July 2010

Financial Services Industry

Monthly Bulletin

III. Domestic regulatory

proposals / measures

1. Banking

2. Private Pensions

IV. International regulatory

proposals / measures

1. Banking

2. Insurance

3. Private Pensions

4. Capital Markets

Contents

I. Domestic regulatory updates

A. Legal Updates

1. Banking

2. Insurance

3. Private Pensions

4. Capital Markets

B. Tax Updates

II. International regulatory updates

Banking

Domestic regulatory

updates

Banking

Issuer: National Bank of Romania (“NBR”)

NBR established the level of the reference

interest rate applicable for July 2010.

NBR enacted Circular no. 22/2010 regarding

the level of the reference interest rate valid for

July 2010. According to the above mentioned

Circular, the interest reference rate of NBR

valid for July 2010 was set at 6.25% per year.

The above mentioned Circular was published

in the Official Gazette no. 447/01.07.2010 and

may be accessed here.

NBR amended the interest rates payable on

minimum mandatory reserves.

NBR enacted Circular no. 23/2010 regarding

the interest rates payable on minimum

mandatory reserves. The above mentioned

Circular sets forth the interest rates payable on

minimum mandatory reserves during June 24 -

July 23, 2010 as follows:

1.84% per year for minimum mandatory

reserves set up in RON;

1.08% per year for minimum mandatory

reserves set up in Euro;

1.06% per year for minimum mandatory

reserves set up in U.S. dollars.

The said Circular was published in the Official

Gazette no. 498/19.07.2010 and may be

accessed here.

NBR repealed the regulation regarding the

transformation of financial institutions in

credit institutions.

NBR enacted Regulation no. 7/2010 repealing

NBR’s Regulation no. 1/2008 regarding the

transformation of financial institutions in credit

institutions. The above mentioned Regulation

was published in the Official Gazette no.

477/12.07.2010.

NBR amended the regulatory framework

regarding the evaluation of the supervisory

framework from the origin third state and

verification of the supervisory equivalence

performed by the competent authorities

from third states.

NBR enacted Regulation no. 8/2010 for the

amendment of NBR’s Regulation no. 2/2008

regarding the evaluation of the supervisory

framework from the origin third state and

verification of the supervisory equivalence

performed by the competent authorities from

third states with the one governed by the

principles provided by Government’s

Emergency Ordinance no. 99/2006 regarding

the credit institutions and capital adequacy.

The above mentioned Regulation was

published in the Official Gazette no.

477/12.07.2010.

NBR established the regulatory framework

for the transmission through electronic

means of certain documents related to

money market operations.

NBR enacted Norm no. 1/2010 regarding the

transmission through electronic means of

certain documents related to money market

operations performed by NBR through auctions

and permanent facilities granted by it to eligible

participants.

The above mentioned Norm was published in

the Official Gazette no. 480/13.07.2010 and

may be accessed here.

NBR established the regulatory framework

for the transmission through electronic

means of certain documents related to

auctions and subscriptions of state bonds.

NBR enacted Norm no. 2/2010 regarding the

transmission through electronic means of

certain documents related to auctions and

subscriptions of state bonds.

The above mentioned Norm was published in

the Official Gazette no. 480/13.07.2010 and

may be accessed here.

Legal Updates

NBR established the regulatory framework

for the reporting of the modifications of the

potential economic value of credit

institutions subsequent to the change of

the level of interest rates.

NBR enacted Order no. 6/2010 regarding the

reporting of the modifications of the potential

economic value of credit institutions

subsequent to the change of the level of

interest rates. The above mentioned Order was

published in the Official Gazette no.

480/13.07.2010 and may be accessed here.

NBR established the regulatory framework

for the reporting of the exposures towards

persons having special relations with the

credit institution.

NBR enacted Order no. 7/2010 regarding the

reporting of the exposures towards persons

having special relations with the credit

institution.

The above mentioned Order was published

with the Official Gazette no. 483/14.07.2010

and may be access here.

