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International Association of Risk and Compliance Professionals (IARCP)


1200 G Street N W Suite 800 Washington, DC 20005-6705 USA Tel: 202-449-9750 www.risk-compliance-association.com

Top 10 risk and compliance management related news stories and world events that (for better or for worse) shaped the week's agenda, and what is next
George Lekatis President of the IARCP

Dear Member, Capital levels have strengthened whilst profits have reduced, leading to significantly lower returns on equity Business models are adapting as banks retreat from some areas of business such as investment banking or global finance particularly where economically affordable funding is no longer available and regulatory changes require more risk protection.

What? Who said that?


The European Banking Authority (EBA) describes the main developments and trends that affected the EU banking sector. Read more at N umber 1.

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I n December 2011, the EBA issued a Recommendation to national authorities that participating EU banks raise their Core Tier 1 ratio (CT1) to 9%, after accounting for an additional buffer against sovereign risk holdings.
The EBA identified a shortfall for 27 banks of 76 bn, to be addressed by end-June 2012 via an increase of the capital elements of the highest quality and via a limited set of actions aimed at reducing risk weighted assets (RWAs), without impacting lending into the real economy. Go to N umber 8 to learn what has happened.

Welcome to the Top 10 list.

Report on Risks and Vulnerabilities of the European banking sector 1 1 July 2012 The annual report on Risks and Vulnerabilities of the European banking sector by the European Banking Authority (EBA) describes the main developments and trends that affected the EU banking sector in 2011.

Questions and Answers Notification of UCI TS and exchange of information between competent authorities The revised Undertakings for Collective Investment in Transferable Securities (UCIT S) Directive puts in place a comprehensive framework for the regulation of harmonised investment funds within Europe.

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Advanced Wide FOV Architectures for I mage Reconstruction and Exploitation (AWARE)

This is an image of a gigapixel camera currently being developed by DARPAs Advanced Wide FOV Architectures for Image Reconstruction and Exploitation (AWARE) program.
As part of the program, DARPA successfully tested cameras with 1.4 and 0.96 gigapixel resolution at the N aval Research Lab in Washington, DC.

EIOPA Final Report on Public Consultations No. 1 1/ 009 and 1 1/01 1 On the Proposal for the Reporting and Disclosure Requirements This Final Report contains the outcome of two Public Consultations, No. 1 1/ 009 and No. 1 1/ 011, which were launched by E IOPA on November 8 2011 and on December 21 2011 on the proposal for reporting and disclosure requirements on insurance and reinsurance undertakings and insurance groups.

FINMA opens consultation on Collective Investment Schemes Bankruptcy Ordinance The Swiss Financial Market Supervisory Authority FINM A has opened the consultation on the Collective I nvestment Schemes Bankruptcy Ordinance. The consultation will end on 22 August 2012.

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Speech by Financial Secretary to the Treasury, Mark Hoban MP; Banking union in the eurozone, Brussels

Implementation of a New Process for Requesting Guidance from the Federal Reserve Regarding Bank and Nonbank Acquisitions and Other Proposals Applicability to Community Banking Organizations: This guidance applies to all institutions supervised by the Federal Reserve, including community banking organizations, defined as institutions supervised by the Federal Reserve with total consolidated assets of $10 billion or less

Update on the implementation of Capital Plans following the EBAs 2011 Recommendation on the creation of temporary capital buffers to restore market confidence In December 2011, the EBA issued a Recommendation to national authorities that participating EU banks raise their Core Tier 1 ratio (CT1) to 9%, after accounting for an additional buffer against sovereign risk holdings. The EBA identified a shortfall for 27 banks of 76 bn, to be addressed by end-June 2012 via an increase of the capital elements of the highest quality and via a limited set of actions aimed at reducing risk weighted assets (RWAs), without impacting lending into the real economy.

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FSA (Japan) publishes English translation of Guidance on Equivalency Assessment on Audit and Public Oversight Systems of Foreign Jurisdictions

The FSA and the Certified Public Accountants and Auditing Oversight Board (CPAAOB) stated in A Framework for Inspection / Supervision of Foreign Audit Firms, etc. (September 14, 2009) that they will, in principle, rely on information requirements and inspections regarding foreign audit firms by the competent authorities of the firms' home jurisdictions.

FINRA Issues N ew Investor Alert: Exchange-Traded NotesAvoid Unpleasant Surprises The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Exchange-Traded NotesAvoid Unpleasant Surprises to inform investors of the features and risks of exchange-traded notes (ETNs).

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NUMBER 1

Report on Risks and Vulnerabilities of the European banking sector


1 1 July 2012 The annual report on Risks and Vulnerabilities of the European banking sector by the European Banking Authority (EBA) describes the main developments and trends that affected the EU banking sector in 2011.

The current conjuncture


EU banks have undergone significant changes since 2007, with an accelerated pace in 2011 and 2012. Funding structures have shifted considerably, towards the predominance of official and retail sources of funding. Capital levels have strengthened whilst profits have reduced, leading to significantly lower returns on equity. Business models are adapting as banks retreat from some areas of business such as investment banking or global finance particularly where economically affordable funding is no longer available and regulatory changes require more risk protection.

Further adjustments are likely.


The re-segmentation of banking markets within national boundaries,

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particularly interbank funding, will significantly impact business models going forward.
During 2011 and 2012 significant efforts have been made to strengthen the EU banking sector in terms of both capital and funding/ liquidity. The EBAs 2011 EU wide stress test reviewed credit soundness, sovereign holdings and funding costs. However, as the situation deteriorated additional measures were required, leading among other steps to the EBAs December 2011 Recapitalisation Recommendation. The Recapitalisation entailed a system wide strengthening of participating banks capital bases to 9% core tier 1 and thus their ability to absorb losses. It was not a stress test, but was a necessary step in the progress to restore banks balance sheet. National authorities will continue to pursue the process of balance sheet repair by assessing individual banks asset valuations, especially for specific credit segments with a focus on geographies and sectors such as property loans. Market participants and rating agencies continue to see banks and sovereigns as inextricably interlinked, leading to acute pressure on funding costs. The ECBs LTRO has meant that funding pressures have eased somewhat following the ECBs action but further measures will be required to return to sustainable funding. Policy announcements as of June 2012 to potentially inject capital directly into banks and undertake EU wide supervision appeared to improve market sentiment in this regard.

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Nonetheless, as of mid-2012 the situation remains extremely fragile with increasing uncertainty on asset quality, funding capacity and concerns over the possibility of extreme events.
Banks and supervisors are considering, and putting in place, relevant emergency actions as a rapid deterioration of events could lead to further significant change in the banking landscape.

Beyond 2012 medium term supervisory risks


A return to sustainable funding, beyond the temporary solution brought by the LTRO, will require (i)Restoring market confidence in EU banks, (ii)A recalibration of banks strategies, business models, asset-liability mixes and risk-tolerance levels, and (iii)Forward-looking and close monitoring by supervisors in 2012 and beyond.

Lengthening maturity profiles, diversifying funding sources and meeting the new liquidity requirements must all be balanced with the challenges of increasing usage of collateral, rising asset encumbrance and changing market views on banks unsecured liabilities.
The focus on secured and retail funding all create potential challenges on the prudential and consumer protection front. These issues will absorb the efforts of both bank management teams and supervisors in the years to come.

For the larger EU banking groups with material cross-border activities these efforts will have to continue to expand well beyond national borders.
As banks adjust to the changing environment, further restructuring of their activities and business models is expected.
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Moreover, the need to address more vigorously asset quality deterioration particularly
(i)Where economies are in recession and (ii)For higher-risk credit sectors like real estate will come to the fore. A number of tools are being used by banks and supervisors to address deteriorating asset quality. For example, higher provisioning levels are being demanded and some supervisors and banks are strengthening their loan-modification and arrears management monitoring capacity to help identify inflection points where forbearance on potentially problematic loans moves from being a risk mitigant to being a risk in its own right. Lower returns on equity, tougher funding conditions, and the segmentation of the single market, are all key drivers for change in banks business models. Heightened supervisory attention will be paid to these developments to understand changes both within the banking system and to monitor aspects of traditional banks which move to other areas of the financial system. Table 1 summarises the EBAs views regarding the main risks and vulnerabilities in the EU banking sector in the short and medium terms.

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Important parts of the document Structure of EU banks funding


EU banks are more dependent on wholesale funds than banks in other regions due to the specific dynamics of each market. As examples, the Asian markets are characterised by a high savings ratio as well as by a more reduced share of economic growth generated by bank lending.
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In the US about three-quarters of outstanding residential mortgages are not in originating banks balance sheets, being securitised and held by GSEs and to a lesser extent via private securitisation.
In contrast, a very large majority of mortgages in the EU especially outside the UK and the N etherlands are held in the originating banks balance sheets, being largely funded with covered bonds raised in wholesale markets. Also, to a greater extent than in the EU, the US business credit market is highly bank-disintermediated as practically all large corporates and a significant number of larger SMEs issue directly in the market. Equally, large markets in the EU saw significant savings disintermediation in earlier years (savings shifting from bank deposits to mutual funds and life insurance plans), on a far broader scale than any corresponding credit disintermediation. As a consequence, EU banks have had to rely increasingly on wholesale funds (market issuance but also corporate deposits) to underpin their lending growth. That being said, we note that a degree of savings reintermediation back to bank deposits is now taking place in parts of the EU. The ratio of customer deposit to total liabilities dropped from about 50% to 46% between 2009 and 2011 (chart 1).

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The structure of funding explains why EU banks have been particularly affected by the crisis. In fact, the last five years have seen a significant change in the dynamics of bank funding. Before the crisis, EU banks were pursuing mostly asset-driven strategies. Specifically, as funding was readily available at affordable price points, especially in the wholesale markets, banks were aiming primarily to increase their assets, leading to excessive leverage which generated unsustainably high earnings for several years. The crisis and its implications on the availability of liquidity forced an abrupt strategic turnaround for banks, which have been since adopting liability-driven strategies, aiming to obtain the funding at price points which could justify generating assets at economically viable costs.

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Credit risk and asset quality


The sovereign crisis and, more generally, the macroeconomic conditions have obviously affected banks risk and solvency profiles. The EBAs KRIs provide mixed indications about banks exposure to credit risk. The ratio of impaired loans to total loans increased from 4.5% to 5.6% between 2009 and 201 1 1. The variability across the sample is explained, among other things, by size: the difference between the top 15 and other banks has been stable over the last 2 years at around 2 percentage points, with the former group of banks demonstrating more resilience to credit risk than the others (Chart 5).

Looking at the stocks, accumulated impaired financial assets to total gross assets remained stable at about 1.6%, with however a significant increase of the dispersion (Chart 6).

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As far as the level of provisions is concerned, the coverage ratio (i.e. ratio of specific provisions on loans to total loans) increased until March 2011 and then slightly declined to 42% in December 2011. The reduction was more pronounced for banks different from the top 15 and the gap between these two categories increased at 5 percentage points (Chart 7).

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Overall, the time series of credit risk indicators over the last 9 quarters signal that asset quality is being affected by the increasingly deteriorating macroeconomic environment. However, this is happening at a different pace across countries and type of banks, as mirrored by increased variability. This could be due to the fact that the crisis has been affecting countries at different times and the impact of the second macroeconomic contraction may be delayed for some countries and not yet visible in 2011-end data still. Furthermore, there are indications that several banks have adopted various forms of forbearance which allowed both borrowers to more easily honour their obligation and banks to postpone the recognition of possible losses. In fact, the more forward-looking picture from the RAQ shows that the respondents mostly expect that the impairment levels will not decrease in the near term.

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Exposures towards small and medium enterprises are the most frequently mentioned driver for the expected increase in problem loans.

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NUMBER 2

Questions and Answers Notification of UCITS and exchange of information between competent authorities I. Background
1.The revised Undertakings for Collective Investment in Transferable Securities (UCIT S) Directive puts in place a comprehensive framework for the regulation of harmonised investment funds within Europe.

The extensive requirements with which UCITS must comply are designed to ensure that these products can be sold on a cross-border basis.
The most recent version of the Directive also introduces a management company passport. 2.The UCITS framework is made up of the following EU legislation: a.Directive 2009 /65/ EC, which was adopted in 2009. It is a framework Level 1 Directive which has been supplemented by technical implementing measures (see the Level 2 legislation in b. below). b.Directive 2007/ 16/ EC; Directive 2010/ 43/ EU; Regulation No 583/ 2010; Directive 2010/42/EU; and Regulation No 584/ 2010.

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3.ESMAs predecessor (CESR) produced a series of questions and answers (Q&A) based on questions received through CESRs MiFID Q&A mechanism.
The Q&As reflected common positions agreed by CESR Members. They were one of the tools used by CESR to elaborate on the provisions of certain EU legislation, thereby fostering supervisory convergence, and were considered useful by external stakeholders. ESMA has therefore decided to introduce a similar mechanism in the UCITS area. 4.Similarly, ESMA is required to play an active role in building a common supervisory culture by promoting common supervisory approaches and practices. In this regard, ESMA will continue to develop Q&As as and when appropriate.

I I . Purpose
5.The purpose of this document is to promote common supervisory approaches and practices in the application of the UCITS Directive and its implementing measures. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the UCITS framework. 6.The content of this document is aimed at competent authorities under UCITS to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. However, the answers are also intended to help UCIT S management companies by providing clarity as to the content of the UCITS rules, rather than creating an extra layer of requirements.

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I I I. Status
7.The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices under Article 29(2) of the ESMA Regulation. 8.Therefore, due to the nature of Q&As, formal consultation on the draft answers is considered unnecessary. However, even if they are not formally consulted on, ESMA may check them with representatives of E SMAs Securities and Markets Stakeholder Group, the relevant Standing Committees Consultative Working Group or, where specific expertise is needed, with other external parties. 9.ESMA will review these questions and answers to identify if, in a certain area, there is a need to convert some of the material into ESMA guidelines and recommendations. In such cases, the procedures foreseen under Article 16 of the ESMA Regulation will be followed.

IV. Questions and answers


10.This document is intended to be continually edited and updated as and when new questions are received. The date each question was last amended is included after each question for ease of reference. 11.Questions on the practical application of any of the UCITS requirements in relation to UCITS notification and exchange of information between competent authorities may be sent to the following email address at ESMA: UCITSnotification@esma.europa.eu

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Question 1: N otification of new investment compartments


Date last updated: July 2012 Question 1a: Should UCITS that wish to market new investment compartments in a Member State where they are already notified for marketing for other existing investment compartments undertake a new notification procedure via their competent authority? Answer 1a: Yes. According to Article 91(4) of Directive 2009 /65/EC, the notification procedure as referred in to Article 93 of that Directive also applies to investment compartments of UCITS. Question 1b: Should UCIT S that wish to market several investment compartments of the same UCITS undertake different notification procedures via their competent authority? Answer 1b: No. UCI TS can undertake a single notification procedure via their competent authority when they wish to market several investment compartments of the same UCITS in a Member State. Indeed, according to the Annex I of the Commission Regulation 584/ 2010, UCIT S may indicate names of different investment compartments in the notification letter they transmit to their competent authority pursuant to Article 93(1) of Directive 2009/ 65/ EC. Question 1c: I f the UCITS attestation transmitted to the competent authority of the home Member State lists all the existing investment compartments of a UCITS, should the UCITS undertake a notification procedure for all the investment compartments it intends to market in a Member State? Answer 1c: Yes. Even if the UCITS attestation lists all the existing investment compartments of a UCITS, the marketing of these investment compartments in a Member State is possible only if the competent authority of the host Member State has been duly notified by the competent authority of the home Member State.

