Global Regulatory Briefing

OCTOBER 1

FINANCIAL SERVICES UK – UK regulator cracks down on payment insurance Sales PraCtices (I) REGULATORY REFORM & STRUCTURES

G20 - Upbeat G20 takes new lead role on global economy (IV TAX) UK - Britain scraps share tax after HSBC court win G7 - G7 debates publishing communique from weekend

meeting as power fades GERMANY - German risk-capital tax law gets partial EU approval GLOBAL - G20 sets up long struggle over bank capital rules

EU – Europe unlikely to FINISH bank supervision OVERHAUL This year – key legislator

US – Senior U.S. prosecutor sees more tax cases against wealthy, US banks

GLOBAL - IASB rejects U.S. plans to widen fair value accounting scope

OFFSHORE – Offshore finance centers talk back against G20 'finger pointing'

US – Prospects rise for new U.S. systemic risk regulator (V) TRADE & CROSSBORDER U.S. - Key US senator determined to create super bank cop SOUTH AFRICA / INDIA - Bharti and MTN telecoms tie-up

talks collapse again UK - UK watchdog agrees to count cost of new bank rules U.S. - SEC, CFTC to release harmonization report on Oct 15 HONG KONG/UK - HSBC CEO moves to Hong Kong, aims

for Shanghai listing AUSTRALIA – ASX demands compensation for regulatory overhaul INDIA - India extends commodity bourse investment deadline U.S. - Fed pursues tough new U.S. credit card rules LIBYA - Uncertainty grows for foreign oil firms in Libya

(ANALYSIS) (II) FINANCIAL CRISIS GLOBAL - IMF cuts global writedowns by banks to $3.4 trillion (VI) EXCHANGES & TRADING INFRASTRUCTURE

UK - London bourse to quit pan-European lobby US – U.S. wants banks to prepay $45 billion in fees to meet failure bill UK – UK market regulator to give domestic firms a choice in

listings JAPAN - Japan loan moratorium debate hits investor confidence UK - LME shareholders reject governance change GERMANY - WestLB near assets shift to bad bank -sources (VII) FUNDS MANAGEMENT & PRIVATE EQUITY

(VIII) COMMODITIES & ENERGY NETHERLANDS - Penalty, EU review may deter ING from aid prepayment NIGERIA - Nigeria may sell oil joint venture stakes to China

GLOBAL - EU, US eye green goods tariff pact in climate fight NETHERLANDS - ABN AMRO files to split off RBS-owned assets U.S. – U.S. Senate Democrats take up climate change after

House bill EU - EU may make Lloyds shed sixth market share -FT US – U.S. Federal Reserve appeals order to reveal bailout details

U.S. – U.S. futures regulator backs position limits on carbon trade

BRAZIL - Brazil central bank alters demand deposit requirements

US – Top U.S. business lobby loses members over climate-change skepticism

(III) ENFORCEMENT, CORPORATE GOVERNANCE & FINANCIAL REPORTING

GERMANY - German poll gives mandate to delay nuclear phaseout (IX) ISLAMIC FINANCE GLOBAL - Cross-border resolution of failing banks may be

hard – Fed's Tarullo FRANCE - France not ready for Islamic bank licenSes – central bank’s Noyer UK - Five major UK banks sign on to G20 pay pledges, split

emerges with U.S GLOBAL - Errant sharia finance advisers open to legal suits-scholar EU - EU watchdog against imposing oTC derivatives

exchange trading DUBAI - Dubai Group rethinks Bank Islam stake UAE – UAE mulls Islamic bank to merge mortgage firms EU – Securities regulator says EU may need mandatory trade

reporting (X) STATE ENTERPRISES AND WEALTH FUNDS US – U.S. SEC examines stricter naked short selling rules RUSSIA - Russia promises privatisation, Gulf wealth funds

wooed U.S. - Rating agencies protest “collective liability” proposal CHINA - China pays $939 million for Kazakh energy stake SWITZERLAND - Switzerland says UBS, Credit Suisse may

face special regulation SINGAPORE - GIC says portfolio recovers after slump EU - EU insurance capital rules likely to be eased (ANALYSIS) CHINA - China's AgBank to list only in Shanghai - media

TELECOMS & INTERNET US – U.S. SEC internal watchdog recommends ways to prevent another Madoff U.S. - US government signs pact with Internet domain body AUSTRALIA - Australia court allows claims against Lehman - firm

US – U.S. may need as much as $350 billion to extend broadband – FCC panel EU - EU mobile roaming rate cap is valid - court adviser VIETNAM - Vietnam stock regulator asks firms for prompt

response to rumors

GLOBAL REGULATORY BRIEFING OCT. 1

US - AT&T says Internet neutrality should apply to Google also THAILAND - Thailand closer to 3G, foreign shareholders a problem SOUTH KOREA - South Korean mobile firms slash tariffs

INTELLECTUAL PROPERTY RIGHTS US - Judge delays hearing on Google books deal

PEOPLE US – U.S. pay czar Feinberg expecting heat for rulings

US – Bank of America CEO Lewis to retire AMID SCRUTINY INTO MERRILL BUY US - AIG unit head Cassano back in US; probe intense UK - UK appoints financier to manage toxic asset scheme EU - Italy presses Draghi as European Central Bank chief, eyes on Germany

A LOOK AHEAD

WEEK IN BRIEF

G20 leaders disbanded from their Pittsburgh summit with a to-do list of regulatory changes in areas including capital adequacy, bankers pay, systemic risk, and derivatives. But as policy makers back home set to work, differences soon emerged between the United States and Europe. The G20 ordained themselves guardians of the global economy, leaving G7 ministers who will meet in Istanbul this weekend debating whether they would have anything official to say,

QUOTES

"It worked." Communique of G20 leaders, who went on to say their forceful response to the financial crisis helped stop an economic slump and stabilize markets. "Everybody has bailout fatigue." Federal Deposit Insurance Corp Chairman Sheila Bair. "Where this will go after Oct. 30 when I'm done, I'll probably have to move to Pluto." Kenneth Feinberg, who as U.S. President Barack Obama’s “pay czar” is deciding on pay rates for the highest ranking executives of major firms rescued by the government. "There was lots of calls for the parliament to move quickly on some things and maybe get the (banking) supervisory package done by Christmas. I have to say it is physically impossible." Sharon Bowles, chief of the European Parliament’s economic and monetary affairs committee. "One key concern is assessing the trade-off between the tougher regulatory regime and the cost to the banking system. No one has yet decided who will make the judgment call or how. With reform developing at G20, EU and domestic levels, there is no obvious answer." Simon Morris of law firm CMS Cameron McKenna. "Let your clients know, if they think it's just UBS they are mistaken." Kevin Downing, senior attorney in the U.S. Justice Department’s tax division, telling tax lawyers that avoidance prosecutions will continue. "There is now a strong suspicion that the G20 has an undisclosed agenda item to drive forward a global corporate tax policy, which may fly in the face of a nation's sovereign right to set down its own tax policy." Bermuda Finance Minister Paula Cox. This Briefing is produced by Reuters News. Contact randall.mikkelsen@thomsonreuters.com for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited.