NBR amended the regulatory framework

regarding the implementation of the

International Financial Reporting Standards

by credit institutions.

NBR enacted Order no. 9/2010 on the

implementation of International Financial

Reporting Standards by credit institutions as a

basis of accounting and for the preparation of

individual annual financial statements

(“Order”).

In accordance with the Order, the credit

institutions shall prepare their accounting

records as of 1 January 2012 in accordance

with the treatments provided by International

Financial Reporting Standards enacted as per

the procedure described in Article 6 (2) of CE

Regulation no. 1606/2002 regarding the

application of the international accounting

standards. On the same date, the accounting

regulations compliant with the European

directives approved through NBR’s Order no.

13/2008 shall be reppealed.

Consequently, starting from 2012, the credit

institutions shall prepare and issue statutory

financial statements in accordance with the

IFRS provisions, in RON and in Romanian

language. Said financial statements will be

audited and made available to NBR within the

deadline set out by the law. By the end of the

current year, credit institutions should send to

NBR their measure plans for IFRS

implementation.

The above mentioned Order was published in

the Official Gazette no. 535/30.07.2010.

Issuer: Romanian Government

Romanian Government amended the

regulatory framework regarding the

payment services.

Romanian Government enacted Emergency

Ordinance no. 61/2010 which sets forth the

institutional and legal framework for solving the

complaints filed also by legal entities users for

the non observance by the payment services

providers of the obligations mentioned under

the Government Emergency Ordinance no.

113/2009 on payment services.

In this respect, the legal entity users may refer

to the Financial Guard in connection with the

cases of violation by payment services

providers of the provisions of the said

ordinance or may file court actions against the

respective service providers. The Ordinance

was published in the Official Gazette no. 446 /

01.07.2010.

Issuer: Deposits Guarantee Fund

Deposits Guarantee Fund amends the

regulatory framework regarding the

transmission of the status of the secured

depositors.

Deposit Guarantee Fund enacted Regulation

no. 3/2010 for the amendment of Regulation

no. 3/2009 issued by the Deposit Guarantee

Fund regarding the transmission to the said

fund of deposits in the banking system of the

status of the secured depositors. The

Regulation was published in the Official

Gazette no. 449/02.07.2010.

ISC amended the current regulatory

framework on the accounting reporting

system.

ISC enacted Order no. 9/2010 approving

accounting reporting system as of June 30,

2010 carried by the insurance/reinsurance

companies and by the insurance/reinsurance

brokers. The said Order was published in the

Official Gazette no. 516/23.07.2010 and may

be accessed here.

Private Pensions

Issuer: Private Pension System Supervision Commission (“PPSSC”)

PPSSC amended the regulatory framework

regarding the authorization of the

administrators of private pensions funds,

the acquisition of the management of

voluntary pension fund and the

organization of assets and liabilities at the

level of the administrators of private

pensions funds.

PPSSC adopted Decision no. 15/2010

approving Norm no. 8/2010 regarding the

authorization of the administrators of private

pensions funds, the acquisition of the

management of voluntary pension fund and the

organization of assets and liabilities at the level

of the administrators of private pensions funds.

The above mentioned decision was published

in the Official Gazette no. 471.08.07.2010 and

may be accessed here.

Insurance

Issuer: Insurance Supervision Commission (“ISC”)

ISC amended the current regulatory

framework regarding the authorization

process of insurance companies.

ISC enacted Order no. 8/2010 for the

amendment of ISC’s Order no. 16/2009

regarding the authorization of insurance

companies. Through the said Order the

following changes are implemented with

respect to the authorization process of

insurance companies:

the persons nominated for executive

management positions within the

insurance company shall be subject to an

interview in front of ISC, both with respect

to the approval of their appointment as

well as with respect to the approval of the

envisaged feasibility study of the

insurance company;

within 90 days as of the entry into force of

Order 8/2010, ISC shall initiate an

evaluation process with respect to the

persons having, at the time of entry into

force of the said Order, executive

management positions within already

authorized insurance companies as well

as with respect to the actuary, managers

of the life/non – life insurance activity and

persons in charge with the running of

certain departments of the said insurance

companies (i.e. financial, legal, risk

management, internal control).

