interfaces. Therefore, the assessment of the risk posed by composite products needs to consider the combinations of parameters most permissive to survival and growth of pathogens. Two complementary approaches are proposed for the identification and profiling of microbiological hazards in different specific composite products. The first one is based on past outbreaks and prevalence of hazards in the products and leads to the conclusion that the most frequent hazard-composite product combinations are Salmonella in cakes and bakery products. The second one consists in decision tools based on the impact on the pathogens of food composition and food processing. Categorisation of the risk for composite products requires information on their composition, processing and further handling, which can largely differ for foods belonging to the same category. Further conditions may influence the risk and should be verified, i.e. hygienic conditions during preparation of the composite products and their ingredients, shelf-life conditions, and reliability of cooking by consumers to inactivate pathogens. The decision tools developed apply to all composite products considered by the mandate, as well as to all other foods. © European Food Safety Authority, 201