GLOBAL REGULATORY BRIEFING OCT. 1

"I've been getting e-mails from people around the world saying 'What's going on? Should I be pulling out of Japan?'" Morgan Stanley Chief Economist Robert Feldman, discussing Japanese bank regulation minister Shizuka Kamei's proposal for a three-year moratorium on loan and mortgage principle payments. "As the situation stabilises and the effects of the crisis are overcome, we intend to reduce state involvement in the economy and, even more than that, we will activate the processes of privatisation." Russian Prime Minister Vladimir Putin "Global financial stability has improved, but risks remain elevated and the risk of reversal remains significant." International Monetary Fund

FINANCIAL SERVICES

(I) REGULATORY REFORM & STRUCTURES

G20 - UPBEAT G20 TAKES NEW LEAD ROLE ON GLOBAL ECONOMY

The Group of 20 rich and developing nations promised to give rising powers such as China more say in rebuilding and guiding the global economy, and declared their crisis-fighting efforts a success. Leaders pledged to keep emergency economic supports in place until sustainable recovery is assured, to launch a framework for acting together to rebalance economic growth, and implement by 2012 tougher rules governing banks including, stronger capital bases. The leaders also took aim at lavish pay packages for bankers and called for crackdowns on the over-the-counter derivatives market. The summit agreed to shift some voting power at the International Monetary Fund to underrepresented countries such as China. It endorsed a plan to phase out fossil fuel subsidies as a way to combat global warming, and to step up efforts to complete the Doha round of trade talks. The G20 said it would now be the "premier forum" for economic cooperation, supplanting the Western-dominated G7 and G8 that were the primary international forums for decades. (Reuters, Sept. 25) G7 - G7 DEBATES PUBLISHING COMMUNIQUE FROM WEEKEND MEETING AS POWER FADES

The Group of Seven finance ministers and central bank governors are still debating whether to issue a communique from their meeting this weekend in Istanbul, a senior U.S. Treasury Department official said. The debate is a sign the group may want to play down its role just a week after leaders from the Group of 20 rich and developing nations met in the United States. The larger G20 forum includes key emerging market economies such as China, India and Brazil and was publicly recognized in Pittsburgh as the forum of the future of economic cooperation, calling into question what, if any, future the G7 grouping of traditional industrial powers would have. (Reuters, Sept. 30) GLOBAL - G20 SETS UP LONG STRUGGLE OVER BANK CAPITAL RULES

A long fight over bank capital standards may begin in the wake of the G20 summit, with U.S. and French industry lobbyists already sounding warnings over their potential impact. In a struggle that will unfold at least through 2012, bankers will grapple with national authorities working to implement goals set by G20 leaders in Pittsburgh to strengthen bank balance sheets as part of a regulatory clampdown on banks and capital markets.

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GLOBAL REGULATORY BRIEFING OCT. 1

EU banks will have a tougher time of it than their U.S. peers in meeting and managing new rules on capital, liquidity and leverage, said Morgan Stanley analysts. The French Banking Federation said on Monday that the G20's goals should be weighed against their economic costs. Big British banks have sounded similar concerns, and the Securities Industry and Financial Markets Association, a U.S. financial services industry lobbying group, warned broadly that proposed reforms "could negatively impact investors, capital flows, and economic growth." (Reuters, Sept. 28-30) EU – EUROPE UNLIKELY TO FINISH BANK SUPERVISION OVERHAUL THIS YEAR – KEY LEGISLATOR

The European Parliament will not manage to approve this year the overhaul of the banking supervision system proposed by the European Commission, a key parliamentarian said. Sharon Bowles, chief of the parliament's economic and monetary affairs committee told the Eurofi financial seminar that it as “physically impossible” to get a supervisory package done by Christmas. (Reuters, Sept. 30) GLOBAL - IASB REJECTS U.S. PLANS TO WIDEN FAIR VALUE ACCOUNTING SCOPE

The top international accounting rule setter rejected as unacceptable U.S. plans to widen the scope of “fair value” standards, raising doubts over a June 2011 G20 deadline for a global set of accounting rules. International Accounting Standards Board Chairman David Tweedie told Reuters Television that a proposal by the U.S. Financial Standards Accounting Board to value all financial instruments at the going price was not acceptable globally or even within some U.S. sectors. The IASB would value some instruments at cost. Tweedie signalled that the IASB, which sets rules used in over 100 countries, including the EU, would not follow a full fair value model, but the way accounts are presented could help iron out differences. (Reuters, Sept. 30) US – PROSPECTS RISE FOR NEW U.S. SYSTEMIC RISK REGULATOR

Congressional approval of an Obama administration plan to create a "systemic risk" regulator for the U.S. economy looks more likely after lawmakers noted a change in tone by the Federal Reserve, in endorsing an interagency council of regulators to share responsibility for monitoring broad risk to the economy. Federal Reserve Chairman Ben Bernanke emphasized in remarks to a congressional committee that a new council of financial regulators, not just the Fed, should monitor systemic risk. The Fed chairman said that the position was not new, but lawmakers detected a new recognition of a larger role for the council, as demanded by critics of Fed’s oversight before the financial crisis. The Obama administration has sought to lodge most risk oversight within the Fed. (Reuters, Oct. 1) U.S. - KEY US SENATOR DETERMINED TO CREATE SUPER BANK COP

A senior U.S. Democratic senator said he is moving forward with his effort to consolidate bank supervision into a single federal regulator, despite criticism from current bank regulators who do not want to lose power. U.S. Senator Charles Dodd's plan, not yet introduced, would consolidate the Office of the Comptroller of the Currency and the U.S. Office of Thrift Supervision into one regulator. It would also strip direct bank supervision powers from the Federal Deposit Insurance Corp and the Federal Reserve, transferring those powers to the new regulator. His plan would go further than what the Obama administration has put forward. The idea of a single bank regulator would attack a key problem in the financial crisis of 2008-2009 -- "regulator shopping" by risk-taking firms such as Countrywide Financial and American International Group Inc. (Reuters, Sept. 29)

This Briefing is produced by Reuters News. Contact randall.mikkelsen@thomsonreuters.com for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited.

GLOBAL REGULATORY BRIEFING OCT. 1

UK - UK WATCHDOG AGREES TO COUNT COST OF NEW BANK RULES

Britain's financial regulator said it intends to issue a report on how to determine if a bank poses risks to the broader system to the extent that it must pay higher capital charges to contain the risks. A planed Financial Services Authority discussion paper will cover issues including the design and implementation of contingency “living wills,” proposed for the wind down of major institutions considered to pose a systemic risk, the FSA said. The discussion paper, a response to calls by banks concerned over the potential impact of new rules proposed by the FSA, will also look at "trade offs" between raising bank capital levels to lessen the need for future government bailouts and the effect on lending ability. (Reuters, Sept. 30) U.S. - SEC, CFTC TO RELEASE HARMONIZATION REPORT ON OCT 15

The two main U.S. regulators policing the securities and futures markets said they will issue an Oct. 15 report outlining gaps in their regulatory frameworks ways to bridge them. The U.S. Securities and Exchange and the U.S. Commodity Futures Trading Commission said they will recommend to Congress and the White House steps to strengthen enforcement powers, investor protection and an ongoing coordination process. The report also will discuss risk-based portfolio margining, insider trading rules, product listing, and customer protection standards for advisors and broker-dealers. (Reuters, Sept. 30) AUSTRALIA – ASX DEMANDS COMPENSATION FOR REGULATORY OVERHAUL