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Question 2: Amendments and updates of documents referred to in Article 93(2) of Directive 2009/65/ EC
Date last updated: July 2012 Question 2a: Should notifications to the competent authorities of the host Member States of amendments to the documents referred to in Article 93(2) of Directive 2009/65 /EC (i.e. fund rules or instruments of incorporation, prospectus, latest annual report and half-yearly report by the UCITS) be accompanied by an attestation letter? Answer 2a: No. The attestation letter should only be transmitted to the competent authority of the host Member State by the competent authority of the home Member State at the time of the original notification of marketing. Question 2b: Should notification by the UCITS to the competent authorities of the host Member States of a change in the name of the UCITS or in one of its investment compartments be accompanied by an attestation letter? Answer 2b: No. When UCIT S notify the competent authorities of home Member States of a change in the name of the UCITS or in one of its investment compartments, no UCITS attestation should be transmitted. Question 2c: Should a UCITS follow a new notification procedure via its competent authority when it notifies updates of documents referred to in Article 93(2) to competent authorities of host Member States? Answer 2c: N o. When UCIT S notify updates of documents to the competent authority of the host Member State they should not undertake a new notification procedure via their competent authority.

Question 2d: Should all the documents referred in to Article 93(2) of Directive 2009/ 65/ EC be transmitted when UCIT S send updates of documents to the competent authorities of the host Member States pursuant to Article 32(2) of Directive 2010 /42/ EU?

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Answer 2d: No. Only the documents which have been modified should be transmitted to the competent authority of the host Member State.

Question 3: UCITS host Member States access to documents


Date last updated: July 2012 Question 3a: When a UCIT S is notified for the first time for marketing in a Member State, when should the UCITS make available on a website an electronic copy of each document referred to in Article 93(2)? Answer 3a: In order to satisfy the obligation of Article 31(1) of Directive 2010/42/EU, UCIT S should make available on a website an electronic copy of each document referred to in Article 93(2) as soon as possible after they receive confirmation from their national competent authorities that the notification of marketing has been transmitted to the competent authority of the host Member State. Question 3b: When complying with the obligation of access to documents as required by Article 31(1) of Directive 2010/42 /EU, can UCIT S use password-protected documents?

Answer 3b: No. The use of password-protected documents by UCITS is not permitted.

Question 4: Part A of the notification letter


Date last updated: July 2012 Question: If the UCITS is a self-managed investment company, what information should be provided under the heading details of contact person at the management company in Part A of the notification letter? Answer: If the UCITS is a self-managed investment company , the details of the contact person at the self managed investment company and the relevant contact information should be provided.

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Question 5: Exchange of information between competent authorities in the context of establishment of a branch of a UCITS management company
Date last updated: July 2012 Question: In the context of establishment of a branch by a UCITS management company in a different Member State, in which language should competent authorities of home Member States send the relevant information to competent authorities of host Member States? Answer: The information should be sent in a language customary in the sphere of international finance, unless the competent authorities of the UCITS home and host Member States agree to that information being provided in an official language of both Member States.

Question 6: Attestation of payment of notification fees


Date last updated: July 2012 Question: Under Part B of the model notification letter set out in Annex I of Regulation 584/ 2010, the UCIT S host Member State may require evidence of payment of notification fees. How should this evidence of payment be provided? Answer: There should be evidence that the notification fee has been transferred e.g. by a scan of the transfer form. The evidence should be attached to the notification as proof of payment.

Questions and Answers Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS

Question 1: H edging strategies


Date last updated: July 2012 Question 1a: Can the following strategy be qualified as a hedging strategy as defined in CESRs guidelines?

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A portfolio management practice which only aims to reduce the interest rate risk of a corporate bond portfolio by entering into a short position on bond future contracts (or an interest rate swap) in the same currency and with a similar interest rate duration.
Note that in this case the portfolio credit risk would remain un-hedged. Answer 1a: Yes. This strategy could be considered as a hedging arrangement as defined in CESRs guidelines as it is in line with the example set out in paragraph 33(a) of the guidelines.

Question 1b: Can the following strategy be qualified as a hedging strategy as defined in CESRs guidelines?
A portfolio management practice which aims to reduce the credit risk of a corporate or government bond portfolio through purchased Credit Default Swaps (CDS). Note that in this case the portfolio interest rate risk would remain un-hedged. Answer 1b: Yes, but only if the corporate or government bond and the purchased CDS relate to the same issuer. Question 1c: When calculating the global exposure according to the Commitment Approach, can UCITS that invest in other funds make use of hedging arrangements? Answer 1c: According to Box 8 of CESRs guidelines, for the purpose of calculating global exposure under the Commitment Approach, hedging arrangements may only be taken into account if they relate to the same asset class. Therefore, hedging arrangements for UCITS funds of funds are possible provided that the management company of the investing UCITS has full knowledge of the underlying investments of the target funds.

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Question 2: Disclosure of leverage by UCITS


Date last updated: July 2012 Question 2a: For UCIT S using VaR to calculate global exposure, can the required disclosure of leverage be made on a net basis i.e. leverage calculated after netting/ hedging arrangements are taken into account? Answer 2a: No. In accordance with Boxes 24 and 25 of CESRs guidelines, leverage should be calculated as the sum of the notionals of the derivatives used. Question 2b: Could UCIT S using the VaR approach to calculate global exposure disclose leverage based on the Commitment Approach? Answer 2b: Yes. However, the leverage should be disclosed based on both the sum of the notionals as provided by CESRs guidelines and the Commitment Approach.

Question 3: Concentration rules


Date last updated: July 2012 Question: Article 54 of Directive 2009/65/ EC permits competent authorities to authorise UCIT S to invest up to 100% of their assets in transferable securities issued by certain issuers e.g. sovereigns. In such cases the UCITS must hold securities from at least six different issues and securities from any single issue shall not exceed 30% of its total assets. Should this diversification rule apply on the basis of the net assets of the UCITS or on a gross basis?

Answer: The 100% diversification limit of Article 54 should be applied on the net assets (i.e. exposure to assets referred to in this article is limited to 100% of the net asset value) as all investment restrictions applicable to UCITS, including the diversification limits of Article 54, have to be applied with reference to their net assets and because any exposure beyond 100% to a sovereign issuer cannot be considered as equivalent
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protection with regard to Article 52. Furthermore, it is explicitly clarified that any exposure taken to assets referred to in Article 54, including through derivatives (e.g. bond future contracts such as Euro.
Bund Future, 10 Year US T-Note future) and any efficient portfolio management techniques (e.g. reinvestment of cash collateral) must be included when calculating the limit of 100% according to Article 54.

Question 4: Calculation of global exposure for fund of funds


Date last updated: July 2012 Question: Is the look-through approach compulsory for the calculation of global exposure when UCIT S invest in other funds? Answer: No. For the purpose of calculating global exposure, a look-through approach is not compulsory when UCIT S invest in other funds. As an alternative, UCITS may treat the NAV of the target fund as an equity and use it as a substitute in the calculation of global exposure, in particular when the VaR Approach is used. This method may only be used if the risk management function can prove and document that this approach does not lead to an inaccurate picture of the fund of funds. In addition, UCIT S fund of funds structures have to comply with all due diligence and risk management requirements laid down in the UCITS framework (Directive 2009/ 65/ EC, Directive 2010/43/EU and the CESR guidelines on Risk Management principles for UCIT S7). Finally, the method chosen by the UCITS should be disclosed in the prospectus.

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NUMBER 3

ADVANCED WI DE FOV ARCHITECTURES FOR IMAGE RECONSTRUCTION AND EXPLOITATION (AWARE)


This is an image of a gigapixel camera currently being developed by DARPAs Advanced Wide FOV Architectures for Image Reconstruction and Exploitation (AWARE) program. As part of the program, DARPA successfully tested cameras with 1.4 and 0.96 gigapixel resolution at the N aval Research Lab in Washington, DC.

The gigapixel cameras combine 100-150 small cameras with a spherical objective lens.
Local aberration correction and focus in the small cameras enable extremely high resolution shots with smaller system volume and less distortion than traditional wide field lens systems.

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The DARPA effort hopes to produce resolution up to 10 and 50 gigapixelsmuch higher resolution than the human eye can see.
Analogous to a parallel-processor supercomputer, the AWARE camera design uses parallel multi-scale micro cameras to form a wide field panoramic image. The AWARE program is developing new approaches and advanced capabilities in imaging to support a variety of Department of Defense missions.

Advanced Wide FOV Architectures for Image Reconstruction and Exploitation (AWARE) program responds to these needs by simultaneously pushing the envelope of imager performance through new FPA and camera designs and advanced distributed aperture sensors (ADAS) ground support systems.
The AWARE program will enable higher resolution and multi-band imaging capability for increased target discrimination and search in all weather day/night conditions. The imaging systems will be sufficiently lightweight and compact to be fielded on a variety of ground and air borne platforms. The AWARE program will solve the current fundamental scaling limitations in imaging systems and demonstrate a design methodology for building compact systems, capable of forming images at or near the full diffraction-limited instantaneous field of view (iFOV) achieved over a wide FOV. This approach represents a dramatic advance over the current state of the art.

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DARPA investments in extreme hypersonics continue


DARPAs research and development in stealth technology during the 1970s and 1980s led to the worlds most advanced radar-evading aircraft, providing strategic national security advantage to the United States. Today, that strategic advantage is threatened as other nations abilities in stealth and counter-stealth improve. Restoring that battle space advantage requires advanced speed, reach and range. Hypersonic technologies have the potential to provide the dominance once afforded by stealth to support a range of varied future national security missions. Extreme hypersonic flight at Mach 20 (i.e., 20 times the speed of sound)which would enable DoD to get anywhere in the world in under an houris an area of research where significant scientific advancements have eluded researchers for decades. Thanks to programs by DARPA, the Army, and the Air Force in recent years, however, more information has been obtained about this challenging subject. DoDs hypersonic technology efforts have made significant advancements in our technical understanding of several critical areas including aerodynamics; aerothermal effects; and guidance, navigation and control, said Acting DARPA Director, Kaigham J. Gabriel. but additional unknowns exist. Tackling remaining unknowns for DoD hypersonics efforts is the focus of the new DARPA Integrated H ypersonics (IH ) program. History is rife with examples of different designs for flying vehicles and approaches to the traditional commercial flight we all take for granted today, explained Gabriel.

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For an entirely new type of flightextreme hypersonicdiverse solutions, approaches and perspectives informed by the knowledge gained from DoDs previous efforts are critical to achieving our goals.
To encourage this diversity, DARPA will host a Proposers Day on August 14, 2012, to detail the technical areas for which proposals are sought through an upcoming competitive broad agency announcement. We do not yet have a complete hypersonic system solution, said Gregory Hulcher, director of Strategic Warfare, Office of the Under Secretary of Defense for Acquisition, Technology and Logistics. Programs like I ntegrated H ypersonics will leverage previous investments in this field and continue to reduce risk, inform development, and advance capabilities. The I H program expands hypersonic technology research to include five primary technical areas: thermal protection system and hot structures; aerodynamics; guidance, navigation, and control (GNC); range / instrumentation; and propulsion. At Mach 20, vehicles flying inside the atmosphere experience intense heat, exceeding 3,500 degrees Fahrenheit, which is hotter than a blast furnace capable of melting steel, as well as extreme pressure on the aeroshell. The thermal protection materials and hot structures technology area aims to advance understanding of high-temperature material characteristics to withstand both high thermal and structural loads. Another goal is to optimize structural designs and manufacturing processes to enable faster production of high-mach aeroshells. The aerodynamics technology area focuses on future vehicle designs for different missions and addresses the effects of adding vertical and horizontal stabilizers or other control surfaces for enhanced aero-control of the vehicle.

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Aerodynamics seeks technology solutions to ensure the vehicle effectively manages energy to be able to glide to its destination.
Desired technical advances in the GNC technology area include advances in software to enable the vehicle to make real-time, in-flight adjustments to changing parameters, such as high-altitude wind gusts, to stay on an optimal flight trajectory. The range/ instrumentation area seeks advanced technologies to embed data measurement sensors into the structure that can withstand the thermal and structural loads to provide real-time thermal and structural parameters, such as temperature, heat transfer, and how the aeroshell skin recedes due to heat. Embedding instrumentation that can provide real-time air data measurements on the vehicle during flight is also desired. Unlike subsonic aircraft that have external probes measuring air density, temperature and pressure of surrounding air, vehicles traveling Mach 20 cant take external probe measurements. Vehicle concepts that make use of new collection and measurement assets are also being sought. The propulsion technology area is developing a single, integrated launch vehicle designed to precisely insert a hypersonic glide vehicle into its desired trajectory, rather than adapting a booster designed for space missions. The propulsion area also addresses integrated rocket propulsion technology onboard vehicles to enable a vehicle to give itself an in-flight rocket boost to extend its glide range. By broadening the scope of research and engaging a larger community in our efforts, we have the opportunity to usher in a new area of flight more rapidly and, in doing so, develop a new national security capability far beyond previous initiatives, explained Air ForceMaj. Christopher

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Schulz, DARPA program manager, who holds a doctorate in aerospace engineering.


The I H program is designed to address technical challenges and improve understanding of long-range hypersonic flight through an initial full-scale baseline test of an existing hypersonic test vehicle, followed by a series of subscale flight tests, innovative ground-based testing, expanded modeling and simulation, and advanced analytic methods, culminating in a test flight of a full-scale hypersonic X-plane (HX) in 2016. HX is envisioned as a recoverable next-generation configuration augmented with a rocket-based propulsion capability that will enable and reduce risk for highly maneuverable, long-range hypersonic platforms.

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THIS FALL, SEE YOURSELF AS A DARPA IMAGERY RESEARCHER


July 10, 2012

Teams wanted for eight weeks of radical innovation in visual and geospatial data analysis
Theres a lot to be said for the road that is takenits safe, its well lit, and you probably know where it leads. Rarely does an opportunity present itself to leave the road entirely and venture off in search of new vistas.

The Defense Advanced Research Projects Agency (DARPA) seeks trailblazers to explore the unknown in the areas of visual and geospatial data analysis.
Researchers will participate in a short-fuse, crucible-style environment to invent new approaches to the identification of people, places, things and activities from still or moving defense and open-source imagery. A lot can happen when you put seriously intelligent, seriously motivated people in a room with a mission and a deadline, said Michael Geertsen, DARPA program manager and the force behind the I nnovation H ouse Study. We are inviting a new generation of innovators to try out ideas in an environment that encourages diverse solutions and far-out thinking. If this model proves to be as successful as we believe it could be, it represents a new means for participating in Government-sponsored research projects. DARPAs I nnovation H ouse Study, conducted with George Mason University in Arlington, Va., will provide a focused residential research environment for as many as eight teams. Interested team leaders are encouraged to submit proposals by July 31, 2012, detailing their plan to design, execute and demonstrate a radical, novel research approach to innovation in the area of extracting
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meaningful content from large volumes of varied visual and geospatial media.
Selected teams will receive up to $50,000 in funding. The I nnovation H ouse concept revolves around a collaborative, rather than competitive, environment. The study will run for eight weeks over two four week sessions from Sept. 17, 2012 to Nov. 9, 2012.

In Phase I, teams are expected to produce an initial design and demonstrate in software the crucial capabilities that validate their approach.
In Phase I I , teams are expected to complete and demonstrate a functional software configuration as a proof of concept. Teams demonstrating sufficient progress in Phase I will receive Phase I I funding. DARPA will provide access to unclassified data sets and facilitate interaction with mentors from U.S. Government and academia. These interactions will provide teams with context for how their proposed technology could be applied in the real world.