The said Order was published in the Official

Gazette no. 444/01.07.2010, entered into force

on 1 July 2010 and may be accessed here.

Capital Markets

Issuer: National Securities Commission (“NSC”)

NSC amended the regulatory framework

regarding the investment and related

services.

NSC adopted Notice no. 24/09.07.2010

regarding the investment and related services.

According to the said notice the financial

investments firms can provide investments and

related services only in connection with the

following financial instruments, as defined by

Article 7 (1) point 141 of the Government’s

Emergency Ordinance no. 99/2006 regarding

credit institutions and capital adequacy:

securities;

instruments of the monetary market;

titles of participation to the collective

placement bodies;

options, futures agreements, swaps,

forward rate agreements and any other

derivative contracts related to securities,

currencies, interest rates or profitability or

other derivative instruments, financial

indices or financial indicators, which may

be settled physically or in cash funds;

options, futures agreements, swaps,

forward rate agreements and any other

derivative contracts related to goods

which must or may be paid in cash funds

at the request of either party (otherwise

than for default or other incident that leads

to termination);

options, futures agreements, swaps and

other derivative contracts related to goods

that can be physically settled, provided

they are traded on a regulated market

and / or in an alternative trading system;

options, futures agreements, swaps,

forward contracts and any other derivative

contracts related to goods that may be

settled physically included in the category

of the letter. f) and having no commercial

purposes, which have characteristics of

other derivative financial instruments,

taking into account, among other things, if

they are cleared and settled through

recognized clearing houses or are subject

to regular margin calls;

derivatives instruments for transfer credit

risk;

financial contracts for differences;

options, futures agreements, swaps,

forward rate agreements and any other

derivative contracts related to climatic

variables, freight, emissions of substances

approvals or inflation rates or other official

economic indicators, to be paid in cash

funds or can thus be settled at the request

of either party (otherwise than for default

or other incident that leads to termination)

and any other derivative contracts related

to assets, rights, obligations, indices or

indicators, not included in this definition,

that shows characteristics of other

derivative financial instruments, taking

account, inter alia, whether they are

traded on a regulated market or

alternative trading systems and are

cleared and settled through recognized

clearing houses or are subject to margin

calls regularly.

The above mentioned notice may be accessed

here.

NSC suspends the application of certain

provisions of NSC’s Regulation no. 2/2006.

NSC issued Decision no. 14/15.07.2010 for the

suspension of Articles 8 (1) and 19 letter (f) of

NSC’s Regulation no. 2/2006 regarding the

regulated markets and alternative trading

systems. The mentioned Articles referred to

the holding of participations by a market

operator and to some of the conditions which

must be observed by the members of the

board and the managers of the market

operator. We underline that for the period of

suspension, the said decision provides for

alternate legal provisions until the amendment

of the suspended ones.

For more details please access here.

NSC clarifies the implementation of NSC’s

Regulation no. 5/2010.

NSC issued Decision no. 885/12.07.2010

regarding some aspects related to the

implementation of NSC’s Regulation no.

5/2010 regarding the usage of global accounts

system, application of the mechanisms with

/without pre-validation, performance of lending

of securities operations and those establishing

associated guarantees and of the short-selling

transactions.

The above mentioned Decision may be

accessed here.

NSC suspends the application of certain

provisions of NSC’s Regulation no. 32/2006.

NSC issued Decision no. 13/12.07.2010 for the

suspension of Articles 141, 191 and 205 (2) of

NSC’s Regulation no. 32/2006 regarding the

financial investment services. The mentioned

Articles referred, among others, to the prompt

delivery of the clients’ instructions and to the

obligation of the market operator to publish the

list of the securities admitted for trading on a

regulated market which might be the subject of

short selling. It is to be underlined that for the

period of suspension, the said decision

provides for alternate legal provisions until the

amendment of the suspended ones.