The Australian Securities Exchange (ASX) indicated that it would seek compensation for the loss of some of its market supervisory roles to the Australian Securities and Investments Commission (ASIC) under plans announced last month, The Australian newspaper reported. ASX chief executive Robert Elstone said shareholders are entitled to receive fair value compensation for intellectual and physical property rights. A government spokesperson said it was up to ASIC whether it would purchase resources from the ASX to help undertake the roles it identified of real-time market-trading supervision and enforcement. (The Australian, Oct. 1) U.S. - FED PURSUES TOUGH NEW U.S. CREDIT CARD RULES

The U.S. Federal Reserve proposed tough new credit card rules to protect consumers from potentially costly practices by lenders, as it moved to implement legislation enacted in May. The rules would generally prohibit an interest rate increase in the first year after a credit-card account is opened, and ban increases on an existing card balance. They would also bar creditors from issuing a card to anyone under the age of 21 unless the borrower has either the ability to make the required payment, or has co-signer. A consumer's consent would be needed before creditors could charge fees for transactions that exceed the credit limit. (Reuters, Sept. 29) (II) FINANCIAL CRISIS

GLOBAL - IMF CUTS GLOBAL WRITEDOWNS BY BANKS TO $3.4 TRILLION

The International Monetary Fund lowered its estimate for global writedowns for banks and other financial institutions to $3.4 trillion. But it warned that loan losses were set to rise as unemployment grew and said Britain had a relatively high vulnerability to credit constraints because its banks were “deleveraging very rapidly.”

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GLOBAL REGULATORY BRIEFING OCT. 1

IMF said in a report that it cut the writedown figure by $600 billion from an April estimate to reflect rising securities values and new methodology for calculating writedowns. The report said that while banks have enough capital to survive, their earnings are not expected to fully offset writedowns expected over the next 18 months. It said stronger action was needed to bolster bank capital and earnings capacity. (Reuters, Sept. 30) US – U.S. WANTS BANKS TO PREPAY $45 BILLION IN FEES TO MEET FAILURE BILL

U.S. banking regulators proposed that banks prepay three years of fees to help cover the rising cost of bank failures, now put at $100 billion through 2013. Banks would prepay $45 billion of regular quarterly assessments under the proposal by the Federal Deposit Insurance Corp, but would not have to recognize the hit to their earnings until the fees are normally due. The proposal avoids levying another hefty "special assessment" that would crimp banks' earnings or tapping the FDIC's $500 billion line of credit with the U.S. Treasury. FDIC staff raised their expectations for bank failure costs from 2009 through 2013 to $100 billion, up from a previous estimate of $70 billion. (Reuters, Sept. 29) JAPAN - JAPAN LOAN MORATORIUM DEBATE HITS INVESTOR CONFIDENCE

A noisy and messy debate over a proposed loan moratorium for small firms is damaging investor confidence in Japan's new government. However, the plan, proposed by the leader of a small junior party in the Democratic party’s coalition, may turn out less painful for banks than first feared. People’s New Party head Shizuka Kamei, named minister for bank regulation two weeks ago, has been dominating headlines and sparking uncertainty with his proposal for a three-year moratorium repayment of loan and mortgage principal. But Finance Minister Hirohisa Fujii has expressed doubts about the need for a moratorium, and a government task force is trying to square the circle in a draft bill. Kamei's party said the proposal would include a scheme aimed at preventing losses by banks, and Kamei added that the government was considering a scheme that would apply to all banks. The Yomiuri newspaper later said the moratorium would not be mandatory. (Reuters, Oct. 1) GERMANY - WESTLB NEAR ASSETS SHIFT TO BAD BANK -SOURCES

Troubled state-owned lender WestLB has reached a deal in principle withregulators that opens the way to setting up Germany's first "bad bank" to house WestLB's toxic assets. Sources familiar with the situation said bank rescue fund Soffin has approved the extension of 4 billion euros in guarantees to WestLB by the bank's owners. The deal paves the way for WestLB to shift some 6.4 billion euros of troubled assets off its balance sheet to the bad bank in a first step, with "at least" a further 87 billion euros to follow later. (Reuters, Oct. 1) NETHERLANDS - PENALTY, EU REVIEW MAY DETER ING FROM AID PREPAYMENT

A stiff prepayment penalty and the risk of higher costs for a state loan guarantee deal make it likely that ING will be a prominent exception to a trend of banks rushing to return state aid. While the Dutch financial group has raised billions of euros this year from asset sales and could probably push through a share issue if needed, analysts said it may be better off waiting until a 50 percent repayment penalty expires in two years' time. An ING spokesman declined to comment other than to reiterate that it

This Briefing is produced by Reuters News. Contact randall.mikkelsen@thomsonreuters.com for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited.

GLOBAL REGULATORY BRIEFING OCT. 1

wants to pay the government back, the sooner the better, and that it has not excluded any potential source of funding. (Reuters, Sept. 30) NETHERLANDS - ABN AMRO FILES TO SPLIT OFF RBS-OWNED ASSETS

Nationalised Dutch bank ABN AMRO said it had filed paperwork to legally separate the units owned by the state from those owned by Royal Bank of Scotland after a 2007 takeover. ABN AMRO said it and shareholders had plans in place to ensure that after the split each bank "is adequately capitalized and has a sound liquidity position". ABN said it currently exceeded the minimum Tier I capital ratio of 9 percent set for it by the Dutch central bank. In a report issued this week on bank stress tests, the finance ministry said it could not guarantee that ABN AMRO and the nationalised Fortis Bank Nederland would not need more state aid. The government has also warned in the past that the RBS split could leave ABN with a capital shortfall. An ABN AMRO spokesman said the filing was only the first step in the process and that it hoped to have the legal separation complete by the end of the year. The Dutch central bank will have to formally approve the split. (Reuters, Sept. 30) EU - EU MAY MAKE LLOYDS SHED SIXTH MARKET SHARE -FT

The European Commission may reduce Lloyds Banking Group market share in Britain by one sixth as compensation for state aid it has received, the Financial Times reported. The newspaper said that EU Competition Commissioner Neelie Kroes had yet to make a final decision on the fate of the enlarged banking group, created by its rescue of HBOS. But she would insist it sell a substantial part of its retail and corporate operations. Royal Bank of Scotland would be told to make similar disposals, it said. The paper said officials in Brussels rejected reports that Lloyds would have to sell the mortgage bank Halifax to comply with the Commission rule on state aid, but added it might have to close or sell a number of its 1,000 Halifax branches. It also said Lloyds will have to do more than shed its Cheltenham and Gloucester subsidiary, which has 164 branches. (Reuters, Sept. 26) US – U.S. FEDERAL RESERVE APPEALS ORDER TO REVEAL BAILOUT DETAILS

The U.S. Federal Reserve appealed a court order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received. The central bank said it will ask the U.S. Court of Appeals for the Second Circuit to overturn an August order by a New York district court judge that it release the information under a Freedom of Information Act lawsuit filed by Bloomberg News. The Fed's board of governors has worried that such disclosure would stigmatize the participating banks, threatening both them and the U.S. economy. (Reuters, Sept. 30) BRAZIL - BRAZIL CENTRAL BANK ALTERS DEMAND DEPOSIT REQUIREMENTS