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NUMBER 4

EIOPA Final Report on Public Consultations N o. 1 1/ 009 and 1 1/ 011 On the Proposal for the Reporting and Disclosure Requirements 1. Scope
1.This Final Report contains the outcome of two Public Consultations, No. 1 1/ 009 and No. 1 1/ 011, which were launched by EIOPA on November 8 2011 and on December 21 2011 on the proposal for reporting and disclosure requirements on insurance and reinsurance undertakings and insurance groups. 2.It includes a feedback statement with E IOPAs opinion on the main comments received during the Public Consultation. 3.In the Annexes, stakeholders can find the detailed resolution template with EIO PAs feedback on all comments received (Annex I ), together with updated reporting and disclosure documents, which have been revised as a result of the comments received (Annex I I). 4.In relation to the draft Guidelines on Solvency and Financial Condition Report and the Regular Supervisory Report, Reporting under predefined events and undertakings Processes for Reporting & Disclosure, EIOPA has included the explanatory text in this Final Report, as it did in the Consultation Papers, in order to assist readers in understanding the thinking behind specific points in the Guidelines. 5.The requirements on reporting and disclosure templates described in this Final Report will be reflected in a technical standard to be drafted by
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EIOPA and endorsed by the European Commission (EC) according to Article 10 and 15 of EIOPA Regulation.
6.The draft Guidelines in this Final Report may still be subject to amendments in order to reflect future developments of any underlying legally binding Union acts. 7.The Omnibus I I Directive (OMDII) will set the date of entry into force of the Solvency I I regime. EIOPA strongly supports, within the constraints of the final decisions of the Parliament and the Council on the timeline and the scope of the technical standards, the entry into force of Solvency I I from 1 January 2014.

2. Purpose
1 . E IOPA acknowledges that the effective transition to the Solvency I I regime and in particular compliance with the reporting and disclosure requirements from day one requires that early preparations are made for implementation. 2.Consequently, EIOPA has performed informal consultations with stakeholders over the last few years and this was followed by a period of formal public consultation at the end of 2011 on , Consultation Paper 9 (CP No. 1 1/ 009 ) and Consultation Paper 1 1 (CP No. 1 1/ 011). 3.CP No. 1 1/009 included the draft proposal on Quantitative Reporting Templates and Draft proposal for Guidelines on N arrative Public Disclosure & Supervisory Reporting, Predefined Events and Processes for Reporting & Disclosure. This consultation, included: a ) I ssues Paper; b) Excel templates for reporting and disclosure; c) Summary docs for each template;
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d)LOGs for each template;


e)Proposal for a Guideline on Narrative Public Disclosure & Supervisory Reporting, Predefined Events and Processes for Reporting & Disclosure; f ) I mpact Assessment. 2.4. CP No. 1 1/ 011 introduced information needs required from insurers for financial stability purposes. This consultation included: a ) I ssues Paper; b) Excel templates for reporting and disclosure; c) LOGs for each template. 5.The package in this Final Report reflects EIOPAs position on the comments received on CP No. 1 1/ 009 and CP No. 1 1/ 011. 6 . E IOPA considers that it is crucial for the effective and timely implementation of Solvency I I reporting and disclosure requirements (including the reporting needed for EIOPA financial stability purposes) that an updated package is provided, which undertakings can use as the basis for their preparations. Furthermore, EIOPA believes that the package represents a stable view of the level of granularity of the information that supervisory authorities will need to receive. 7.Changes arising from the discussions of OMDII and the implementing measures are not expected to be major and may potentially include amendments in the following templates: a) Scope of the quarterly reporting; b) Own funds; c) Solvency Capital Requirements (SCR) specific risk modules; d) Life Technical Provisions;
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e)Activity by country;
f)Templates applicable to Ring Fenced Funds (RFF) (as the matching premium may impact RFF treatment). 8.Additionally, further clarifications will need to be developed regarding the use of the templates by undertakings that use the simplifications on technical provisions and SCR calculations to be defined by implementing measures. 9.The application of reporting and disclosure requirements to third country branches located in the EU will also be considered following this publication. 10.The European Markets I nfrastructure Regulation (EM IR) consultation package, expected in July of 2012 will lead to an assessment on the need to revise the templates on derivatives. A full convergence of requirements is not envisaged since EM IR serves a different purpose to Solvency I I . However, E IOPA believes it is important to align the requirements as far as possible to limit the reporting burden on undertakings.. 11.Finally, the package may be amended during the implementation phase, in particular due to the development of the data point modelling and eXtensible Business Reporting Language (XBRL) taxonomy, the templates may require design or structural changes, but these will not affect their content. 12.The package published in this Final Report includes: a) Feedback Statement for CP N o. 1 1/009 and for CP No. 1 1/011; b)Updated Excel templates (covering solo, groups and financial stability); c) Updated Summary docs (covering solo, groups and financial stability); d) Updated LOGs (covering solo, groups and financial stability); e)Updated proposal for the SFCR and narrative RSR, reporting under Predefined Events and undertakings own Processes for Reporting & Disclosure;
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f) Comments template.
2.13. The updated Excel files are presented in a different way to the files in CP no. 1 1/009 and CP No. 1 1/ 011 since this provides for better understanding The package now includes six Excel files, listed in the table below, that include information for supervisory purposes and for financial stability purposes. The content for these files is described at the end of the Feedback Statement.

14.The Summary docs, LOG files and the proposal for the SFCR and narrative RSR, reporting under Predefined Events and undertakings own Processes for Reporting & Disclosure were updated according to the changes made to the templates and further clarifications requested from stakeholders.

Future full and final package on Reporting and Disclosure


15.EIOPA expects that the final package on reporting and disclosure will be published during the course of 2013 and that it will incorporate the package now approved along with all foreseen changes described at paragraphs 2.1 to 2.10, and will include:

a) Draft Technical Standard


(including solo, groups, financial stability requirements and requirements for third country branches):

i. Articles (will include content of I ssues Paper as consulted and part of the content of summary docs and LOGs that are requirements)

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ii.Technical annexes (will include templates plus description of the items, based on LOG files)
iii. Validation rules (to be confirmed)

b) Guidelines
(including solo, groups, financial stability requirements and requirements for third country branches), covering SFCR, RSR, pre-defines events and undertakings policies: i. Guidelines (where a more clear link between the SFCR and templates to be disclosed will be done) ii.Excel templates (if needed depends of the format to be used in the Technical annexes of the Technical Standard) iii.Summary docs (if needed, with information not used in the Technical Standard but considered helpful for stakeholders) iv.LOGs files (if needed, with information not used in the Technical Standard but considered helpful for stakeholders)

c) Guideline on XBRL 3. Feedback Statement I. Introduction


1.EIOPA would like to thank all respondents who provided comments on the CP No. 1 1/ 009 and CP No. 1 1/ 011. These provided valuable suggestions for improving the reporting and disclosure requirements package and helped to identify areas needing further clarification. 2.The amendments made cover not only clarifications, including the acceptance of a number of rewording suggestions from respondents, but also some changes to the content of the Guidelines and the accompanying explanatory text..
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3.The feedback statement outlines first the comments received from respondents to CP No. 1 1/ 009 and CP0 No. 1 1/ 011 and second the review and resulting changes made to the reporting and disclosure package.
4.The comments from the I nsurance and Reinsurance Stakeholders Group are addressed in a specific section at the end of the feedback statement.

I I . Comments in general Implementation and maintenance costs


5.Respondents stated that the proposed reporting templates would put a heavy burden on undertakings.

The costs will not only be the immediate costs of changing IT-systems.
They believe that there will also be a permanent increase in costs for reporting because additional human resources will be required in all company functions involved in reporting.

Timing 18 months for implementation


6.If XBRL is chosen as the new technical format for reporting templates, respondents stated that the industry may require up to 2 years to implement and test the necessary systems. Respondents urged EIOPA to communicate their decision on the format of reporting templates as soon as possible to allow sufficient time for industry preparation.

Proportionality in general
7.Respondents believe that the principles of proportionality and materiality were not adequately considered in the general reporting requirements as well as in the amount of information to be reported.

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They proposed that a clear definition of materiality thresholds should be considered in several templates (e.g. reinsurance, technical provisions, repos and securities lending, balance-sheet in this case respondents requested clarity on the criteria to report the balance sheet quarterly).
8.Respondents stated that assurance should be provided that the definition of which undertakings are exempted from quarterly reporting will remain stable and that this might be done through a larger period of observation of the conditions for inclusion and exclusion. It was stated that it is not clear who decides which undertakings are within the threshold and for how long.

Threshold of 6bn for financial stability information


9.Respondents believe the threshold is too low and will include insurers with no relevance for financial stability. In particular in large countries, a relatively high number of insurers will be included.

10.Other respondents expressed some concern that a threshold of EUR 6 bn might have a negative impact on the sector coverage for small and medium sized countries.

Deadlines for financial stability information


11.Respondents expressed serious concern regarding the introduction of shorter deadlines for groups. Several respondents expressed that they would face severe difficulties in preparing consolidated data with the shorter deadlines and on a quarterly basis. 12.Other respondents considered timely information essential for financial stability analysis.

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Quarterly reporting and 4th quarter reporting


13.Respondents believe that national regulatory authorities should be given the flexibility of exempting companies with a stable risk profile from quarterly reporting in accordance with the principle of proportionality. 14.Reporting of the 4th quarter template is considered very burdensome as it duplicates a process which must be done at a later point again. It is questioned why the supervisory authority request parts of the information already 9 weeks before the annual report will be submitted.

Standard codes to be used in the reporting


15.Respondents have many doubts on how the several codes required are maintained, e.g. codes for reinsurers, issuers, issuer group, issuer sector and counterparties. Respondents welcomed the possibility that E IOPA introduces entitys codes to avoid incorrect legal names of involved entities. However it is still unclear whether these codes will be determined by the undertaking or by EIOPA. 16.On the CIC codes respondents welcome standardised rules. They say that a possibility would be EIOPA to appoint providers for determining the CIC Codes for listed securities and providing guidance on CIC mapping for unlisted securities, for example via a guidance committee.

Technical provisions by line of business for financial stability information


17.Respondents were concerned about the request of technical provisions by line of business for groups as they saw it to re-introduce requirements
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on group level which were no longer part of the micro-prudential package.


Groups are not required to fill in the technical provisions templates in the micro-package by line of business.

Quarterly SCR for financial stability information


18.Respondents raised concerns about providing quarterly updates on a best effort basis of SCR if this includes a volatile element, in particular for groups (for micro-prudential purposes, there is no requirement to present either a solo SCR nor a SCR group calculation on a quarterly basis). 19.Other respondents stressed the importance of the reporting of quarterly SCR, either solo or at a group level, important for financial stability analysis.

Statutory accounts for financial stability information


20.Respondents raised concern regarding the reporting of quarterly statutory accounts as many insurers only disclose semi-annual information. In particular, this concern related to the overall P&L figure, although issues were also raised with the other statutory account figure of total balance sheet.

Detailed list of assets and look-through principle


21.Respondents, and assets managers in particular, expressed concern about confidentiality , costs of provision of ratings and availability of investment returns on group level. 22.Respondents believed the look-through principle of investment funds would be challenging to meet.

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Best effort for financial stability information


23.Respondents requested clarity or guidance regarding the content of the best effort principle to be applied for financial stability reporting.

Legal hook for financial stability information


24.Respondents requested clarity on the legal hook for a separate request for data for financial stability purposes and argued that it would be insufficient to base the reporting requirement on Solvency I I requirements.

Lapse rates for financial stability information


25.Respondents believed that lapse rates, especially number of contracts, would not provide useful information to EIOPA.

Duration of liabilities for financial stability information


26.Respondents questioned the usefulness of this information and argued that it would be difficult to calculate, especially on a group basis.

I I I. Specific issues raised by respondents Balance Sheet


27.The disclosure of the Accounting Balance Sheet together with the Solvency I I Balance Sheet was considered as misleading and adding no additional benefit. Respondents believed that only the Solvency I I Balance Sheet should be publically disclosed along with a narrative statement explaining differences that have arisen between the two balance sheets.

Country K1
28.Respondents proposed to introduce a threshold for the EEA branches reporting.
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Own funds
29.Respondents commented on the apparent complexity of the own funds template.

Variation analysis
30.Respondents main comments were: a)No split by lines of business (LoB) should be required; b)The accident Year and Underwriting Year approaches for explaining variations due to technical provisions should be authorised; c)The split of analysis between periods and detailed breakdown on reinsurance recoverables is considered demanding; d)Concerns around the request of cash flow information (as opposed to accounting or accrual based information); e) Cost and timeliness issues. 31.Major respondents requested further discussions to be held with EIOPA on these templates.

MCR / SCR
32.Respondents asked if a tool will be produced by E IOPA to help undertakings to calculate the SCR. 33.Doubts regarding the applicability of the templates to companies using internal models when an estimate of the SCR is requested under article 1 12 of the Directive. 34.Respondents commented on the level of detail of the catastrophic risk template (B3F).

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Assets
35.Proposals to delete some columns, e.g. delta, rating, etc., that can be retrieved form financial sources. 36.Comments stated that the reporting of information on credit rating may have additional costs. 37.Respondents stated that assets of unit linked products should not be reported. 38.Respondents asked for the possibility of allowing for simplifications in the reporting of investment funds using the look-through approach.

Technical provisions Non-Life


39.There was a request for guidance on simplifications and clarification of the meaning of best effort basis regarding quarterly reporting. 40.There was a request for revisiting thresholds regarding the split of run-off triangles by material currency 41.Respondents questioned the need for reinsurance triangles.

Technical provisions Life


42.Comments regarding the quarterly reporting There was a request for guidance on simplifications regarding the quarterly reporting and for clarification on the meaning of best efforts basis.

Reinsurance
43.Comments were received regarding the request of information on reinsurers credit rating and eventual costs (same issue on assets), and the requested materiality thresholds.

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Specific comments on groups templates Balance-sheet


44.Respondents believed that the applicability of the template was not clear (Deduction & Aggregation method: doubts on how to fill in the template). Also, they believed that only the Solvency I I Balance Sheet should be publically disclosed along with a narrative statement explaining the differences that have arisen between the Solvency I I Balance Sheet and accounting Balance Sheet (consolidation scope may even be different).

Own funds
45.Respondents questioned the quarterly frequency, the level of public disclosure and the treatment of non-EEA entities.

SCR
46.Doubts were expressed on how the templates should be filled in when a combination of methods are used.

Assets
47.Respondents recommended that the scope of assets reported at group level should be reviewed. Respondents considered that it is more relevant for assets be reported on a consolidated basis for the whole group (instead of the proposed requirement of reporting being limited to non-EEA entities and non-insurance and non- regulated entities)

Intra Group Transactions (IGT)


48.Reporting at different levels was considered to be excessive (sub-groups and groups).

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It was stated that the definitions of significant and very significant should be risk based; it was also queried whether all I GTs should be reported, particularly those terminated during the period.
49.It was suggested that transactions should be reported in the currency of the group rather than the currency of the transaction

Risk Concentration (RC)


50.Respondents commented that the reporting of RC should not be standardised. Respondents believe that the template does not achieve the intended purpose, and that the reporting of risk concentrations should be performed on a qualitative basis (in combination with quantitative reporting).

Specific comments on Narrative reporting and disclosure


51.Regarding the narrative part, respondents comments addressed mainly the SFCR: a)The amount of information proposed for public disclosure is seen as excessive in general; b)The industry perception is that requirements go beyond what is defined in Level 2; There is perceived to be a duplication of information between the SFCR and quantitative templates disclosed.

IV. EIOPA review of the Guidelines based on the comments received Implementation and maintenance costs

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52.EIOPA acknowledges the implementation and maintenance costs of the reporting package, but it should be considered within the context of the overall Solvency I I implementation EIOPA has assessed the costs and benefits arising from the reporting package and believes that the revised package represents an appropriate balance between costs for the undertakings and the needs of supervisory authorities to ensure the protection of policyholders and the assessment of financial stability.
Furthermore, part of the costs associated to this package should not be considered simply as supervisory reporting costs, since the detailed information reported is also needed for the calculation of financial requirements and the proper management of the undertaking.

