BASEL/BRUSSELS – At its meeting in early July, the newly-expanded Basel Committee, which sets prudential standards for banks around the world, approved a substantial package of measures to toughen up the Basel II capital adequacy framework and fix some of the weaknesses revealed by the financial crisis.

PARIS – EU securities regulators are advising the European Commission to impose a mandatory post-trade transparency regime on markets for corporate bonds, structured finance products, and credit derivatives. In the case of corporate bonds, this represents a reversal of previous advice given just two years ago, when it was concluded that a mandatory transparency regime was not necessary as there was no evidence of market failure. Major capital markets associations promised to provide greater post-trade information to retail investors on a voluntary basis, instead.

WASHINGTON – Turf disputes between US regulators are also a feature of the debate over the new National Bank Supervisor which the Obama administration envisages as the supervisor of all federally chartered, as distinct from state chartered, banks.

LONDON - International accounting rule-setters proposed in July ways of making it easier for investors to understand the valuation of financial assets and liabilities under controversial fair value rules. The International Accounting Standards Board (IASB), which is under intense political pressure at least to clarify its guidance on fair value accounting, proposes to replace the many classification categories under its current IAS 39 rule on measuring financial instruments with just two categories. The two categories are fair value, under which assets and

NEW YORK – Top international bankers believe the mandate of the Financial Stability Board (FSB), the body co-ordinating the regulatory response to the global financial crisis, must be expanded to help avoid international efforts at reform splintering into separate national agendas motivated by financial protectionism.

LONDON – Britain’s opposition Conservative party put the cat among the regulatory pigeons in July when it said it would abolish the Financial Services Authority (FSA), the country’s principal financial services watchdog, if the party won next year’s general parliamentary election.

BASEL – Banks have made considerable progress in the collection and use of internal operational loss data since the early part of the decade, according to a loss data collection exercise carried out last year by global banking regulators.

Economic and Financial Affairs Council (ECOFIN) Pro-cyclicality EU finance ministers meeting in ECOFIN on July 7, backed the report of the Working Group on Pro-cyclicality. This centres on developing a macro- prudential approach, including incorporating automatic stabilisers into the regulation. Ministers agreed on the need to monitor system-wide risks and supported the introduction of forward looking provisioning. They asked the European Commission to come forward with proposals to pursue these objectives

National governments, European lawmakers and the alternative funds industry are girding up for a tough fight over new law By Roger Aitken

The Obama Administration delivered legislation to Congress in mid-July* for the registration and regulation of hedge fund advisors in the US. This forms part of the wider proposals for the reform of US financial regulation. Under the hedge fund legislation, all advisers to private investment funds with more than $30m of assets under management (AUM) – including hedge funds – must register with the US Securities and Exchange Commission (SEC).