Brazil's central bank said it will modify a series of bank requirements regarding term deposits that it deployed during the heart of the global financial crisis, but added the changes are not expected to alter overall system liquidity. The central bank said it would lower the reserve requirements on time deposits to 55 percent of their portfolio from 60 percent previously, and raise the percentage held in treasury notes to 45 percent. It also reduced the maximum bank size of small banks eligible for a program that has allowed larger banks to reduce some of their deposit requirements in treasuries by investing in loan portfolios of the smaller banks. (Reuters, Sept. 28) (III) ENFORCEMENT, CORPORATE GOVERNANCE & FINANCIAL REPORTING

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GLOBAL REGULATORY BRIEFING OCT. 1

GLOBAL - CROSS-BORDER RESOLUTION OF FAILING BANKS MAY BE HARD – FED'S TARULLO

An international consensus on cross-border resolution of troubled financial institutions may be hard to find, a U.S. Federal Reserve board member said. Board member Daniel Tarullo told a U.S. Senate hearing that it will take time to work out relationships among global financial standard-setting bodies in light of the increased role of the Financial Stability Board, the new policy coordinating arm of the Group of 20 nations, and that winding up banks across borders may challenge an evolving ideal that such polcies be reached by consensus. (Reuters, Sept. 30) UK - FIVE MAJOR UK BANKS SIGN ON TO G20 PAY PLEDGES, SPLIT EMERGES WITH U.S. Five of Britain's biggest banks -- HSBC Holdings Plc, Lloyds Banking Group Plc, Barclays Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc – have promised to abide by curbs on bonuses outlined at the Group of 20 nations meeting in Pittsburgh last week, the British government announced. The banks have agreed to comply with Financial Services Authority (FSA) rules on remuneration, which are broadly in line with the G20 approach and will be updated next year to close any gaps, the Treasury said. Finance Minister Alistair Darling is writing to other countries to urge them to negotiate similar arrangements, a government source said. However, the Financial Times reported that there was a divide emerging over how to implement G20 rules on the issue. It said the United States intended to take a more flexible approach to interpreting the global guidelines on delaying a portion of bonus payments, with the result that U.S. banks could pay some bonuses more rapidly than their competitors overseas. (Reuters, Sept. 30-Oct. 1) EU - EU WATCHDOG AGAINST IMPOSING OTC DERIVATIVES EXCHANGE TRADING

Trading of credit-default swaps or other over-the-counter derivatives contracts should not be forced onto exchanges, a group of national markets regulators in the European Union said, underscoring a split in approaches between the European Union and the United States. The Committee of European Securities Regulators (CERS) said in a consultation paper that instead, central transaction repositories could make over-the-counter (OTC) derivatives markets less risky, and their establishment should be led by the market. The United States has proposed standardisation of contracts, clearing and exchange trading where possible, putting pressure on the EU to follow suit. The Group of 20 leading countries agreed that all standardised OTC contracts should be traded on exchanges or electronic platforms, where appropriate. The derivatives industry has expressed opposition. (Reuters, Sept. 29-30) EU – SECURITIES REGULATOR SAYS EU MAY NEED MANDATORY TRADE REPORTING

Mandatory reporting of off-exchange trades could make investors better informed about share prices in a market fragmenting under 2007 EU rules to boost competition, said Eddy Wymeersch, chairman of the Committee of European Securities Regulators. Wymeersch told Reuters Television that a wide transaction-reporting mandate could be the solution to what he described as a shift of trading from regulated to unregulated markets. (Reuters, Sept. 30)

This Briefing is produced by Reuters News. Contact randall.mikkelsen@thomsonreuters.com for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited.

GLOBAL REGULATORY BRIEFING OCT. 1

US – U.S. SEC EXAMINES STRICTER NAKED SHORT SELLING RULES

U.S. securities regulators are examining whether investors should have to pre-borrow a stock before shorting it, to prevent abusive naked short selling, Securities and Exchange Commission Chairman Mary Schapiro said. Such a measure, one of various rules the SEC has proposed to restrict short selling under pressure from Congress, would go far beyond a temporary limit imposed last year on short selling in 19 financial stocks, in which the SEC required short sellers to borrow the shares before executing a short sale. (Reuters, Sept. 30) U.S. - RATING AGENCIES PROTEST “COLLECTIVE LIABILITY” PROPOSAL

Moody's Corp chief executive Raymond McDaniel told U.S. lawmakers that his credit rating firm may agree to disclose some of its fees to regulators, but opposes a plan to impose greater liability on the sector. At a congressional hearing to examine a draft bill to toughen oversight of the industry, McDaniel said a provision to make ratings agencies collectively liable for each others’ ratings was unnecessary and could lead to more lawsuits. The president of McGraw Hill’s Standard & Poor's agency, Deven Sharma told lawmakers the company, which also opposed the collective liability idea, would back creation of a new office at the Securities and Exchange Commission to oversee credit rating agencies and giving the SEC power to impose "steep fines" for failing to comply with regulations. (Reuters, Oct. 1) SWITZERLAND - SWITZERLAND SAYS UBS, CREDIT SUISSE MAY FACE SPECIAL REGULATION

Switzerland's two global banks UBS and Credit Suisse may face tighter regulation than other domestic and international competitors, the country's banking regulator FINMA said in a strategy paper. In the paper laying out strategic goals, the regulator renewed its push for tougher rules on bank capital, liquidity, risk management, governance as well as its call for rules to unwind a large bank in times of crisis. It said large institutions “of systemic importance (to big-to-fail)” must face stricter regulation to reduce the risk of failure and strengthen their resistance to crisis. (Reuters, Sept. 30) EU - EU INSURANCE CAPITAL RULES LIKELY TO BE EASED (ANALYSIS)

Draft European Union solvency rules that could push Britain's insurers into a 50 billion pound ($80 billion) capital raising are likely to be watered down. Analysts and senior British industry figures say key aspects of the so-called Solvency II regime, initially opposed by UK insurers, are now attracting criticism in continental Europe, increasing the probability they will be altered. A key test of support for an easing of Solvency II comes on Oct. 29 and 30, when regulators from all 27 EU countries meet in Berlin to agree on recommendations for legislation to be submitted to the European Commission early next year. (Reuters, Sept. 28) US – U.S. SEC INTERNAL WATCHDOG RECOMMENDS WAYS TO PREVENT ANOTHER MADOFF

After dismissing complaints that might have uncovered Bernard Madoff's $65 billion fraud, the U.S. Securities and Exchange Commission must reform how it reviews tips and conducts examinations, the SEC's internal watchdog said. SEC Inspector General David Kotz outlined 58 recommendations to overhaul the agency and in particular its compliance unit, where staff made critical mistakes in nearly every aspect of their examinations of Madoff and his business, the report said. High on Kotz's list of recommendations is for the SEC compliance unit to create a protocol detailing how staff can identify red flags and potential securities violations based on information gleaned from sources. (Reuters, Sept. 29) AUSTRALIA - AUSTRALIA COURT ALLOWS CLAIMS AGAINST LEHMAN - FIRM