Timing of 18 months for implementation


53.EIOPA is aware of and shares some of respondents concerns regarding the timing for implementation. This is the reason why CP N o. 1 1/009 and CP no. 1 1/ 011 were consulted with respondents in advance of other Solvency I I technical standards and guidelines and why an updated package is now being published. However, it should be noted that EIOPA is dependent on a number of external factors. The OMDI I and the implementing measures, which are still under discussion, are expected to lead to changes in the reporting package and the final draft of Technical Standard to be developed by E IOPA will have to incorporate those changes. 54.Despite these expected changes, EIOPA believes that this package represents a stable view of the level of granularity of the information that supervisory authorities will need to receive.

Proportionality in general
55.The principle of proportionality is considered in the reporting package in three different ways.
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Firstly it is inherent, in that a company with less complexity in their business will consequently have less complexity to their reporting, for example fewer Lines of Business, currencies, and no derivatives to report.
Secondly, for some templates such as the detailed list of assets, thresholds based on size are defined. Thirdly, materiality thresholds are considered in several templates. 56.In the revised package, the potential for exemptions and the application of materiality principles were revised and made clearer.

Threshold of 6bn for financial stability information


57.In line with the proportionality principle and taking the concern of the industry into consideration, the threshold will be increased to 12 billion Euros in assets at Solvency I I balance sheet. 58.A national market coverage survey indicated that for a few countries, national market coverage would be very limited. In order to ensure a minimum national market coverage, the 12 billion threshold will therefore be complemented with a criterion for obtaining at least 50 per cent coverage on a national level. 59.It is clarified that the threshold relates to the Solvency I I balance sheet. 60.It is noted that these criteria may be subject to a review (3 years after the start of reporting) following market developments in order to ensure that reasonable sample coverage is obtained for financial stability purposes, and along the further developments in the definition of systemic importance.

Deadlines for financial stability information


61.It is acknowledged that time is required for consolidation of the solo reports.
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Taking into consideration the concerns of industry, but also the tight deadlines E IOPA is bound by, 1 additional week will be allowed for group consolidation for the Financial Stability reporting, resulting in a FS deadline of 6 weeks after transition.
For solo undertakings falling within the threshold and that do not report at a group level the reporting would need to be made within 5 weeks for the financial stability items which are in the micro solo package and 6 weeks for the ones that are not in the micro solo package. 62.This should enable reporting undertakings to take full advantage of the time allowed for solo reporting (5 weeks after transition), and then have 1 week for consolidating on a best effort basis for financial stability reporting. 63.During the transition period, the deadlines for financial stability will follow the solo deadlines, plus 1 week (i.e. envisaged 8+1 week the first year decreasing to 5+1 week four years after implementation of Solvency I I ).

Quarterly reporting and 4th quarter reporting


64.Frequency and timeliness of reporting is crucial for the adequate supervision of insurance undertakings. In this regard, quarterly reporting is crucial for the supervisory process which is why it already exists under Solvency I. Under Solvency I I , quarterly reporting is kept to a minimum of the information needed. 65.However, following the consultation on the financial stability reporting, E IOPA has identified several areas where it was able to reduce the reporting burden to insurers, and under the CP N o. 1 1/009 package EIOPA has reviewed the thresholds and criteria related to quarterly reporting, notably as regards Assets D4.

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66.Also, EIOPA agrees that insurers should not have to report the same information twice.
Therefore some changes were introduced in the split between quarterly and annual information. In the current package the templates Assets D1, D2O and D2T are quarterly templates only, although they are to be reported on the fourth quarter by every undertaking, with no exemptions and within the quarterly deadline. They would only need to occur after the due date for the fourth quarter reporting.

Standard codes to be used in the reporting


67.EIOPA acknowledges the concerns in this area. However it considers that full harmonisation of the codes to be used is currently not possible.

A first step will be done with a reinsurance undertakings codification that will be developed and maintained by E IOPA to guarantee a common identifier of the reinsurance undertakings.
Regarding the other codes, codes available in the market will be used. Additionally, in relation to E IOPAs duties to set up a register of all EU insurance and reinsurance undertakings, harmonised codes will be implemented and will be made available. 68.In relation to the CIC codes, the aim of these codes is primarily to assess an undertakings ability to identify the risks of the investments that it holds. This is the reason why a harmonisation of the code is not envisaged within the short term.
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The use of this code by supervisors to perform cross-sector and market analysis is a secondary aim.
This secondary purpose is not undermined by the lack of the lack of harmonisation of the CIC, as it can be overcome by adequate supervision and use of financial information from service providers.

Technical provisions by line of business for financial stability information


69.EIOPA acknowledges that this would be demanding for insurers and will not require technical provisions by line of business for groups. 70.Instead, and as the SII Balance-sheet will be required quarterly for both solo and groups, technical provisions items will be requested from the Balance Sheet template quarterly with the following splits: i) Non-life (excluding health), ii) Health (similar to non-life),

iii) Health (similar to life),


iv) Life (excluding health and index-linked and unit-linked), and v ) I ndex-linked and unit-linked.

Quarterly SCR for financial stability information


71.As quarterly information on the solvency capital position of undertakings is considered crucial for financial stability purposes, the overall SCR is requested quarterly for undertakings within the FS scope. However, as indicated in CP no. 1 1/ 011, the SCR should only be updated with volatile elements, and only on a best effort basis. See also sub-section f) on the best effort. 72. For (partial) internal model users this can be based on their use test.
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73.Standard formula users should re-calculate the volatile components of the SCR (this would usually be the market risk module) in order to report the overall SCR on best effort basis.

Statutory accounts (i.e. P&L and Balance Sheet) for financial stability information
74.Taking the concerns of the industry into consideration, profit and loss information will be requested on a semi-annual basis and not quarterly.
The overall profit and loss (P&L is seen as an important overall performance indicator that is not part of Solvency I I reporting for micro prudential purposes. 75.Based on industry comments, semi-annual reporting should not be too burdensome. 76.The other statutory accounting balance sheet items (balance sheet total, and capital and reserves) proposed in CP no. 1 1/ 011 are no longer requested as this will be reported quarterly on a Solvency-I I basis for supervisory purposes (see item Balance sheets under comments on specific templates).

Detailed list of assets


77.The Solvency I I framework gives undertakings extensive freedom to perform their activities as they see fit. A principle based regime, with a reduction in the prescribed constraints on the way undertakings are managed should be balanced with a higher degree of information to supervisory authorities to allow the latter to discharge their duties. Furthermore, the information required for reporting purposes will also be needed by undertaking to properly manage their investments under Solvency I I .
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78.In terms of the look-through approach, EIOPA notes that the quarterly reporting is only required from undertakings that hold more than 30% of their portfolio in investment funds (the threshold was raised from 20% to 30%) and template Assets D4 only requires the look through approach regarding the asset category, geographical exposure and currency exposure (and therefore not a complete look-through).

Best effort for financial stability information


79.EIOPA acknowledges the need for Guidelines on best effort for financial stability reporting. 80.As a principle, best effort is intended to provide a limited room for individual optimisation in data-provision for reporting undertakings, while requiring a certain level of internal governance (not necessary the same level as governance as for regular reporting) to ensure the necessary quality. While data provided need to be exact enough to serve as an indicator on aggregate, there needs to be a clear distinction from the exactness of data for supervisory use. 81.More Guidelines from E IOPA will be available from the start of the reporting. These Guidelines will include specific information on the use of estimations for particular items and the preliminary status of the figures.

Legal hook for financial stability information


82.Following industry concern, E IOPA clarifies that the specific reporting requirements for financial stability are based on Article 35 of the EIOPA regulation which provides the Authority with the possibility to collect all the necessary information to carry out the duties assigned to it, i.e. to monitor and assess market development.

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Lapse rates for financial stability information


83.EIOPA requires an indicator for the potential liquidity drain due to policyholder behaviour for life business. Although lapse rates by volume and number of contracts are not perfect measures, E IOPA considers this information to be available on a best-effort basis to undertakings and that the benefits outweigh the costs of this request.

Duration of liabilities for financial stability information


84.EIOPA requires an indicator for the interest rate sensitivity of the technical liabilities, the risk-mitigating effect of hedging via derivatives and potential asset-liability mismatches. EIOPA considers this information to be available on a best-effort basis to undertakings and that the benefits outweigh the costs of this request.

On the specific templates Balance-sheet


85.EIOPA agreed on respondents comments regarding the disclosure requirements and has provided that for disclosure purposes only the SII Balance Sheet should be disclosed, both at solo and at group level. 86.As for the quarterly reporting requirement, CP No. 1 1/ 009 proposed that undertakings were exempted from the quarterly reporting of the Balance sheet according to a threshold and this was welcomed by respondents.

However, respondents complained that the threshold was difficult to apply, creating uncertainty on the quarterly requirements for each undertaking.

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No solution was presented by respondents to overcome this problem and any risk-based threshold that could be developed would always be subject to criticism.
87.Moreover, respondents highlighted that undertakings would have to establish a balance sheet in any case to report own funds information quarterly and E IOPA considers quarterly own funds information as crucial to supervise the MCR, as defined in the Directive. 88.Finally, respondents correctly highlighted that the threshold proposed under CP N o. 1 1/009 was not possible to be applied to groups. 89.Taking all this into consideration, E IOPA believes that, both from a supervisory point of view and from an operational point of view for undertakings, the request of the balance-sheet quarterly without exemptions is the best approach.

Country K1
90.EIOPA did not include, as requested, a threshold since information from all EEA branches needs to be reported (and exchanged between supervisory authorities), according to the SII Directive. 91.Regarding the non-EEA branches the threshold was removed as the impact will be minor, and for the undertakings where the impact is not minor the information on all non-EEA branches is crucial for supervision.

Own funds
92.Amendments to this template were introduced to better reflect the requirements and a specific template on participations, with materiality thresholds, was added.

Variation analysis

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93. EIOPA engaged in a discussion with some respondents and the current proposal represents a balanced approach between supervisory needs and respondents comments:
a)The templates were revised in general to provide a better link to the other templates and a reduced burden in some areas (one of the four template was removed); b)It was clarified that both accident and underwriting basis are allowed in line with the approach for TP templates reporting;

c) The detailed breakdown on reinsurance recoverables was removed;


d)The order of calculation in the roll-forward of Best estimate was modified; e) The split per period was kept with information by LoB on Non-Life; f)The information on technical flows are now required on an accrual basis instead of a cash-flow basis. 94. With respect to the information in the split per period in Life, it was considered that a breakdown between Life and H ealth could be sufficient. For Non-Life, considering the very different types of LoB, a breakdown by LoB was considered crucial. The introduction of thresholds was considered as likely to introduce gaps in the information from one reporting year to the next that would render the information reported unusable for supervisory purposes.

For the analysis of this information the maintenance of historical data with no gaps was considered as fundamental.

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MCR / SCR
95.A tool for the calculation of the SCR may be considered in future but such a tool will not be used for reporting purposes. 96.It was clarified that when supervisory authorities require an estimate of the SCR in accordance with article 1 12(7), as default, only SCR-B2A should be used for the reporting of the estimate. 97.The counterparty default risk SCR template was adapted to better reflect the SCR calculation rationale. 98.Regarding the Catastrophe template EIOPA believes that the information contained within the template is required in order for the supervisor to understand the material risk exposures which drive the catastrophe capital charge and to challenge the undertaking as appropriate. 99.Usually undertakings do not have all types of risks, so the templates are only partially applicable to most of the undertakings. For undertakings that are exposed to all types of risks all information needs to be reported due to the complexity of the portfolio. 100.The applicability of these templates to RFF was kept. 101.Finally, reporting requirements for undertakings that use simplifications in different risk modules needs to be addressed after the OMDII and the implementing measures are known.

Assets
102.The granularity of Assets D1 was kept as the template is a crucial tool for the supervision of the prudent person principle.
103.Applicability to unit linked, including the look-through template, was kept as it is understood that the prudent person principle applies also to

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the investments underlying these products and this should be supervised as risks, such as the reputational risk, could be faced.
104.The frequency of Assets D4 was kept, however the threshold was increased from 20% to 30%. E IOPA highlights that the template Assets D4 only requires look-through of asset category, three geographical zone and currency identification (as local or foreign), not a full look-through of investment funds as required for SCR calculation.

Technical provisions Non-Life


1 0 5 . E IOPA proposes that the simplifications to be used in the quarterly calculation of technical provisions are the ones foreseen in the legislation and will be further developed in the Guidelines on the Valuation of Technical Provisions.
106.The thresholds applicable to the templates were clarified. 107.The reinsurance triangles were kept however the salvages and subrogation triangles were deleted. 108.The scope of the reporting of the cash-flow projection by undertakings that use simplifications was reduced but will still be requested in defined situations. The obligation to report future expected cash-flows was kept for reporting purposes only where a material part of TP (more than 10%) has a long settlement period, while undertakings will be allowed to exclude from template E2 and F2 the cash-flows related to Technical Provisions with a short settlement period (less than 24 months).

Technical provisions Life


1 0 9 . E IOPA proposes that the simplifications to be used in the quarterly calculation of technical provisions are the ones foreseen in the legislation and will be further developed in Actuarial Guidelines.

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Reinsurance
110.No materiality threshold was introduced in these templates, but templates J1 and J2 were simplified (divided) to avoid the duplication of information as much as possible. Also, the frequency of template J2 was revised.

Specific comments on groups templates Balance-sheet


111.The doubts raised on the applicability of the template were clarified.
112.EIOPA agreed with respondents comments regarding the disclosure requirement and has provided that for disclosure purposes only the SII Balance Sheet should be disclosed, both at solo and at a group level.

Own funds
113.Quarterly own-funds requirements were kept as they are deemed relevant at group level as well. However, the quarterly template is less detailed compared to the annual template. 114.Amendments to the annual template were introduced to better clarify the meaning and the calculation of some cells (for example treatment on non-EEA entities, reconciliation reserve, calculation of non-available own funds). 115.At both solo and group level, the part for the public disclosure has been clearly indicated.

SCR
116.The doubts raised were clarified.

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Assets
117.EIOPA agreed with the comments received and the scope of the template was amended. The template will be applicable for all methods (Accounting consolidation-based method and Deduction and Aggregation method and a combination of both methods).

Intra Group Transactions


118.Article 216 of SII Directive requires that if a national subgroup is established, it is subject to group supervision. As reporting is part of group supervision all reporting templates must be reported at this level. 119.Definitions of what constitutes the significant and very significant will be addressed by separately as part of the overall Solvency I I package. The college will be able to amend these definitions to account for group specificities. 120.All I GTs that occur or terminate over the period are to be reported. This is aligned with the SII Directive (art. 245(2)). 121.Transactions are to be reported in the currency of the group, the LOGS have been updated to reflect this.

Risk Concentration
122.Reporting of risk concentrations will be done in a quantitative form through a RC template and will be binding for all insurance groups. Additionally, qualitative information may be reported. Due to strong concerns from of the industry, public disclosure is no longer requested.