For more details please access here.

Tax updates

Registrations of intra-community operators

As of August 1, 2010, all entities performing

intra-community transactions with goods

and services must be registered in the

registry of intra-community operators. The

procedure is detailed in ANAF Order no.

2101/2010.

This requirement is also applicable to credit

and financial institutions which receive services

from EU suppliers who are taxable from a VAT

perspective under the business to business

main rule. Such services include advisory

services, IT licenses and maintenance, access

to databases and information streams.

Non-registration attracts a fine between RON

1,000 – 5,000, as well as the invalidity of the

VAT number for intra-community transactions.

For the press release of the authorities, please

access here.

International regulatory

updates

Banking

Issuer: European Central Bank (“ECB”)

ECB reviews risk control measures in Euro-

system market operations.

The Governing Council of ECB has reviewed

the risk control measures in the framework for

assets eligible for use as collateral in Euro-

system market operations. The amendments

shall enter into force as of 1 January 2011.

For more details please access here.

Issuer: Committee of European Banking Supervisors (“CEBS”)

CEBS published its implementation

guidelines on large exposures exemptions

for money transmission, correspondent

banking, clearing and settlement and

custody services.

CEBS published on 29 July 2010 its

implementation guidelines on Article 106 (2)

letters (c) and (d) of Capital Requirements

Directive. As a consequence of the deletion of

the general preferential treatment for inter-bank

exposures in the large exposures rules, the

Capital Requirements Directive currently

provides exemptions from large exposures

rules for specific short-term exposures arising

from the provision of money transmission,

correspondent banking, clearing and

settlement and custody activities. The above

mentioned guidelines have to be transposed

into Member States’ national law by 31

October 2010 and to be applied from 31

December 2010.

For more details please access here.

Domestic regulatory

proposals / measures

Banking

Issuer: Romanian Parliament

Proposal of Law regarding the activity of

electronic currency issuance.

The full text of the proposal may be accessed

here.

Issuer: NBR

Proposal of Regulation regarding the

amendment and supplementation of

Regulation no. 18/2009 regarding the

administration framework of the activity of

credit institutions, the internal evaluation

process of adequacy of the capital to risks

and the conditions of the externalization of

their activities as subsequently amended.

The draft regulation was induced by the

necessity of solving certain problems related to

the practical implementation of the provisions

of the NBR Regulation no. 18/2009, as well as

by the necessity of transposing certain

documents issued by the communautaire foras

into the Romanian legislation.

The draft regulation amends and/or

supplements the provisions related to:

governance arrangements, so as to take

into consideration some issues raised by

the Romanian Banking Association, as

well as Section D - Public Disclosure and

Transparency from the Guidelines on

Internal Governance of the document

Guidelines on the Application of the

Supervisory Review Process under Pillar

2, issued by the Committee of European

Banking Supervisors (CEBS), document

which has already been partially

transposed into the NBR Regulation No.

18/2009;

outsourcing activities, so as to clarify the

definition of outsourcing;

Internal Capital Adequacy Assessment

Process (ICAAP), so as to clarify certain

aspects related to the structure and

implementation of this process within the

credit institutions;

exposures to related parties, so as to

extend the definition of related parties;

non arm’s length transactions, so as to

transfer the provisions on non arm’s

length transactions from the NBR-NSC

Regulation no. 16/21/2006 regarding large

exposures of credit institutions and

investment firms;

restructuring loans portfolios, so as to

extend the scope of application by

introducing in place of the existing

operations, i.e. loans refinancing/

rescheduling, the so-called “replacement

operations”, as well as to introduce

reporting requirements regarding

replacement operations performed by

credit institutions in relation to their loans

and the impact of those operations on the

application of NBR Regulation No. 3/2009

on classification of loans and investments,

and establishment, adjustment and use of

specific provisions for credit risk;

liquidity risk, so as to amend the NBR

Regulation No. 18/2009 due to the

necessity of transposition of the relevant

provisions of Directive 2009/111/EC of the

European Parliament and of the Council

amending Directives 2006/48/EC,

2006/49/EC and 2007/64/EC as regards

banks affiliated to central institutions,

certain own funds items, large exposures,

supervisory arrangements, and crisis

management and Guidelines on Liquidity

Buffers & Survival Periods issued by

CEBS.