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GLOBAL REGULATORY BRIEFING OCT. 1

An Australian court has ruled that local governments can pursue financial claims against collapsed U.S. investment bank Lehman Brothers in Australia and elsewhere, a firm that is funding the litigation said. IMF (Australia) Ltd said the Federal Court ruled in favour of town councils and others which had lost money in collateralised debt obligations marketed and issued by Lehman, opening the door to legal claims to recover their losses. However, the judgment does not set a precedent for the many other Lehman investors and creditors worldwide who are seeking hundreds of millions of dollars from the bankrupt bank's estate, said Susanna Khouri, investment manager at IMF. (Reuters, Sept. 28) VIETNAM - VIETNAM STOCK REGULATOR ASKS FIRMS FOR PROMPT RESPONSE TO RUMORS

Vietnam’s stock market regulator has asked the country’s exchanges to monitor rumors and urged companies to respond swiftly, Vietnam News reported. The report said the regulator was requiring companies to immediately explain rumors and post confirmation on their Web sites. It said rumors affected nearly one-third of listed firms, but they rarely responded. (Vietnam News, Oct. 1) UK – UK REGULATOR CRACKS DOWN ON PAYMENT INSURANCE SALES PRACTICES

Britain's financial regulator said a number of UK lenders have agreed to identify and compensate borrowers who were mis-sold payment protection insurance (PPI), as part of a crackdown on poor sales practices in the industry. Companies accounting for 40 percent of PPI contracts sold directly to borrowers alongside unsecured personal loans have agreed to screen all such sales since July 2007 for evidence of mis-selling, and compensate affected customers, the Financial Services Authority said. The FSA also said new rules taking effect at the end of 2009 would force lenders to look again at 185,000 previously rejected customer complaints about PPI. (Reuters, Sept. 29) (IV TAX)

UK - BRITAIN SCRAPS SHARE TAX AFTER HSBC COURT WIN

Britain scrapped a tax on share transactions after the European Union's top court ruled it breaks EU law, leaving an already cash-strapped British treasury facing a huge refund bill from companies. Britain's Revenue and Customs said it would stop levying the stamp duty reserve tax immediately but may come back with new rules. The European Court of Justice ruled in a case involving HSBC bank’s purchase of rival CCF in 2000 that a stamp duty on shares newly issued in one EU state and distributed through a clearing system in another state as part of a takeover deal should not be subject to the tax. (Reuters, Oct. 1)

GERMANY - GERMAN RISK-CAPITAL TAX LAW GETS PARTIAL EU APPROVAL

Germany's plan to give tax breaks to private investors that provide risk capital to companies won approval from European Union antitrust regulators, but tax breaks for venture capitalists received a veto. Under the proposed law individuals investing in certain target companies will receive an income tax benefit if they make a capital gain on the sale of their investments. However, the European Commission turned down the idea of tax breaks for venture capital companies and the right of target enterprises acquired by these companies to carry forward losses. It said the plan infringed the risk capital guidelines and could not be implemented. (Reuters, Oct. 1)

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GLOBAL REGULATORY BRIEFING OCT. 1

US – SENIOR U.S. PROSECUTOR SEES MORE TAX CASES AGAINST WEALTHY, US BANKS

The U.S. government is stepping up prosecutions of wealthy individuals dodging taxes through off-shore accounts, with new cases expected to be made public "every couple of weeks." This year’s settlement of a criminal tax probe against Swiss bank UBS AG, and an amnesty program encouraging tax evaders to turn themselves in is speeding prosecutions, Kevin Downing, a senior attorney in the tax division of the Department of Justice told an American Bar Association tax conference. Downing told Reuters that U.S. banks that helped U.S. clients hide money off-shore are a target. (Reuters, Sept. 26) OFFSHORE – OFFSHORE FINANCE CENTERS TALK BACK AGAINST G20 'FINGER POINTING'

Caribbean and Atlantic offshore finance centers are hitting back against attempts to portray them as shady tax havens and say world leaders are making them scapegoats for the global downturn. Policymakers and business chiefs from the Cayman Islands and other prominent offshore centers say the anti-tax haven "finger pointing" by rich and powerful governments is hypocritical and seeks to shift blame away from their own failed policies, high taxes and lax regulation. "It's not fair," said McKeeva Bush, political leader and Minister of Financial Services of the Cayman Islands. But many offshore sites are scrambling to change policies and get themselves off the Organsation for Economic Cooperation and Developments’ list of tax havens, and officials express optimism that their finance centers will prosper. (Reuters, Sept. 25) (V) TRADE & CROSSBORDER

SOUTH AFRICA / INDIA - BHARTI AND MTN TELECOMS TIE-UP TALKS COLLAPSE AGAIN

Talks between Bharti Airtel and MTN Group to create the world's third-largest mobile operator collapsed for the second time in just over a year over South Africa's reluctance to allow a flagship corporation to lose its national character. Bharti, India's largest mobile operator, blamed the South African government for the breakdown in the planned $24 billion deal which faced close scrutiny from regulators and politicians. The transaction could have led to a full-blown merger. South Africa was eager to retain MTN's local management and homegrown character and had approached Indian authorities to consider a dual-listed entity, a structure Indian law does not allow. (Reuters, Sept. 30)

HONG KONG/UK - HSBC CEO MOVES TO HONG KONG, AIMS FOR SHANGHAI LISTING

HSBC Holdings is swinging its power base back to its place of birth 144 years ago by moving its chief executive to Hong Kong as it increasingly focuses on Asia. HSBC, Europe's biggest bank, said it will stay based in London for tax purposes and had no plans to move, and Britain's Financial Services Authority will remain its lead regulator. But CEO Michael Geoghegan will move to Hong Kong from February, and told reporters in Hong Kong the move was intended to help build business in Asia. HSBC wants to be one of the first overseas companies to list its shares in Shanghai, and Chairman Stephen Green said it remains in talks with the authorities there to do so. He declined to say when it is likely to happen. The bank will look to raise between $3 billion and $7 billion as part of a Shanghai listing, probably next year, people familiar with the matter have told Reuters. (Reuters, Sept. 25)

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INDIA - INDIA EXTENDS COMMODITY BOURSE INVESTMENT DEADLINE

India has given a final six-month extension to March 31, 2010 to foreign firms who must reduce their individual stakes in local commodity exchanges to 5 percent to meet foreign investment regulations, the government said. Firms such as Fidelity, Citigroup , NYSE Euronext and IntercontinentalExchange have acquired stakes in the rapidly growing local commodity bourses. The individual stake limits were imposed in March 2008 as part of broader limits on foreign investment in commodity bourses. (Reuters, Sept. 30) LIBYA - UNCERTAINTY GROWS FOR FOREIGN OIL FIRMS IN LIBYA (ANALYSIS)

The resignation of Libya's top energy official is a setback for foreign oil companies that saw him as an ally in an country whose leader once threatened full-scale nationalisation. Yet such a move remains unlikely as Libya is just beginning to reap the benefits of foreign investment and expertise that it spent years trying to lure, analysts say. Mystery over the timing and the reasons for Shokri Ghanem's departure from National Oil Corporation (NOC) underlined an opaque decision-making process that made him useful to international oil companies. As if to underline the risks, Libya scuppered the sale of Canadian oil exploration firm Verenex to China National Petroleum Corp. (CNPC) by blocking the deal and forcing its own purchase of Verenex at a lower price. (Reuters, Sept. 25) (VI) EXCHANGES & TRADING INFRASTRUCTURE