Specific comments on Narrative reporting/ disclosure

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123. E IOPA considers that the narrative reporting Guidelines complement what will be prescribed under the Directive and the implementing measures and gives important guidance on the expected level of reporting and disclosure.
However, the content of the SFCR was revised and where appropriate some information was moved to the narrative part of the RSR. To read more:
https://eiopa.europa.eu/consultations/consultation-papers/2011-closed-cons ultations/november-2011/draft-proposal-on-quantitative-reporting-templates -and-draft-proposal-for-guidelines-on-narrative-public-disclosure-supervisory -reporting-predefined-events-and-processes-for-reporting-disclosure/index.ht ml

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NUMBER 5

FINMA opens consultation on Collective I nvestment Schemes Bankruptcy Ordinance


The Swiss Financial Market Supervisory Authority FINMA has opened the consultation on the Collective I nvestment Schemes Bankruptcy Ordinance. This Ordinance is deemed necessary because the Collective Investment Schemes Act (CISA) provides only a rudimentary framework for bankruptcy proceedings, in addition to the fact that since 1 September 2011 FINMA has been responsible for declaring bankruptcy over certain institutions subject to the CISA.

The consultation will end on 22 August 2012.


Since 1 September 2011, FINMA has been responsible for initiating and conducting bankruptcy proceedings over fund management companies, investment companies with variable capital (SICAVs), limited partnerships for collective investments, and investment companies with fixed capital (SICAFs). The Collective I nvestment Schemes Act (CISA) provides only a rudimentary framework for bankruptcy proceedings which explains why this Ordinance fleshes out the Act accordingly, providing for legal security and predictability. The present draft of the Ordinance of the Swiss Financial Market Supervisory Authority on the Bankruptcy of Collective I nvestment Schemes (FINMA Collective I nvestment Schemes Bankruptcy Ordinance, CISBO-FINMA) should provide for speedy and practical bankruptcy proceedings attuned to the case in question.

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As a result, bankruptcy proceedings will partly vary depending on the type of institution; in other words, besides the generally valid implementing provisions, institute-specific rules are also foreseen for some types of institutions.
While in the case of SICAVs interaction between the various subfunds especially requires regulation, particular reference is also made to segregating investment fund assets in the event of a fund management company declaring bankruptcy. Compared with the Banking Act, which allows FINMA to issue implementing provisions for bankruptcy law and restructuring law, the Collective Investment Schemes Act and consequently this draft ordinance are restricted to bankruptcy. Both the content and entry into force of the present draft of the CISBO-FINMA are intended to be aligned with the CISA which is currently being revised.

Draft FINMA Collective Investment Schemes Bankruptcy Ordinance - Key points Background
Since 1 September 2011, FINMA has been responsible for initiating and conducting bankruptcy proceedings concerning certain institutions subject to the Collective I nvestment Schemes Act (CISA; SR 951.31). The CISA itself does not regulate bankruptcy proceedings but refers instead to Articles 33-37g of the Banking Act (BA; SR 952.9), which provide a rudimentary framework for bankruptcy proceedings. In addition, only certain points of the rules set out in the BA are materially suited to institutions subject to the CISA. This Ordinance provides further clarification and specific details regarding these rules.
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Both the content and the entry into force of the present draft of the Ordinance of the Swiss Financial Market Supervisory Authority on the Bankruptcy of Collective I nvestment Schemes (FINM A Collective Investment Schemes Bankruptcy Ordinance, CISBO-FINMA) are intended to be aligned with the revised CISA, which is currently being prepared.
However, if the revised CISA does not enter into force in the first quarter of 2013 as planned, this Ordinance will nevertheless enter into force on 1 January 2013 and be revised when the revised CI SA enters into force.

Objectives
Speedy bankruptcy proceedings: The process will be speeded up by streamlining it and placing it under the control of a single authority, namely FINMA. Efficient bankruptcy proceedings: Bankruptcy proceedings will be organised in a more efficient manner in that a variety of instruments geared specifically to collective investment schemes will be placed at the disposal of FINMA and the bankruptcy liquidator. Improved investor protection: Protection for investors will be improved by taking account of the particular circumstances applying, especially in relation to SICAVs, for example, where there are various subfunds with different liability regimes. Improved legal certainty: Bankruptcy proceedings will benefit from greater legal certainty because this Ordinance will create transparency and predictability.

Important aspects of the Ordinance


FINMA has already published two draft ordinances concerning bankruptcy proceedings for specific types of financial intermediary under
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its supervision: the Bank Insolvency Ordinance and the I nsurance Bankruptcy Ordinance.
In view of the close relationship between these two fields and that of collective investment schemes, the two said ordinances serve as the basis for the present draft of the CISBO-FIN MA (D-CISBO-FIN MA). This Ordinance creates a flexible process attuned to the needs of the institution to be liquidated in each case. In particular, it proposes rules for the bankruptcy of fund management companies and SICAVs that are adapted to the respective legal forms. Most of the institution-specific rules in the D-CISBO-FINM A concern SICAVs. The principles that every subfund is liable for its own liabilities and that the claims of the companys shareholders are subordinated make it necessary to treat the various subfunds differently. Some institution-specific rules for the bankruptcy of fund management companies are standardised. I n addition, the legal requirement for assets belonging to an investment fund to be segregated in the event of bankruptcy is taken into account. There is no need for special provisions geared to the legal forms of SICAFs and limited partnerships for collective investment. The D-CISBO-FINMA will not result in any organisational adjustment or conversion for institutions governed by it because the new provisions apply exclusively to legal entities to be liquidated under bankruptcy law. Accordingly, no additional costs will arise for institutions supervised by FINMA when the Ordinance enters into force.

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NUMBER 6

Speech by Financial Secretary to the Treasury, Mark Hoban MP; Banking union in the eurozone, Brussels
Thank you for inviting me here today. Since the financial crisis started in 2008-9, there has been a drive to reform the regulation, culture and structure of banking to strengthen the stability and resilience of the sector. The deepening crisis in the Eurozone and scandals, whether the manipulation of LIBOR or rogue traders at Societe Generale and UBS, demonstrate the need to continue those reforms. I want to talk today about how we work together to return stability and integrity to the banking sector. There is international consensus that tougher financial regulation is essential to safeguard stability and end the problem of too big to fail.

The UK has been at the forefront of these efforts.


But as we have seen, the implications for the Eurozone are even more profound. The interdependence of states and banks needs to tackled if we are to stabilise the Eurozone. Banking Union is the natural corollary of fiscal and monetary Union, and so the decision to proceed with this is a great step in addressing the crisis we face. Urgently turning this plan into action, finding answers to the difficult questions that will accompany doing so will be no easy task, but it is vital. At the same time, we must work together to maintain the benefits to our economies that a well functioning sector can deliver
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Through preserving and deepening the single market


With a common core of minimum standards that neither allows for protectionism, nor invites a race to the bottom. Fear of the destabilising effects of a banking crisis has linked banks and governments together. Taxpayers across Europe provided around four and a half trillion Euros in capital support and guarantees before LTRO to stave off catastrophic collapse.

And the sobering examples of Spain and I reland show that there can come a point at which banks become so large that even Governments lack the capacity to stand behind them.
A stable, responsible sector will never exist in an environment in which banks enjoy gains when things go well, and taxpayers take the pain when they dont. So we need regulation which does not allow for banks to privatise gain and socialise loss.

And it is not just the structure of the sector that needs to change. The events we have seen in the recent scandals that have rightly attracted so much scrutiny show that the culture of the industry needs to change, and needs to change now.
The cynical attempts to manipulate financial benchmarks are sadly not the only example. We have also seen revelations of rogue traders at Societe Generale and UBS; pervasive failures in risk management, and a number of accusations of mis-selling of complex financial products. This behaviour is not, and cannot be allowed to become, representative of the way business is done in London or in any other financial hub. To address both the structural and the cultural failures in the sector, we must take action. And the UK is leading the way in putting right what has gone so wrong.
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The UK Government has taken a tough approach to both supervision and regulation, reflecting the sheer scale of the sector relative to our economy.
To bring long-term stability to the sector, we are combining micro and macro prudential supervision within the Bank of England. So that the monitoring and response to the threats to financial stability posed either by the sector as a whole or by individual institutions are the responsibility of a single organisation. To ensure that taxpayers are no longer perceived as liable for the risks taken by banks, we are implementing the Vickers report. Ring fencing retail operations of investment banks to protect depositors; making creditors not taxpayers bear losses; and ensuring critical functions continue in any future crisis. We are balancing tougher regulation and supervision with the need to maintain a competitive, efficient sector. And to ensure appropriate standards of conduct, we are creating a separate, independent, market and conduct of business regulator with tougher powers to uphold integrity in markets and give appropriate protection to consumers. From the moment we came into office, we demonstrated a commitment to reform the financial sector. And we are taking a further action to respond to the attempted manipulation of LIBOR to stamp out and punish bad behaviour. There will be a full Parliamentary inquiry into the lessons to be learned on transparency, conflicts of interest, and the professional standard of the banking industry.

There will also need to be changes so that in future Libor is properly regulated and attempts to manipulate it thwarted.
We will act quickly to restore any loss of confidence in its integrity, transparency and utility.

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We have already established a review into what reforms are required to the current framework for setting and governing Libor, headed by the incoming CEO of our new Financial Conduct Authority.
And that inquiry will identify new criminal sanctions we can put into law. Indeed, we will need to go further now and work with the Commission to extend the market abuse regime to cover attempted manipulation of benchmarks. Regulators need full access to telephone records, including those with retail clients. Retail customers can be responsible for market abuse, as well as victims of it. And as the investigation of the fixing of LIBOR and other rates demonstrated in the 21st Century, written records simply won't suffice. This will complement essential provisions in the commissions MiFid proposal to ensure benchmarks are transparent and operated fairly helping to enhance surveillance and the ability of supervisors to detect manipulation . But the scandal over financial benchmarks also shows us how internationalised the market has become - alleged manipulation of Libor set in London, Euribor set in Brussels, and other leading benchmark rates, being investigated by competition authorities and regulators in America, Japan, and across Europe. Indeed, Japan has already settled with Citi for alleged manipulation of TIBOR. Together, we will deal with the culture that flourished in the age of irresponsibility and hold those who allowed it to do so to account. But it is not just here that we need to work together. Our work is a combination of programmes of national reforms and collective efforts at a European and global level.

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Member states building a set of European Union wide reforms but having the flexibility to go further to be tougher to reflect their national circumstances.
So the UK has led the debate here as well. Higher capital and liquidity standards in Basel. Moving all standardised derivative trades into central clearing. Creating a comprehensive set of tools for recovery and resolution of financial firms. Ending the perceived implicit taxpayer guarantee. Once implemented, our global and local banks will be stronger in life and easier to deal with in death. I am encouraged by the progress that we have made through working together on this with other European nations, and nations beyond the EUs borders. And there is still work to do on derivatives regulation in particular, there is a major loophole in the EU regime that allows derivatives traded electronically not to be cleared centrally, impeding our goal of reducing systemic risk. Whilst that is a matter that must be tackled together, there is another which requires one group of member states to go further to reflect a set of circumstances that is common to them the interdependence of banks and sovereigns in the Eurozone. We welcome the decisions already taken by the Eurogroup and the European council to establish banking union.

The crisis has shown us why a banking union is a necessary part of monetary and fiscal union.
One of the largest fiscal risks faced by a government is the contingent liability for its banking sector.

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When countries need to deliver core financial stability tasks, like protecting depositors, and are unable to, it may be necessary for other Member States in the currency union to work together to protect the currency as a whole.
As well as the mutual dependence of state and bank, we have also seen the enhanced interdependencies between banking systems within a single currency as contagion has spread from Greece to Spain rather than to countries outside the euro area. And we have seen how the single interest rate of the countries in the Euro Area can feed bubbles in one country whilst delivering excess liquidity in others. The impact of this on economic performance is of course a strong driver of risk in the banking sector. For all these reasons, I see banking union as a necessary part of monetary and fiscal union. A mutualised deposit insurance scheme for insured deposits to ensure consumer confidence where states cannot stand behind failed banks. A common fiscal backstop for crisis management.

And a Eurozone-level prudential supervisory authority to align fiscal and supervisory responsibility.
So I strongly support the euro area's decision to pool sovereignty and express solidarity through a banking union. The UK has a vital interest in a fair, competitive and vibrant market. And we welcome the decisions that have so far been taken: We welcome ensuring a key role for the ECB as supervisor with the credibility and legal mandate it carries.

We welcome the identification of the ESM as a tool for banking interventions, with the capacity to recapitalise banks directly.
And we welcome the European Councils statement that should Member States with a common currency wish to go further to coordinate and

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integrate their policies, they must respect fully the integrity of the single market and the EU as a whole.
There are now a number of design issues that need urgent attention: - What will need to be done to directives on the Deposit Guarantee Schemes and Resolution and Recovery? - What more needs to be done in CRD 4, particularly as flexibility in macroprudential supervision becomes even more important? - What will be the scope of the banking union how many banks will be supervised by the ECB ? This cannot be limited to the biggest banks only, since systemic risk comes from smaller institutions too. - How will we ensure the EBA remains focussed on the internal market? - Do we still need resolution funds, now that an ESM can be used? - Who is in charge in a crisis?The euro area will need a credible resolution regime. - What are the liabilities and risks already in the system? These are just a few of the questions that spring to mind I am sure there are more. We will work closely with our European colleagues to ensure that a strong solution can be found that benefits all. In completing the design, we will need a system with strong supervisory foundations and practice, that maximises the benefits of the banking union, while mitigating the risks. Maximising the benefits from common supervision and the mutualisation of risk - breaking the link between sovereign and bank. What President H ollande calls integration solidaire. While minimising the risks of fragmenting the single market. Whilst supervision and resolution will be a matter for the 17, the single market and the single rule book will be a matter for all 27 member states.
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The EBA will need to continue to set core minimum standards for all member states, and the system will need checks and balances.
This is a standard concept included in the Lisbon Treaty, and reinforced by the European Council statement. Banking union must be put in context. I t is not a replacement for the single market in financial services rather a specific set arrangement to support the single currency. And so, before I end, I would like to ask one final question of the utmost importance - how we are going to protect the single market? The UK supports the treaty freedoms to non-discriminatory access and fair competition freedoms that must be upheld, and which we will fight to maintain. A banking union that erects barriers and looks inwards would not be in anyones long-term interests. To allow the protectionism to take hold and the single market to fragment will do nothing but shrink the global economy at a time when it desperately needs help to grow. All EU member states require open capital markets to support our corporations. And ultimately, a global reserve currency like the Euro or Dollar can only maintain its international standing if it can freely be traded and cleared beyond the 17 Eurozone members, across the world. The EU is lucky enough to enjoy so many world-leading financial hubs in Luxembourg, in Frankfurt, in Dublin, in Paris, and, of course, in London.

London, and its partner hubs across Europe, mean that businesses can gain access to capital and savers can invest in products from outside their home country, without the need to impose products and services on all local markets.

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And I strongly believe that those hubs should continue to serve the wider economy, channelling the funds of savers to investment opportunities, transforming our bank deposits into loans to our businesses and helping businesses and individuals manage risk.
Helping European Governments raise almost 1 trillion in bond markets in 2010; Helping European companies raise almost 3 trillion in funds since 2006; And helping EU citizens save over 6 trillion in current and savings accounts. But for us all to continue to enjoy these benefits not just the banks and the member states in which they locate we must have proportionate regulation that supports free choice through promoting a vibrant single market. The scale and complexity of the challenges faced by the financial services sector, and the global nature of the industry, mean we must work together to solve them. And as we do so, we must ensure we preserve the rewards from allowing a well functioning global financial services sector to flourish, so that organisations in one part of the world can help the economy of another to grow. Through working together through international agreements, and through defending and advancing the Single Market as strongly as we can, we can meet the dual challenge enjoying the greatest benefits of a thriving globalised financial services sector, while curbing its worst excesses. Thank you.