For more details please access here.

Private Pensions

Issuer: PPSSC

Proposal of Norm regarding the

authorization of establishing the pensions

legal entity and authorization of

management of facultative pension funds.

The full text of the proposal can be accessed

here.

International regulatory

proposals / measures

Banking

Issuer: CEBS

CEBS published on 1 July 2010 its

consultation paper on guidelines to the new

Article 122 (a) of the Capital Requirements

Directive.

Article 122 (a) of the Capital Requirements

Directive provides for new requirements to be

fulfilled by credit institutions when acting in a

particular capacity, such as original lender and

also when investing in securitisations.

For more information please access here.

CEBS published on 23 July 2010 the results of

a stress test performed over several credit

institutions from the European Union.

The results of the said stress test may be

found here.

CEBS published on 13 July 2010 a

consultation paper on its draft guidelines

on revised Article 3 of the Directive

2006/48/EC relating to the taking up and

pursuit of the business of credit

institutions.

CEBS published on 13 July 2010 a

consultation paper on its draft guidelines

on revised Article 3 of the Directive

2006/48/EC relating to the taking up and

pursuit of the business of credit

institutions. The debate period ends on 27

August 2010.

For more information please access here.

CEBS published on 13 July 2010 its

comments to the International Accounting

Standards Board Exposure Draft on the fair

value option for financial liabilities.

For more information please access here.

Insurance

Issuer: International Accounting Standards Board (“IASB”)

IASB proposes improvements to insurance

accounting.

IASB published on 30 July 2010 the Exposure

Draft of the new International Financial

Reporting Standard for insurance contracts.

For more information please access here.

Private Pensions

Issuer: Committee of European Insurance and Occupational Pensions Supervisors (“CEIOPS”)

CEIOPS published on 14 July 2010 a Draft

Advice to the European Commission on

equivalence assessments to be undertaken

in relation to Articles 172, 227 and 260 of

the Solvency II Directive 2009/138/CE

(Solvency II).

The mentioned Draft Advice was produced as

a response to the EC Call for Advice asking

CEIOPS to identify and prioritise the third

countries where an equivalence assessment

would be desirable before the introduction of

Solvency II, while recognising that further

equivalence assessments will be carried out

subsequent to the first wave.

For information please access here.

Capital Markets

Issuer: Committee of European Securities Regulators (“CESR“)

CESR published on 9 July 2010 the

eleventh version of Frequently Asked

Questions regarding the prospectus.

Please find more information here.

CESR initiated on 19 July 2010 public

consultations on standardisation and exchange

trading of OTC derivatives. The consultation

period ends on 16 August 2010.

For more information please access here.

CESR initiated on 19 July 2010 public

consultations on transaction reporting on

the OTC derivatives and extension of

transaction reporting scope. The

consultation period ends on 16 August

2010.

For more information on transaction reporting,

please access here.

CESR published on 28 July 2010 its final

guidelines on risk measurement and the

calculation of global exposure and

counterparty risk for Undertakings for

Collective Investments in Transferable

Securities.

For more details please access here.

CESR published on 29 July 2010 its report on

trends, risks and vulnerabilities in financial

markets.

For more details please access here.

CESR published on 29 July 2010 its

Technical Advice to the European

Commission in the Context of the MiFID

Review and Responses to the European

Commission Request for Additional

Information.

For more details please access here.

Issuer: International Organization of Securities Commissions ("IOSC")

IOSC published on 9 July 2010 its final

report regarding the transparency of the

structured finance products.

The above mentioned report may be accessed

here.

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