UK - LONDON BOURSE TO QUIT PAN-EUROPEAN LOBBY

The London Stock Exchange is quitting the industry's main European association, the Federation of European Securities Exchanges, as it seeks a free hand to lobby regulators mulling a crackdown on off-exchange trading at banks and dark pools. Exchange officials have said privately for some time that divergences were appearing between influential FESE and the LSE under chief executive Xavier Rolet, who took up reins at the exchange a year ago. FESE has been lobbying regulators to apply the same share trading rules on a bank or dark pool that exchanges have to comply with. However, Rolet, a former Lehman Brothers banker, has not wanted to antagonise banks who are the main providers of share trading volumes to bourses like the LSE, industry officials said. (Reuters, Sept. 30) UK – UK MARKET REGULATOR TO GIVE DOMESTIC FIRMS A CHOICE IN LISTINGS

Britain's market watchdog will offer domestic firms a choice of stock market listings, putting them on an equal footing with foreign companies to help keep London competitive as a financial centre. The Financial Services Authority said its board has adopted changes to allow UK companies to chose between a "premium" or less onerous "standard" regime, as long as they tell investors clearly which one they have chosen. Premium listings will have to meet Britain's "super equivalent" standards which the FSA says are higher than the European Union's minimum requirements. The premium segment would only be open to equity securities issued by commercial companies, and closed and open ended investment entities. Standard listings will cover issues of equities, global depository receipts and debt and securitised derivatives. (Reuters, Sept. 25)

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GLOBAL REGULATORY BRIEFING OCT. 1

UK - LME SHAREHOLDERS REJECT GOVERNANCE CHANGE

London Metal Exchange shareholders failed to approve a shift in its governance structure from a single-board to a proposed dual board. Under the rejected plan, intended to help the exchange become involved in markets such as forward freight agreements, an LME Holdings board would have taken responsibility for overall strategy and the LME Limited board would have had sole responsibility for the rings or floor trading. The proposal needed a 75 percent majority, but only 70.7 percent voted in favour, the exchange said. Chairman Donald Brydon said the issue would “in due course” be revisited. (Reuters, Sept. 30)

(VII) FUNDS MANAGEMENT & PRIVATE EQUITY

U.S. - Massachusetts court rules against hedge fund manager in free-speech case A Massachusetts court ruled that hedge fund manager Phillip Goldstein's right to free speech was not violated by a regulator’s order to let only qualified investors view his firm's website. Goldstein runs Bulldog Investors and is best-known for successfully curbing the reach of financial regulators into the $1.4 trillion hedge fund industry. He took the case to court after Massachusetts' top financial regulator, in a bid to protect unsophisticated investors, ordered him to stop allowing unqualified investors to look at his portfolios. Goldstein vowed to appeal the court ruling. (Reuters, Sept. 30)

(VIII) COMMODITIES & ENERGY

NIGERIA - NIGERIA MAY SELL OIL JOINT VENTURE STAKES TO CHINA

Chinese state energy firm China National Offshore Oil Corp has made a proposal to buy 6 billion barrels of Nigeria's crude oil reserves and the West African country said it could sell stakes in its joint ventures with Western oil firms to help Beijing do so. Minister of State for Petroleum Odein Ajumogobia said China would not be given all the reserves it was seeking but that Nigerian state oil firm NNPC could sell stakes in joint ventures with existing oil partners if Beijing offered the right price. (Reuters, Sept. 30) GLOBAL - EU, US EYE GREEN GOODS TARIFF PACT IN CLIMATE FIGHT

The European Union and the United States are holding talks on forging a pact with OECD countries and China to eliminate duties on environmentally friendly goods as part of incentives to Beijing in a potential global climate deal. EU diplomats told Reuters that under a plan being discussed by Brussels and Washington, the 30 nations in the Organization for Economic Cooperation and Development and China would agree a global pact to phase out import tariffs on goods such as wind turbines, renewable energy and green technologies. But any deal is unlikely to include environmentally friendly hybrid cars. (Reuters, Sept. 28) U.S. – U.S. SENATE DEMOCRATS TAKE UP CLIMATE CHANGE AFTER HOUSE BILL

Democrats in the U.S. Senate unveiled draft legislation aimed at reducing greenhouse gas emissions over the next four decades. The legislation, written by Senators John Kerry and Barbara Boxer, embraces major elements of a controversial bill that passed the House of Representatives in June. Both bills would establish a "cap and trade" system to replace dirty, polluting fossil fuels with cleaner solar, wind and other alternative energies to power factories and oil refineries and to produce electricity. Republican Leader Senator Mitch McConnell denounced it as an expensive “national energy tax.” (Reuters, Sept. 30)

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U.S. – U.S. FUTURES REGULATOR BACKS POSITION LIMITS ON CARBON TRADE

A U.S. carbon trading program could create the largest physical commodity market in the world, and it should be subject to position limits, said Bart Chilton, a member of the Commodity Futures Trading Commission. Chilton told the Senate Agriculture Committee that it was "probably appropriate" for position limits to apply to a cap-and-trade program. But he was quick to note that speculators would be necessary for the market to work. (Reuters, Sept. 30) US – TOP U.S. BUSINESS LOBBY LOSES MEMBERS OVER CLIMATE-CHANGE SKEPTICISM

The fight over climate change has spread to the U.S. Chamber of Commerce, where prominent members of the American big-business lobby, including Nike, Johnson & Johnson and Exelon Corp, are publicly disputing the group's skeptical stances on policy to fight global warming. Exelon, the largest U.S. nuclear-plant operator, announced it would quit the chamber. California utility PG&E Corp and New Mexico-based PNM Resources Inc did the same last week. Sportswear giant Nike Inc last week criticized the chamber’s recent challenge of the U.S. Environmental Protection Agency's authority to regulate carbon dioxide emissions as pollution. (Reuters, Sept. 29)

GERMANY - GERMAN POLL GIVES MANDATE TO DELAY NUCLEAR PHASEOUT

German Chancellor Angela Merkel's majority for a new centre-right government means she can rewrite a national nuclear phaseout deal by allowing reactors to run longer than laid down by her predecessors. A senior conservative lawmaker said the government intended to work to extend the planned phaseout. Although this week’s election outcome may also be a precursor for more nuclear projects in other European countries, but is no carte blanche for new reactors on German soil, which the public still opposes. On the other hand, representatives of Germany’s solar industry expressed optimism over continued state support despite a victory by centre-right parties that are widely expected to cut subsidies. (Reuters, Sept. 28) (IX) ISLAMIC FINANCE

FRANCE - FRANCE NOT READY FOR ISLAMIC BANK LICENSES – CENTRAL BANK’S NOYER

More work needs to be done to ensure that Islamic banks can operate soundly in a conventional banking environment before France hands out its first such licenses, French central bank head Christian Noyer said. France has spearheaded a drive to create a new European hub for Islamic finance, industry hopes have been growing that the banking authorities may soon give the green light to an Islamic bank. Islamic banks interested in setting up shop in France would be assessed on points that include capital levels and management experience, Noyer said told a forum on Islamic finance. Banking authorities also needed to tackle issues related to governance, such as the role of sharia boards. Legal classification of profit-sharing investment accounts, coverage by the domestic deposit guarantee scheme, as well as liquidity management and access to Eurosystem funding also must be addressed, he said. (Reuters, Sept. 29)