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NUMBER 7

Implementation of a N ew Process for Requesting Guidance from the Federal Reserve Regarding Bank and N onbank Acquisitions and Other Proposals
Applicability to Community Banking Organizations: This guidance applies to all institutions supervised by the Federal Reserve, including community banking organizations, defined as institutions supervised by the Federal Reserve with total consolidated assets of $10 billion or less. This letter outlines the Federal Reserves new process for an applicant to request feedback on a potential acquisition or other proposal prior to the submission of a formal application or notice. The Board believes that this new process will be particularly helpful for community banking organizations that typically do not file applications on a frequent basis or for pre-filers with novel proposals. These applicants will now have the opportunity to work with Federal Reserve staff to receive critical feedback on potential issues related to acquisitions or other proposals. This new optional process, described more fully below, could shorten the review period for many formal applications.

General Guidance
Federal Reserve System staff understand that individuals or companies frequently have questions about potential filings and, as a courtesy, will now review submitted information, termed a pre-filing, prior to the submission of a formal filing.
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Pre-filings are inquiries related to potential applications and notices that include, but are not limited to, information about a specific aspect of a proposal or a potential issue, business plans or pro forma financial information related to a potential filing, or presentations outlining specific potential proposals (i.e., not just proposal concepts).
Pre-filings also may include draft transactional and structural documents such as shareholder agreements, purchase agreements, voting agreements, side letters, offering documents, partnership agreements, or qualified family partnership agreements.

In addition, pre-filings may include questions regarding the type of filing required, if any; the individuals or entities that would need to join a filing; and whether an entity would be considered to be a company or have control under the Bank H olding Company Act or the Home Owners Loan Act.
The Board believes that the new pre-filing process will be particularly beneficial to individuals and entities that are not frequent filers with the System or for filers with novel proposals that are seeking feedback on specific areas regarding a proposal. For community banking organizations in particular, the pre-filing process can be very useful in helping organizations understand relevant issues and the overall process. The pre-filing process is not expected to be typically used by organizations that frequently file proposals with the Federal Reserve. Those submitting a pre-filing should understand that staff review will be targeted to the specific request for feedback and is not intended to identify or resolve all issues or concerns related to a possible future application or notice, or be predictive of the final outcome. In addition, this review is not intended to be a forum for negotiating the structure of a potential proposal or for resolving significant issues of policy or law.

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Finally, a pre-filing evaluation is not part of the formal review period for applications outlined in relevant statutes and regulations and should not be considered as such.
Such pre-filings should be submitted to the appropriate Reserve Bank. Pre-filings also may be submitted electronically through the Systems Electronic Applications System, E-Apps. Depending on the nature of the inquiry, a pre-filing review may include Board staff consultation. Although most pre-filings can be addressed swiftly, the Federal Reserve anticipates reviewing pre-filing and submitted information regarding a particular proposal for no more than 60 days. Some pre-filings may require additional time. Pre-filing inquiries will be handled on a best-efforts basis, with staff giving priority to pending formal applications and notices. Pre-filers will be contacted upon completion of the review, but no later than 60 days from the date of receipt of the pre-filing. There generally will be only one pre-filing review period for a potential application or notice. If further review of a proposal is desired, a final application or notice should be filed, and the filer need not wait for staff to complete its review and assessment of the pre-filing within the pre-filing review period. At the conclusion of the review period, a pre-filer wishing to pursue their proposal, or a pre-filer who has been informed that a proposal requires a filing, is encouraged to submit a final application or notice as soon as practicable. The final filing record should stand on its own whereby the applicant or notificant should provide all pertinent documents in the final filing.

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Final submissions generally are expected to be more quickly reviewed and acted upon when previously identified issues or concerns are fully addressed.
Questions about this letter concerning safety-and-soundness issues may be directed to Michael J. Sexton, Assistant Director, at (202) 452-3009, or Katie Cox, Manager, at (202) 452-2721, Domestic Acquisitions and Activities, in the Boards Division of Banking Supervision and Regulation. Questions about this letter concerning legal issues may be directed to Alison Thro, Assistant General Counsel, at (202) 452-3236, or Amanda Allexon, Senior Counsel, at (202) 452-3818, in the Boards Legal Division. Questions about this letter concerning consumer compliance or Community Reinvestment Act issues may be directed to Beverly Smith, Manager, at (202) 452-5291, or Charles Fleet, Senior Supervisory Consumer Financial Services Analyst, at (202) 452-2776, in the Boards Division of Consumer and Community Affairs. In addition, questions may be sent via the Boards public website.

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NUMBER 8

Update on the implementation of Capital Plans following the EBAs 2011 Recommendation on the creation of temporary capital buffers to restore market confidence
1 1 July 2012

Executive summary
1 . I n December 2011, the EBA issued a Recommendation to national authorities that participating EU banks raise their Core Tier 1 ratio (CT1) to 9%, after accounting for an additional buffer against sovereign risk holdings. 2.The EBA identified a shortfall for 27 banks of 76 bn (look to the note below), to be addressed by end-June 2012 via an increase of the capital elements of the highest quality and via a limited set of actions aimed at reducing risk weighted assets (RWAs), without impacting lending into the real economy. Comprehensive measures have subsequently been implemented by banks to comply with the Recommendation by end-June 2012. Relevant banks submitted their capital plans to National Supervisory Authorities (NSAs) in coordination with the EBA.

These plans were discussed in supervisory colleges, where host supervisors had the opportunity to raise any concerns on those measures having an impact on their own jurisdictions and credit markets.
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3.According to the updates of the plans submitted in June, banks are generally on track to comply with the EBA Recommendation and the measures initially identified have been implemented as planned.
According to the latest updates, the exercise will result in an aggregate 94 .4 bn recap italisation for the 27 banks and in a significant restructuring for the remaining 4 banks. Compliance with the Recommendation has been achieved mainly via new capital measures (retained earnings, new equity, and liability management), and to a lesser extent, by releasing capital through measures impacting RWAs. Note: Of the 71 EEA banks in the capital exercise, thirty seven banks showed an initial shortfall of 115 bn. However, three banks (Dexia, 6.3 bn; Volksbank AG, 1.1bn; West LB 0.2bn) were identified as being involved in such deep restructuring that submission of plans was unnecessary.

Similarly, the initial shortfall for six Greek banks (30 bn) would be addressed in the Greek Programme, therefore no separate plans were requested.
Finally, Bankia (1.3bn), which initially submitted a capital plan, has subsequently gone into an intensive restructuring in early May 2012 and will therefore be monitored separately by the relevant authorities. The initial shortfall for the remaining 27 banks is 76 bn. 4.The recapitalisation exercise was a necessary step on the road to repairing EU banks balance sheets. It is one of a series of coordinated policy measures agreed by the European Council last October. Although the external environment remains very challenging, the recapitalisation has contributed to strengthening the capital base of the
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banking system and put banks in a stronger position to continue lending to the real economy.
Along with the ensuing ECB long-term refinancing operations, which alleviated the liquidity tail risk of EU banks, these are necessary steps to gradually restoring access to market funding. 5. The process of balance sheet repair is, however, on-going. Following the recapitalisation exercise, N SAs will continue their heightened supervisory monitoring. Where necessary, they will undertake detailed reviews of each banks asset quality both assessing the loss contents of loan bank-books and revaluing asset collateral on a conservative basis.

Background
1 . I n July 2011, the EBAs EU-wide stress test attempted to assess the impact of credit losses and of elevated funding costs on banks balance sheets.

The stress test prompted significant pre-emptive capital-raising action by banks (50bn for the first four months of 2011) was accompanied by an unprecedented transparency exercise, which addressed longstanding uncertainty about bank holdings of various asset classes, including government debt.
The EBA subsequently recommended capital strengthening for banks with CT1 below 5% and for those above 5% but holding significant amounts of stressed sovereign debt.

2.As the EU financially-stressed sovereigns situation in the market deteriorated in 2011, the EBA advised on the need to break the link between banks and sovereigns via
(i) Direct capital injections into banks from EU bodies,

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(ii) Effective EU-wide bank term debt guarantees, and


(iii) Higher capital buffers across the entire banking system. 3.In this context, in December 2011, the EBA issued a Recommendation that all participating EU banks raise their CT1 capital to 9% after accounting for an additional buffer against stressed sovereign risk holdings. This Recommendation was aimed at reassuring the market that the EU banking system as a whole had the ability to withstand a range of credit shocks including sovereign stresses and still maintain adequate capital. This requirement for a capital buffer was not the result of a stress test and was not based on an actual asset quality review of each bank. 4.A sample of 71 EEA banks took part in the capital exercise, of which 31 banks, excluding Greek banks, experienced an initial shortfall in meeting a 9% CT1 ratio after including the sovereign buffer. 28 banks out of the 31 provided capital plans to comply with the EBA December Recommendation. The remaining three banks are currently involved in deep restructuring, with a wind-down of their activity: Dexia, sterreichische Volksbank AG and WestLB AG, Dsseldorf. Bankia, which initially submitted a capital plan, is now undergoing fundamental restructuring and will be monitored separately by relevant authorities. (See para 29). Therefore, the current report covers the remaining 27 banks, with a shortfall of 76 bn.

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The capital exercise is a one off exercise conducted with the aim to restore market confidence in the banking sector. I t is not a stress test exercise. No assessment of assets quality was undertaken
5.NSAs submitted the banks capital plans to the EBA at the end of January 2012, in line with the EBA December Recommendation (EBA/REC/ 2011/ 1). Following this submission, discussions on the measures designed by banks took place in the framework of colleges, allowing an exchange of views among home and host supervisors. 6.Discussions in supervisory colleges provided the opportunity for all relevant competent authorities to consider the plans in more depth and to understand the viability of the proposed measures and the implications for the markets in the various countries. Host supervisors had the opportunity to raise any concerns during these meetings. For those banks with no college in place, plans were discussed bilaterally between the EBA and the N SA, in order to clarify the eligibility, feasibility and timeline of planned measures, and their possible impact on the real economy. 7.Notwithstanding the fact that formal approval of plans and communication with banks is a matter for Consolidating National Supervisors, the EBA, together with NSAs has been monitoring the progress in the implementation of plans by banks. This report is based on the updates on the progress in the implementation of capital plans submitted by 27 banks. 8.This report is preliminary. The final assessment of the capital exercise and compliance of the sample of 71 banks involved in the exercise will be based upon an extensive collection of data - similar to the one undertaken
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as of September 2011 - provided by banks from their 30 June financial statements.


The EBA assessment will be undertaken during the summer and the final report for all banks will be published in September.

Progress on the implementation of the capital plans Overview


Banks are on track to comply with the EBA Recommendation

9. As of 30 Jun e 2012, th e 27 b an ks wit h a sh ortfall of 76 bn , resu ltin g from the 2011 capital exercise, reported that they have reached a recap it alisat ion amou nt of 94.4 b n .
10.The 27 banks are on track to comply with the EBA Recommendation as at end June, seven of these banks are relying on government backstop measures to reach the 9% level. In the case of one bank, reporting its capital position above the 9% level as at end June, the final validation of the implemented measures is subject to the formal endorsement by the EU Commission under state-aid rules. Capital measures predominate over RWA measures - Banks have strengthened their capital position mainly increasing eligible own funds, and to a less extent, releasing capital through measures impacting the RWA 11.The increase in eligible own funds through the implementation of capital measures represents 76% of the total recap amount while the release of capital through the execution of RWA measures amounting to 24%.

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12.Backstop measures mainly consist of new issuances of capital instruments. These instruments will, in most of the cases, be underwritten by governments directly or through the support of the European Financial Stability Facility (EFSF).

Measures taken Breakdown


13.The charts below show the breakdown of the recapitalisation amount as at 30 June 2012, distinguishing between measures which directly enhanced capital and those affecting RWAs.

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The 27 banks have broadly strengthened their capital positions with new ordinary capital and reserves, and have raised own funds by 12% since September 2011

Direct capital measures


14.Since September 2011, and as result of their capital plans, the 27 banks have increased their core capital position (ordinary equity plus reserves) by 41 bn through the issuance of new ordinary shares, the payment of dividends in shares, retained earnings and conversion of hybrids into common capital. As of 31 October, ordinary capital will have increased by an additional 6.4 bn, taking into account the scheduled conversion into shares of hybrid instruments. Therefore, by 31 October 2012, the 27 banks will have increased their core capital by 47.4 bn, a 12% increase compared to September 2011. 15.Furthermore, banks have issued a number of Buffer Convertible Capital Securities compliant with the EBA Common Term Sheet. The total issued is 11.5 bn. These bonds are not CT1 instruments but are eligible to meet the EBA Recommendation.
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With these new instruments, banks have strengthened their capital position by a further 2.9% compared to September 2011.
16. Finally, other mitigating measures directly imp act in g banks cap it al p osit ion amoun t t o 12.6 bn . These impacts stem from: Lower deductions from CT1 capital (depreciation/ disposal of goodwill and intangible assets, disposal of securitisation portfolios, reduction in the difference between expected losses and specific provisions in case of IRB models, disposal of non consolidated subsidiaries/ stakes on financial firms); Consolidation impacts on capital (e.g., increase on minority interests) Further impairments on sovereign exposures accounted after September 2011.

Release of capital stemming from RWA reductions


In line with the Recommendation, capital plans have not led directly to a significant reduction of lending into the real economy. A deleveraging process had already started before the capital exercise and will need to continue in an orderly fashion. 17.Measures related to a decrease in lending led to a reduction of just 0.62% of total RWAs at September 20118 (reduction in RWAs of 30.3 bn). Moreover, this deleveraging was focused on a small number of banks that are in specific agreements with international and EU organisations in the framework of formal restructuring plans and state aid injections. 18.Disposals of assets had a positive impact on capital of 8.1 bn, and led to a RWA reduction of 90 bn, or 1.8% of RWAs at September 2011.
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This was also focused on a small number of banks and the disposals concentrated mainly on non-core assets, especially US dollar denominated assets held outside the EU, in relation to the disappearance of US dollar funding in the last part of 201 1.
19.Both the measures related to deleveraging, and the disposal of assets, were broadly discussed in the framework of colleges, where host supervisors had the opportunity to raise any concerns on those measures having an impact on their own jurisdictions. 20.As stated on the EBA Recommendation, reductions in RWAs due to the validation, roll-out and changes of internal models were only allowed as a means of addressing the capital shortfall in those cases where changes had already been planned and were under consideration by the competent authority. 21.Finally, other mitigating measures have reduced the RWAs by 30.6 bn, 0.62% of RWAs at end September 201 1. These measures consist mainly of: improvement in collaterals and guarantees and impacts stemming from the application of CRD 3. In those cases where Governments have committed to supporting banks to meet the EBA Recommendation, adherence to some common principles has been ensured 22.Government commitments to provide public backstops to those banks that would otherwise not comply with the Recommendation had to meet common principles. A written statement, detailing the amount committed and drawing a clear timeline within 2012, was requested in order to show the governments willingness to underwrite the new issuance. According to the principles, the EBA should be allowed to publicly refer to this timeline in its September report on the Recommendation.

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In addition, the Consolidating National Supervisor agreed to keep the EBA informed of the progress made on an ongoing basis and to immediately notify the EBA of any change or contingency in this respect.

Activation of public backstops


Public backstop contributed to an injection of fresh capital by 9.5 bn. 23.By the end of June, the recapitalisation operations of three Portuguese banking groups were concluded after the publication, on 17 May 2012, of the Portuguese Ministry of Finance Ordinance in which the conditions of the instruments to be subscribed by the Portuguese State were established: Caixa Geral de Depsitos (1.65 bn), Banco Comercial Portugus SA (3 bn) and Banco BPI SA (1.5 bn). On 29 June, the financial instruments were subscribed by the Portuguese State and the capital injections were settled at that time into those banking groups. With these capital increases, the aforementioned banking groups have complied with the EBA Recommendation and the Core Tier 1 capital requirements. 24.The Slovenian N ova Ljubljanska Banka d.d. has reached the 9% level thanks to government support, after an issuance of contingent convertible instruments underwritten and fully paid by the Republic of Slovenia by the end of June, amounting to 0.32 bn. 25.With regard to Banca Monte dei Paschi di Siena, on 27 June the Italian Government approved the Decree-Law n. 87/2012 establishing a form of Government support in order to cover the

residual shortfall of MPS according to the decisions of the European Council of 26th October 2011.
The support will take the form of capitalisation instruments up to an amount of 2 bn.

