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NBR repealed the regulation regarding the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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