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GLOBAL REGULATORY BRIEFING OCT. 1

GLOBAL - ERRANT SHARIA FINANCE ADVISERS OPEN TO LEGAL SUITS-SCHOLAR

Sharia advisers can be held accountable in court for lapses in their duty but it would be hard to make a case against them as their role involves views which differ across the industry, a top scholar said. Sharia advisers are gatekeepers of the $1 trillion Islamic finance industry, applying Islamic and banking law to decide which financial practices and products comply with the sharia. As the industry tries to reach wider markets and more products are developed, there has been debate on the role and accountability of sharia advisers. Mohammad Akram Laldin, executive director of the International Sharia Research Academy for Islamic Finance, said sharia advisers have to answer for failures in their functions but not business decisions. (Reuters, Sept. 28) DUBAI - DUBAI GROUP RETHINKS BANK ISLAM STAKE

Dubai Group, an investment vehicle owned by the ruler of Dubai, is reviewing options for its stake in Malaysia's Bank Islam as it shifts its strategic focus closer to home, it said. If Dubai Group eventually sells its stake in Bank Islam, it could spark a round of consolidation among Malaysia's Islamic banks. (Reuters, Oct. 1) UAE – UAE MULLS ISLAMIC BANK TO MERGE MORTGAGE FIRMS

A United Arab Emirates government body overseeing the restructuring of two troubled Islamic mortgage lenders is mulling merging them into an Islamic bank and doubling their capital, a newspaper reported, citing bankers. The new entity would have a capital of 5 billion dirhams ($1.36 billion), doubling the 1.5 billion dirham capital of Tamweel and the one billion dirham capital of Amlak, newspaper al-Khaleej said. The plan envisages the federal government and that of the emirate of Dubai to be partners in the new entity alongside lenders of Amlak and Tamweel, the newspaper said. (Reuters, Sept. 30) (X) STATE ENTERPRISES AND WEALTH FUNDS

RUSSIA - RUSSIA PROMISES PRIVATISATION, GULF WEALTH FUNDS WOOED Prime Minister Vladimir Putin promised to launch a new Russian privatisation drive and courted the heads of some of the world's largest sovereign wealth funds and money managers. Putin’s comments at an investment forum were his first clearly in favour of a fresh privatisation round since the financial crisis hit Russia, though no specific timetable was announced. After the speech Putin had lunch with the heads of sovereign wealth funds from Kuwait, Abu Dhabi and Oman as well as private investment funds. Putin's spokesman Dmitry Peskov said executives from TCW Group, Lansdowne Partners and German asset manager DWS were at the lunch. Economy Minister Elvira Nabiullina said the government is discussing the sale of minority stakes in shipping firm Sovkomflot, agricultural equipment leasing firm Rosagroleasing, as well as in some sea ports and airports. She added that the sale of a stake in top oil firm Rosneft was not on the agenda. (Reuters, Sept. 29) CHINA - CHINA PAYS $939 MILLION FOR KAZAKH ENERGY STAKE

China strengthened its grip on Central Asia's energy after its sovereign wealth fund bought an 11-percent stake in Kazakhstan's second-largest oil producer. The fund, China Investment Corp (CIC), fresh from a series of commodities investments across the globe, said it had bought a stake in the Kazakh state-controlled upstream company KazMunaiGas Exploration and Production (KMG EP). The deal comes less than two weeks after CIC bought a 14.5 percent stake in commodities trading firm Noble Group, lent Indonesian coalminer PT Bumi Resources $1.9 billion and sealed a cooperation pact with

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commodity trader Glencore. CIC said it paid $939 million for about 11 percent of the Global Depositary Receipts of KMG EP. (Reuters, Sept. 30)

SINGAPORE - GIC SAYS PORTFOLIO RECOVERS AFTER SLUMP

Singapore's giant sovereign wealth fund GIC said its assets had fallen fell over 20 percent in Singapore dollar terms in the year to March 2009, but it has since recovered over half the losses as markets rallied. The Government of Singapore Investment Corp, the larger of Singapore's two wealth funds with an estimated $200 billion or more in assets, said it had cut its equity holdings but raised exposure to the United States and alternative investments. Its investment in Swiss bank UBS was still showing a loss, it said in its second annual report. (Reuters, Sept. 28) CHINA - CHINA'S AGBANK TO LIST ONLY IN SHANGHAI - MEDIA

Agricultural Bank of China, the only big state lender that has yet to float shares, plans to list only in Shanghai and not Hong Kong, the South China Morning Post reported, contradicting earlier reports of a likely dual listing. AgBank would probably not bring in foreign strategic investors ahead of its initial public offering, the newspaper said, meaning it would not follow the model used by China's other three state-owned banks as they underwent reform. The newspaper said the decision was in part due to a backlash this year after cash-strapped strategic investors Royal Bank of Scotland and Bank of America dumped shares in Bank of China and China Construction Bank as soon as lockup provisions expired. AgBank would instead sell strategic stakes to Chinese financial institutions and conglomerates, the newspaper said. (Reuters, Sept. 28)

TELECOMS & INTERNET

U.S. - US GOVERNMENT SIGNS PACT WITH INTERNET DOMAIN BODY

The U.S. government and the body in charge of assigning Internet addresses signed an agreement that allows for greater global participation in the Internet domain name process. The U.S. Commerce Department said it reached an agreement with Internet Corporation for Assigned Names and Numbers, which decides what names can be added to the Internet’s top-level domains, such as .com. The agreement gives other governments more say but keeps the nonprofit organization’s headquarters in the United States. The European Union had sought a complete delinking of the organization and the U.S. government, but Washington will take part in its reviews. (Reuters, Sept. 30) US – U.S. MAY NEED AS MUCH AS $350 BILLION TO EXTEND BROADBAND – FCC PANEL

Expanding broadband usage throughout the United States will require subsidies and investment in infrastructure upgrades of as much as $350 billion, a U.S. Federal Communications Commission task force said. The potential costs for investment dwarfs the $7.2 billion set aside in President Barack Obama's economic stimulus package.