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26.The two Cypriot banks taking part in the capital exercise, Bank of Cyprus and Cyprus Popular, have not been able to reach the 9% core tier target by actions in the private market.
Nevertheless, the EBA has received reassurance that these banks will comply with the EBA Recommendation as a result of the governments decision to request the support of the EFSF. It is possible that additional capital needs for these two banks will be required after assessment by the relevant EU authorities and the I MF in the framework of the assistance programme.

Other cases
27.Nova KBM d.d., another Slovenian bank, which was above the 9% target as of end of September 2011, has subsequently shown a shortfall mainly due to the recognition of further credit risk impairments. Therefore, the bank has submitted a detailed capital plan to the EBA in order to meet the 9% target. The capital plan expects to meet the Recommendation by September 2012 through private investors. H owever, backstops are in place, with an ultimate and eventual recapitalisation by the Republic of Slovenia, if necessary, with a deadline of 31 December 2012. 28.Concerning Norddeutsche Landesbank GZ, the German Bank has achieved the 9% CT1 as of end of June after the implementation of its capital plan. The final validation of the implemented measures is, however, subject to the final formal endorsement by the EU Commission of the ongoing state-aid investigation. As of the end of June, it appears this agreement is on track for a final decision to be taken imminently. 29.Finally, for Bankia, which initially submitted a capital plan, a restructuring process is under way, now within the context of the Spanish Authorities request for financial support from the EFSF.
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Banco de Espaa, in conjunction with the EU Commission, liaising with the ECB, the EBA and the I MF, is currently carrying out a comprehensive asset quality review on a number of Spanish banks, including some other banks participating in the capital exercise, where their final capital needs are being assessed.
The EBA is involved in this process in compliance with EFSF guidelines.

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Q. Why has the EBA undertaken a recapitalisation exercise?


A. The EBA recapitalisation exercise was designed and performed with the primary aim of strengthening banks capital positions to shore up market confidence in the EU banking sector, against the backdrop of a difficult macroeconomic environment and the aggravation of the sovereign debt crisis in Europe. This exercise is one of a series of coordinated policy measures agreed by the European Council last October. The EU comprehensive package called for additional capital as a necessary measure to reassure investors about banks ability to withstand any further shocks and to remain well protected against residual credit risk.

2. Q. Overall did the recapitalisation exercise achieve its goals?


A.During the second half of last year the global markets were extremely concerned about EU banks level of capital, which they deemed insufficient faced with the worsening sovereign financial situation, as well as with funding shortages. While the latter challenge was significantly mitigated by the ECBs LTROs, the former was addressed by the EBA recapitalisation exercise. The EBA exercise led to a significant increase in the aggregate capital for those participating banks which needed to achieve the 9% CT1 by end-June 2012. However it is important to highlight that the recapitalisation exercise in and of itself is not the last step towards repairing EU banks balance sheets. It may be followed, where needed, by a thorough bank-by-bank asset quality review by national supervisory authorities, to include both a reassessment of the loan portfolios loss contents and of collateral valuations.
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Successful completions of these steps should be able to unlock both long-term funding markets and cross-border interbank markets.

3.Q. I snt a recapitalisation exercise leading to banks being more reluctant to lend?
A.It has sometimes been argued that a regulatory requirement to increase capital in the current situation would impact negatively lending growth thus hurting the economy. However, as we have observed both during the current crisis and in previous ones (for example during the European banking crisis 20 years ago), banks with border-line capital levels or perceived by the market as being so are those that have been most reluctant to increase lending and were viewed negatively by the market, with consequences for their funding and equity valuations. Banks with large capital positions, by contrast, are less sensitive to cyclical shocks and are thus more likely to pursue lending-growth strategies even in more difficult markets.

Without additional capital buffers, problems in accessing funding are likely to create severe deleveraging pressures, forcing weakly capitalised banks to cut credit to the real economy.

4. Q. Why cant we refer to this exercise as a stress test?


A. The capital exercise is not a stress test. It takes actual, not stressed, figures and is just a requirement to establish a buffer of high quality capital above minimum regulatory requirements. A stress test is aimed at simulating the impact of adverse macroeconomic and financial market developments on the banks capital positions over a certain time horizon.

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Unlike stress tests, the capital exercise did not apply any adverse macro-economic scenarios nor requested the banks to produce estimates of their losses under such circumstances.
Banks have been asked to set up a buffer of capital so that their Core Tier 1 ratio was above the 9% threshold, after establishing a buffer related to prudent valuation of their sovereign debt holdings so as to reassure that they have a much improved capacity to absorb losses.

5.Q. What distinct roles did the EBA and the competent national authorities play in reviewing and implementing the capital plans?
A.The recapitalisation exercise was launched and coordinated by the EBA in close cooperation with the competent national authorities. In particular, the EBA put forward a Recommendation to competent national authorities to request banks to set aside exceptional and temporary capital buffers to address current market concerns over sovereign risk.

The national competent authorities committed to complying with the EBA Recommendation and to enforcing the new requirements using their respective supervisory powers.
To this end, they were responsible for carrying out an in-depth analysis of the banks capital plans and ensure that they were in line with the Recommendation. This included in particular an assessment of the measures aimed at reducing risk weighted assets (RWAs), to ensure a strict scrutiny of the capital alleviation deriving from the validation and roll over of appropriate internal models as well as the compliance of deleveraging measures with the criteria defined by the EBA Recommendation and designed to avoid adverse impacts on lending to the real economy.

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All relevant competent authorities and the EBA discussed banks plans within colleges of supervisors which provided the opportunity to consider the plans in more depth and to understand the viability of the proposed measures and the implications for the markets in the various countries.
The national competent authorities bore ultimate responsibility for the approval of banks capital plans. No assessment of assets quality was undertaken by the EBA as this was beyond the scope of the exercise, and remains in the responsibility of national authorities.

6.Q. Why is the list of banks covered by this report different to the initial sample?
A.Out of the 71 banks participating in the capital exercise, 31 banks resulted in an initial shortfall to meet the 9% core tier 1 ratio. H owever, three banks (sterreichische Volksbank AG, Dexia and WestLB AG Dsseldorf) are currently involved in deep restructuring, with a wind down of their activity which the EBA has agreed is an appropriate response to the December Recapitalisation Recommendation. Moreover, in May, the Spanish authorities announced that Bankia would go through a deep restructuring process. Therefore, Bankia is not included in the current report and will be monitored separately by the Spanish authorities in conjunction with the European Commission and liaising with the ECB, the EBA and the I MF. This report therefore covers 27 banks.

7.Q. H ow will the EBA contribute to monitoring those banks that are under special programs or undergoing major restructuring?
A.As clearly provided for in the EFSF Guidelines on Recapitalisation of Financial Institutions via loans to non-programme countries, the EBA is called to liaise with the EU Commission at various stages of the recapitalisation process.
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Therefore, the EBA will play an important role in a number of key aspects related mainly to the eligibility for and the amount of the facility, the preparation of institution specific conditionality, and the monitoring of banks compliance with the set conditions.

8.Q. H ow did the EBA assess those banks for which backstop measures have been activated by Governments to directly support them?
A.For those banks for which backstop measures were deemed necessary, the EBA ensured that a written statement be published clearly showing the governments willingness to support the institutions underwriting the new issuance as well as detailing the amount committed and the timeline. A clear reference to this timeline will be made in the September report. The EBA also asked the national competent authorities to be kept abreast, on an ongoing basis, of the progress made and to be immediately notified of any change or contingency plan in this respect.

9.Q. Will banks have to maintain the capital level required by the Recommendation after July?
A.The Recommendation will remain into force until rescinded. Work is currently underway to map the transition from the recommendation to the future regulatory framework of CRD4-CRR. The key principle will be to ensure capital conservation in 2013 and beyond that date, while banks progress in their plans to align their capital levels with the requirements set in CRD4-CRR at the end of the implementation phase (2019).

10. Q. Has the EBA Recommendation allowed banks to reach the set target by tweaking their RWAs calculations, thus achieving the so called risk-weighted asset optimization?

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A. As clearly stated in the EBA Recommendation, reductions in risk weighted assets (RWAs) due to the validation, roll-out and changes of appropriate internal models are not allowed as a means of addressing the capital shortfall unless those changes had already been planned and under consideration by the competent authority.
According to the figures published today, the other mitigating measures on RWAs have reduced them by 0.62% compared to September. These measures mainly consist of improvement of assets quality including through collaterals and guarantees and impacts stemming from the application of CRD 3.

1 1. Has the EBA Recommendation resulted in fire sales of bank assets?


A. The EBA Recommendation explicitly called on N SAs to ensure that banks reduction in RWAs as a means of attaining the set target was achieved only through the sale of selected assets. Disposals of assets stemming from the EBA Recommendation led to a RWA reduction of 90 bn, only 1.8% of the RWAs compared to September 2011. They were mainly disposals of non-core assets in a small number of banks. In particular, a significant component of the asset sales concerned US dollar denominated assets, as a result of the drying up of US dollar funding sources, rather than by capital constraints.

12. Q. Has the Recommendation negatively impacted lending to the real economy?
A. The short answer is no. Overall, EU banks new lending levels are driven primarily by credit demand (which is lower, especially in countries experiencing a difficult economy), by banks need to de-risk and tighten
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their credit underwriting criteria (seeking to avoid future asset quality problems), by funding shortages, and also by capital constraints.
Specifically to the EBA recapitalisation exercise, deleveraging measures agreed as part of the capital plans, and discussed in colleges of supervisors, led to an overall reduction of RWAs of 30.3 bn, only 0.62% of the September aggregate RWAs. Such measures concentrate in a small number of banks that have agreed this reduction with international and EU organisations.

Also the BIS quarterly review, published in 2012, showed that despite the strong pressure for deleveraging in Europe during the final quarter of 2011 and the consequent freeze of the markets for medium and long term bank funding there is no evidence that the deleveraging process has become excessive or disorderly, with disruptive consequences on the real economy.

13. Q. What are the figures being disclosed today?


A. In line with the overview report published last February, the current report provides an aggregate picture of banks ability to fill the identified shortfall and indicates the main drivers underlying banks strengthening of their capital positions. A bank-by-bank report will be published in September.

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NUMBER 9

FSA (Japan) publishes English translation of Guidance on Equivalency Assessment on Audit and Public Oversight Systems of Foreign Jurisdictions
The FSA and the Certified Public Accountants and Auditing Oversight Board (CPAAOB) stated in A Framework for Inspection / Supervision of Foreign Audit Firms, etc. (September 14, 2009) that they will, in principle, rely on information requirements and inspections regarding foreign audit firms by the competent authorities of the firms' home jurisdictions, instead of seeking to obtain information from or conducting inspections on firms themselves, provided that (a)Audit and public oversight systems in the firms' home jurisdictions are equivalent to those of Japan, (b)Necessary information can be provided from the foreign competent authorities through appropriate arrangements of information exchange, and (c) Reciprocity is ensured. In the course of publication of the Framework, the FSA mentioned that it will disclose criteria for equivalency assessment.

In this respect, the FSA publishes herewith an English translation of principles and criteria to assess equivalency of audit and public oversight systems to that of Japan.

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Guidance on Equivalency Assessment on Audit and Public Oversight Systems of Foreign Jurisdictions
I. Introduction
With respect to information requirements and inspections regarding foreign audit firms, etc. (hereafter referred to as audit firms), the Financial Services Agency (FSA) and the Certified Public Accountants and Auditing Oversight Board (CPAAOB) will, in principle, rely on such actions by the competent authorities of the firms home jurisdictions, instead of seeking to obtain information from or conducting inspections on firms themselves, provided that (a)Audit and public oversight systems in the firms home jurisdictions are equivalent to those of Japan, (b)Necessary information can be provided from the foreign competent authorities through appropriate arrangements of information exchange, and (c) Reciprocity is ensured. The FSA and CPAAOB published the policy above in A Framework for Inspection / Supervision of Foreign Audit Firms, etc. on September 14, 2009, after public consultation. In the course of publication of the Framework, the FSA stated that it will disclose criteria for equivalency assessment and examine the equivalency of audit and public oversight system of foreign jurisdictions in a holistic manner.

In this respect, the FSA publishes herewith principles and criteria to assess the equivalency of audit and public oversight systems to that of Japan.

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I I . Principles for equivalency assessment


The FSA will decide the equivalency of audit and public oversight systems of foreign jurisdictions based on the following five principles to ensure effectiveness of oversight cooperation. The FSA will assess equivalency of each jurisdiction with due consideration of the effectiveness of the system as a whole and will not decide it based on appearance. -There should be a public oversight system on auditors that is independent from the audit profession. -The oversight body should have an effective inspection and/ or review system to ensure audit quality. -The audit oversight body should have the authority to stipulate remedial actions and/ or to take disciplinary actions when problems are detected. -There should be an appropriate qualification system of auditors and audit standards. - The audit oversight body should have the competence and willingness to mutually rely on audit activities in its home jurisdiction. Principles will be examined from the respect of whether the FSA is able to seek a cooperative arrangement toward mutual reliance with the oversight body of a foreign jurisdiction instead of seeking information and inspections. Therefore, the assessment will not be intended to give any assurance to the audit quality of jurisdictions.

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I I I. Criteria for Equivalency


The FSA also prepared criteria clarify which points will be referred to when it examines conformity to the principles.

1. Oversight Structure
Principle: There should be a public oversight system on auditors that is independent from the audit profession.

This principle will be assessed based on the following criteria:


Are there mechanisms for oversight on auditors in the jurisdiction? The mechanism may include for example, (i) registration, (ii) setting of standards, (iii) inspection or review of audit quality and

(iv) investigation and remedial/ disciplinary action.


Is there an oversight body that operates in the public interest? Does the oversight body have an appropriate membership and an adequate charter of responsibilities and powers? Is the audit oversight body operationally independent of the audit profession?

The majority of the relevant governing body should be non-practitioners (with an appropriate cooling off period).
Does the audit oversight body have adequate funding? Funding should be free of undue influence by the audit profession.
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Does the oversight body adequately recognize who or which entity provides audit services in its jurisdiction through a registration requirement or other measures?
Does the oversight body cover audit firms in its jurisdiction that audit financial statements of a company with securities issued or traded on markets in Japan? Does the oversight body have in place appropriate arrangements to protect confidential information? Does the oversight body secure transparency and accountability through measures such as adequate publications about programs and outputs of their activities?

2. Inspection
Principle: The oversight body should have an effective inspection and/ or review system to ensure audit quality. This principle will be assessed based on the following criteria: Does the auditor oversight body have an inspection process to review quality control policies, audit procedures to assess compliance with applicable professional standards, independence requirements, and other laws, rules and regulations of audit firms? If the inspection process is performed in coordination with a quality control review by professional bodies, does the oversight body maintain control over key issues such as the scope of reviews, access to audit work papers and other information needed in reviews, and follow-up the outcome of reviews to ensure the integrity of oversight? Does the oversight body conduct inspections on a recurring basis? Inspections will be ensured to include effective procedures for both firm-wide and file reviews.
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Does the oversight body have sufficient inspectors who are independent from the audit profession and with appropriate competence?
Is there any mechanism for reporting inspection findings to the audit firm and ensuring remediation of findings by the audit firm?

3. Investigation and Remedial/ Disciplinary Action


Principle: The audit oversight body should have the authority to stipulate remedial actions and/ or to take disciplinary actions when problems are detected. This principle will be assessed based on the following criteria: Does the oversight body have the authority to initiate the investigation process to take disciplinary actions on auditors and/ or audit firms when non-compliance or significant deficiency in their operation or audit process is considered? Is the oversight body able to order remedial actions on audit firms? Does the authority have the ability to impose a range of sanctions including, for example, suspension for an audit service and the removal of an audit license and/ or registration?

4. Qualification of Auditors and Audit Standards


Principle: There should be an appropriate qualification system of auditors and audit standards. This principle will be assessed based on the following criteria: Are auditors required to have proper qualifications and professional competency before being licensed?

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Are there appropriate audit standards, quality control standards, an ethics code, and independence requirements?

5. International Audit Oversight


Principle: The audit oversight body should have the competence and willingness to mutually rely on audit oversight activities in its home jurisdiction. This principle will be assessed based on the following criteria: With regard to oversight on audit firms in foreign jurisdiction, is the oversight body allowed to rely on oversight activities by the competent authorities of the firms home jurisdictions instead of seeking to obtain information from or conducting inspections on foreign audit firms itself? Is the oversight body capable of providing assistance to and sharing information with Japanese audit oversight authorities with regard to audit firms of both jurisdictions?

IV. Assessment Process and Announcement


To start the process of equivalency assessment, the FSA is sending questionnaires related to the above criteria to the audit oversight bodies of foreign audit firms home jurisdictions. The FSA will also utilize existing information available from such sources as websites of foreign authorities and the I FIAR Members Profile. Assessment will be conducted on an on-going basis. Foreign jurisdictions which are recognized as equivalent will be publicly announced on the FSA website.

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NUMBER 10

FINRA I ssues N ew I nvestor Alert: Exchange-Traded NotesAvoid Unpleasant Surprises


WASHINGTON The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Exchange-Traded Notes Avoid Unpleasant Surprises to inform investors of the features and risks of exchange-traded notes (ETNs). ETNs are a type of debt security that trade on exchanges and promise a return linked to a market index or other benchmark. However, unlike ETFs, ETNs do not buy or hold assets to replicate or approximate the performance of the underlying index. Some of the indexes and investment strategies used by ETNs can be quite sophisticated and may not have much performance history.

The return on an ETN generally depends on price changes if the ETN is sold prior to maturity (as with stocks or ETFs)or on the payment, if any, of a distribution if the ETN is held to maturity (as with some other structured products).
As FIN RA's I nvestor Alert explains, an ETN's closing indicative value is computed by the issuer and is distinct from an ETN's market price, which is the price at which an ETN trades in the secondary market. Investors should understand that an ETN's market price can deviate, sometimes significantly, from its indicative value. If the ETN is trading at a significant premium to its closing or intraday indicative value, investors might want to consider similar products that are not trading at a premium.
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"ETNs are complex products and can carry a raft of risks. I nvestors considering ETN s should only invest if they are confident the ETN can help them meet their investment objectives and they fully understand and are comfortable with the risks," said Gerri Walsh, FIN RA's Vice President for Investor Education.

Exchange-Traded Notes describes the specific risks associates with ETNs, including:

Credit Risk. ETNs are unsecured debt obligations of the issuer. Market Risk. As an index's value changes with market forces, so will the value of the ETN in general, which can result in a loss of principal to investors. Liquidity Risk. Although ETNs are exchange-traded, a trading market may not develop. Price-Tracking Risk. Investors should be wary of buying at a price that varies significantly from closing and intraday indicative values. Holding-Period Risk. Some leveraged, inverse and inverse leveraged ETNs, are designed to be short-term trading tools, and the performance of these products over long periods can differ significantly from the stated multiple of the performance (or inverse of the performance) of the underlying index or benchmark during the same period. Call, Early Redemption and Acceleration Risk. Some ETN s are callable at the issuer's discretion. Conflicts of Interest. The issuer of the notes may engage in trading activities that are at odds with investors who hold the notes (shorting strategies, for instance).

FINRA's new Investor Alert also contains a step-by-step checklist to help investors determine if an ETN is right for them.

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Note
FINRA, the Financial I ndustry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.

Exchange-Traded N otesAvoid Unpleasant Surprises


Recent events involving exchange-traded notes (ETNs) have placed a spotlight on the market for these products and highlighted the importance of understanding what ETN s are and how they work before you consider investing in them. ETNs are a type of debt security that trade on exchanges and promise a return linked to a market index or other benchmark. ETNs can offer investors convenient and cost-effective exposure to everything from commodities to emerging markets, but they can be complex and carry numerous risksincluding the risk that the issuer will default on the note or take other actions that may impact the price of the ETN. FINRA is issuing this Alert to inform investors of the features and some particular risks of ETNsand to suggest questions to ask when considering investing in these products. While the names may sound
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alike, investors should also understand that ETNs and exchange-traded funds (ETFs) differ in some fundamental and important ways.

What Are ETN s?


ETNs are unsecured debt obligations of the issuertypically a bank or another financial institution. They are, however, different from traditional bond. For example, unlike traditional bonds, ETNs typically do not pay any interest payments to investors. Instead, the issuer promises to pay the holder of the ETN an amount (referred to as a "distribution") determined by the performance of the underlying index or benchmark on the ET Ns maturity date (typically 10, 30 or in some cases even 40 years from issuance), minus any specified fees. In addition, unlike traditional bonds, ETNs trade on exchanges throughout the day at prices determined by the market, similar to stocks or ETFs. But unlike ETFs, ETNs do not buy or hold assets to replicate or approximate the performance of the underlying index. Some ETNs provide exposure to familiar, broad-based indexes, while others do so to less familiar asset classes or newer, more complex, or even proprietary indexes. For example, there are ETNs linked to indexes that track emerging markets, commodities such as gold and oil, foreign currencies and market volatility. Some of the indexes and investment strategies used by ETNs can be quite sophisticated and may not have much performance history.

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The return on an ETN generally depends on price changes if the ETN is sold prior to maturity (as with stocks or ETFs)or on the payment, if any, of a distribution if the ETN is held to maturity (as with some other structured products).

Leveraged and I nverse ETNs


Some ETNs offer leveraged exposure to the index or benchmark they track. This means that they promise to pay a multiple of the performance of the underlying index or benchmark. For example, an ETN that offers two timesor "2x" leverage promises to pay twice the performance the index it tracks. Inverse ETNs offer to pay the opposite of the performance of the index or benchmark they track, and leveraged inverse ETNs seek to pay a multiple of the opposite of the performance of the index or benchmark they track. Some leveraged, inverse or leveraged inverse ETN s are designed to achieve their stated performance objectives on a daily basis and "reset" their leverage or inverse exposure on a daily basis. Given the daily resetting of its leverage factor, an ETN that is set up to deliver twice the performance of a benchmark on a daily basis will not necessarily deliver twice the performance of that benchmark over longer periods such as weeks, months or years. Due to the effect of compounding, their performance over longer periods of time can differ significantly from the stated multiple of the performance (or inverse of the performance) of their underlying index or benchmark during the same period of time. Generally, leveraged and inverse ETNs are designed to be short-term trading tools and are not intended for buy-and-hold investing.

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Other leveraged, inverse or leveraged inverse ETN s can have monthly resets or even no resets, so it is important to distinguish one type from another and understand how their performance may differ.

ETN Trading, Share Creation and Redemption


ETNs list on an exchange and can be bought and sold at market prices, similar to other exchange-traded investments. Market prices of ETNs may fluctuate due to movements in the indexes they track, as well as other factors, including ETN creation and redemption activity. Issuers of exchange-traded products create and redeem shares as a means to keep the products share price in line with a calculated value, called the indicative value or closing indicative value for ETNs. This value is calculated and published at the end of each day by the ETN issuer. When shares are trading at a premium above the indicative value, adding more shares to the market through share creation can bring the price down. Similarly, if shares are trading at a discount, redemption of shares by the issuer reduces the number of shares available in the market, which tends to raise the price. ETN issuers have primary control over the creation and redemption processes in the ETN market. The decision to create new ETN shares is at the issuers sole discretion. Investors may initiate the redemption process prior to an ET Ns maturity date, following precise steps laid out by the issuer in the prospectus. The process generally begins by submitting "notice of redemption" form to the issuer.
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Given the various steps in the process, transaction feesand especially the large number of shares required to initiate a redemption (usually 50,000)redemption is not generally a practical source of liquidity for most retail investors.
If a redemption occurs, the issuer will redeem shares at the ETNs indicative value. Indicative values are generally based on the value of the underlying index or benchmark, minus certain fees (sometimes referred to as "daily investor fees"), which vary across ETNs and can fluctuate for a given ETN. ETNs also typically have an intraday indicative value that is calculated and published every 15 seconds during the trading day under the applicable trading symbol by the market in which the ETN trades. Each ETN uses its own formula for computing its indicative value, which is generally outlined in the ET Ns prospectus or pricing supplement.

Indicative Value and Market PriceBe Alert When There is Significant Deviation
An ETNs closing indicative value, as well as its intraday indicative value, are computed by the issuer and are distinct from an ET Ns market price, which is the price at which an ETN trades in the secondary market. In theory, an ET Ns market price should closely track its closing and intraday indicative values. However, an ETN s market price can deviate, sometimes significantly, from its indicative value. Price deviations can happen for a variety of reasons. For example, an ETN might trade at a premium to its indicative value if the issuer suspends issuance of new shares.

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Paying a premium relative to the indicative value to purchase the ETN in the secondary marketand then selling the ETN when the market price no longer reflects the premiumcan lead to significant losses for an investor.
This occurred recently when an ETN experienced price movement that diverged significantly from its indicative value and the performance of the index it tracks, due in part to suspensions in the issuance of new shares, which caused the ETN to trade at a significant premiumnearly 90 percent.

When the issuer of the ETN resumed the creation of new shares, the market price of the ETN fell sharplydropping by more than half in two days.
For this reason, before trading in the secondary market, its a good idea to compare an ET Ns closing and intraday indicative values with the market price. If the ETN is trading at a significant premium to its closing or intraday indicative value, you might want to consider similar products that are not trading at a premium, or that provide similar expose to the index or asset class. Its also a good idea to ask whether the issuer has suspended issuing new shares, and if so, why. Find out from your broker what type of orders you may place for the ETN and what will happen if it is no longer listed on an exchange.

Risks to Consider
There are a number of risks associated with ETNs, including: Credit Risk. ETNs are unsecured debt obligations of the issuer. If the issuer defaults on the note, investors may lose some or all of their investment.

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Market Risk. ETNs are market-linked: the value of an ETN is largely influenced by the value of the index it tracks. As an index's value changes with market forces, so will the value of the ETN in general, which can result in a loss of principal to investors.
Thus, in addition to credit risk, an ETN subjects investors to market risk, which is generally not assumed by investors in other corporate debt. Also, make sure you understand what the index being tracked by the ETN is measuringfor example, some indices reflect a dynamic trading strategy and others are based on futures markets. Also, some indices reflect "total returns" while others may not. Liquidity Risk. Although ETNs are exchange-traded, they do carry some liquidity risk. As with other exchange-traded products, a trading market may not develop. In addition, under some circumstances, issuers can delist an ETN. If this happens, the market for the ETN can dry up or evaporate entirely. Price-Tracking Risk. ETNs like other exchange-traded products, typically trade at prices that closely track their indicative values, but this might not always be the case. When trading in the secondary market, check market prices against indicative values, and be wary of buying at a price that varies significantly from closing and intraday indicative values. Holding-Period Risk. Some ETNs, particularly some leveraged, inverse and inverse leveraged ETNs, are designed to be short-term trading tools (with holding periods as short as one day) rather than buy-and-hold investments. Because of the effects of compounding, the performance of these products over long periods can differ significantly from the stated multiple of the performance (or inverse of the performance) of the
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underlying index or benchmark during the same period.


Call, Early Redemption and Acceleration Risk. Some ETN s are callable at the issuer's discretion. In some instances ETNs can be subject to early redemption or an "accelerated" maturity date at the discretion of the issuer or one of its affiliates. Since ETNs may be called at any time, their value when called may be less than the market price that you paid or even zero, resulting in a partial or total loss of your investment. Conflicts of Interest. There are a number of potential conflicts of interest between you and the issuer of these products. For example, the issuer of the notes may engage in trading activities that are at odds with investors who hold the notes (shorting strategies, for instance). Search the ETN 's prospectus for any mention of "conflicts of interest" and evaluate whether these conflicts are worth the risk.

Before You I nvest


Make sure you have answers to the following questions so that you can better assess whether an ETN investment is right for you: - Who is the issuer? Once you know, be sure to research the issuers credit rating and financial situation. I f the issuer is publicly traded, use the SEC's EDGAR database. Keep in mind that ETN s are not registered investment companies and therefore are not subject to the same registration, disclosure and other regulatory requirements as most ETFs or mutual funds. - What index or benchmark does the ETN track? If it involves an unfamiliar market or asset class, ask yourself whether you feel informed enough about the market or asset to effectively assess the
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risks involved.
- Is the ETN callable by the issuer? You can find this out by reading the prospectus or asking your financial professional. - Does the ETN offer leveraged or inverse exposure to the underlying index or benchmark? If so, how frequently does it "reset"? One clue may be in the ETN s name: words like "daily" and "short-term" often indicate that the product resets daily and is not intended to be held for long periods of time.

- What fees and costs are associated with the ETN? ETNs differ widely with respect to fees, including the investor fee charged in connection with redemptions. Read the prospectus and ask your investment professional to clearly explain any fees and expenses associated with a given ETN.
- What are the tax consequences? The tax treatment of ETN s can vary depending on the nature of the ETN. Check with your tax advisor if you are unsure about the tax implications of a particular investment. As with all investments, it pays to do your own homework regarding ETNs. Only invest if you are confident the ETN can help you meet your investment objectives and you are knowledgeable and comfortable with the risks associated with the investment.

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Certified Risk and Compliance Management Professional (CRCMP) Distance learning and online certification program.
Companies like IBM, Accenture etc. consider the CRCMP a preferred certificate. You may find more if you search (CRCMP preferred certificate) using any search engine. The all-inclusive cost is $297. What is included in the price:

A.The official presentations we use in our instructor-led classes (3285 slides)


The 2309 slides are needed for the exam, as all the questions are based on these slides. The remaining 976 slides are for reference. You can find the course synopsis at: www.risk-compliance-association.com/ Certified_Risk_Compliance_Tra ining.htm

B. Up to 3 Online Exams
You have to pass one exam. If you fail, you must study the official presentations and try again, but you do not need to spend money. Up to 3 exams are included in the price. To learn more you may visit: www.risk-compliance-association.com/ Questions_About_The_Certifica tion_And_The_Exams_1.pdf www.risk-compliance-association.com/ CRCMP_Certification_Steps_1.p df

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C.Personalized Certificate printed in full color.


Processing, printing, packing and posting to your office or home.

D.The Dodd Frank Act and the new Risk Management Standards (976 slides, included in the 3285 slides)
The US Dodd-Frank Wall Street Reform and Consumer Protection Act is the most significant piece of legislation concerning the financial services industry in about 80 years. What does it mean for risk and compliance management professionals?It means new challenges, new jobs, new careers, and new opportunities. The bill establishes new risk management and corporate governance principles, sets up an early warning system to protect the economy from future threats, and brings more transparency and accountability. It also amends important sections of the Sarbanes Oxley Act. For example, it significantly expands whistleblower protections under the Sarbanes Oxley Act and creates additional anti-retaliation requirements. You will find more information at: www.risk-compliance-association.com/ Distance_Learning_and_Certific ation.htm

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