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GLOBAL REGULATORY BRIEFING OCT. 1

An envisoned mechanism, transferring for broadband use the universal services fund collected for traditional phone calls, will not suffice, the task force said in an update on its work toward a plan for expanding broadband service in rural and urban areas. It said subsidies must also be considered. (Reuters, Sept. 29) EU - EU MOBILE ROAMING RATE CAP IS VALID - COURT ADVISER

European Union legislation that limits tariffs for making and receiving mobile phone calls when abroad is valid, an adviser to Europe's top court said. Vodafone, Telefonica's O2, T-Mobile and France Telecom's Orange had in 2007 challenged in the British High Court the European Commission's cap on tariffs. The European Court of Justice’s Advocate General, Poiares Maduro, whose opinions are non-binding but influential with the court, said in response to a request by the British court that the commission acted within its authority in imposing the limits. (Reuters, Oct. 1) US - AT&T SAYS INTERNET NEUTRALITY SHOULD APPLY TO GOOGLE ALSO

AT&T Inc said any new "net neutrality" rules imposed by U.S. regulators need to apply to Web companies like Google Inc much as to phone companies, to ensure a level playing field. In a letter to the head of the U.S. Federal Communications Commission's Wireline Competition Bureau, the biggest U.S. telephone company argued that Google would have an unfair advantage if its Voice service is not subject to the same rules proposed by the FCC on phone operators. FCC Chairman Julius Genachowski last week proposed new rules requiring operators to open their networks to any legitimate Internet content or service without discrimination. If adopted, the rules would be a victory for big Internet companies like Google at the expense of network operators like AT&T, Verizon Communications, Sprint Nextel Corp and T-Mobile. Broadband carriers want the ability to protect their networks from bandwidth-hogging applications. (Reuters, Sept. 26) THAILAND - THAILAND CLOSER TO 3G, FOREIGN SHAREHOLDERS A PROBLEM

Thailand is moving closer to a long-awaited auction for third-generation mobile phone licences, now expected in the second week of December, but the issue of foreign shareholders in telecom firms may derail the process. The telecoms regulator expects to issue licences within two weeks of selecting winning bidders in the auction, Sethaporn Cusripituck, one of the members of the National Telecommunications Commission (NTC), told reporters. But analysts said the process could be delayed if a Thai court is asked to determine whether bidders comply with laws which limit foreign shareholding in Thai firms to 49 percent. Athueck Asvanund, vice chairman of True Corp, which owns a majority stake in Thai mobile operator True Move, said the NTC should make clear whether foreign state companies were qualified to join the auction, and also said the 3G spectrum should not be given to foreigners on national security grounds. (Reuters, Sept. 28) SOUTH KOREA - SOUTH KOREAN MOBILE FIRMS SLASH TARIFFS

The South Korean telecom regulator said the country's three mobile service providers would lower mobile tariffs and other charges under a government initiative aimed at supporting households. Savings from the cuts would amount to 1.5 trillion won ($1.25 billion) in 2010, equivalent to 7-8 percent of combined revenue of the operators -- SK Telecom , KT Corp and LG Telecom. The savings would reach 2.1 trillion won in 2011, or about 10 percent of the combined revenue, the Korea Communications Commission said. (Reuters, Sept. 27)

INTELLECTUAL PROPERTY RIGHTS

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US - JUDGE DELAYS HEARING ON GOOGLE BOOKS DEAL

A U.S. judge cast doubt on the future of a $125 million deal that would allow Google Inc to create a massive digital library. He delayed a scheduled hearing on the controversial settlement between Google and groups representing authors and publishers, and said the settlement was unlikely to be the “operative one” one in view of objections raised by countries, states and nonprofit organizations. U.S. District Judge Denny Chin said that while the proposed settlement would offer benefits to society, it also raises significant issues, as demonstrated by objections to the deal by parties including countries, states and nonprofit organizations. He postponed the fairness hearing scheduled for October 7 and instead scheduled a "status conference" on that date to determine how to proceed. The U.S. Justice Department, citing antitrust concerns, has urged the parties to modify the settlement, which would allow Google to distribute and sell digital versions of out-of-print, copyrighted books. (Reuters, Sept. 24)

PEOPLE

US – U.S. PAY CZAR FEINBERG EXPECTING HEAT FOR RULINGS

The Obama administration's pay czar joked that he might have to move to Pluto to escape the fallout from his first batch of compensation decisions for bailout bankers, which are expected in October. Kenneth Feinberg, a Washington lawyer appointed in June to decide on pay for the highest-paid employees of companies that received government rescues, told the Chicago Bar Association that he expected his rulings to be “criticized from both ends.” Feinberg said he is meeting nonstop with Citigroup Inc, Bank of America Corp and American International Group Inc as he completes his first wave of compensation rulings. He said the discussions remain amicable, and he hopes he won't have to impose pay curbs over the objections of the companies involved. (Reuters, Sept. 30) US – BANK OF AMERICA CEO LEWIS TO RETIRE AMID SCRUTINY INTO MERRILL BUY

Bank of America’s CEO Kenneth Lewis announced he was retiring by the end of the year, after months of being dogged by a series of government investigations into the company's acquisition of Merrill Lynch last year. The reputation of the 62-year-old Lewis had been badly bruised by massive credit losses and the need for two government bailouts. But experts believe it was the intense scrutiny from federal regulators, state attorneys general and the courts that forced his hand. (Reuters, Sept. 30) US - AIG UNIT HEAD CASSANO BACK IN US; PROBE INTENSE Former AIG executive Joseph Cassano, closely associated the insurer’s collapse, has slipped back into the United States from Britain to face an intensifying investigation into the failure. Cassano, who returned from London to a modest home in Connecticut, is fully cooperating with all probes into the losses at AIG Financial Products, his attorney said. (Reuters, Sept. 25) UK - UK APPOINTS FINANCIER TO MANAGE TOXIC ASSET SCHEME

Britain has appointed private equity executive Stephan Wilcke as the first permanent head of its Asset Protection Agency, the body designed to oversee a proposed insurance scheme for banks' toxic assets, the This Briefing is produced by Reuters News. Contact randall.mikkelsen@thomsonreuters.com for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited.

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finance ministry said. Wilcke joins from credit asset manager Cairn Capital and was formerly a partner at private equity firm Apax Partners and financial services consultancy Oliver Wyman. The APA oversees the Asset Protection Scheme, which in return for a premium is due to insure 585 billion pounds of risky assets held by RBS and Lloyds Banking Group. (Reuters, Sept. 25) EU - ITALY PRESSES DRAGHI AS EUROPEAN CENTRAL BANK CHIEF, EYES ON GERMANY

Italy staked a claim to the European Central Bank presidency after Jean-Claude Trichet's mandate expires in October 2011, setting the stage for a fight with EU powerhouse Germany. Italian Foreign Minister Franco Frattini said on local television Italy would be "honoured" if Bank of Italy Governor Mario Draghi were named ECB head, reviving debate over who will succeed France's Trichet. Draghi's prominent role during the global crisis as chairman of the Financial Stability Board, which spearheads the Group of 20's regulation initiatives, means he is often mentioned as a potential replacement for Trichet, but he faces a likely challenge from German ECB Governing Council member Axel Weber. (Reuters, Sept. 30)

A LOOK AHEAD

Oct 3 - G7 finance ministers and central bank governors meet in Istanbul, Turkey. Oct 7-9 - International Organisation of Securities Commissions (IOSCO) Technical Committee meets in Basel, Switzerland, to discuss financial regulation initiatives. Oct 9-10 - International Conference on Corporate Governance at Royal Overseas League, London. Speakers include UK financial services minister Paul Myners and HSBC bank chairman, Stephen Green. Oct. 15 - Global Financial Regulation conference at Chatham House, London. Also in October: - International Accounting Standards Board (IASB) expected to publish draft rule on provisioning as part of a wider revamp of its IAS 39 fair value rule. - The European Commission is expected to publish the third leg of its reform of the EU's bank capital requirements rules which may include a simple leverage cap, liquidity requirements and an extra capital buffer that can be drawn down in weak markets.