Speed & Transparency 2015

I like this IBM interpretation of a recent EIU study of "Financial Markets 2015". In short: Financial Services are characterised by increasing speed & transparency, which leads to the evaporation of agency trade profitability. This shifts the balance of power towards the investor. Ultimately, the industry distinction between buy/sell side & processors may be replaced by principals & advisers. But of course, there's lots of other useful insights.

European Pensions for Switzerland

A project group of Innovation Second Pillar is currently evaluating options for extending the Pensions Directive's cross border regime to Switzerland and vice versa. With Switzerland not being part of the EU nor of the EEA, this constitutes a major impediment for otherwise highly experienced Swiss service providers. It also dispossesses Swiss firms with employees in the EU of potential economies of scale by forcing them to maintain dual structures.

The Pensions Directive is technically still not part of the legal body of the EEA at this point. This technicality is expected to be removed by May of this year, however. Nevertheless, the Principality of Liechtenstein, with which Switzerland has close ties, is part of the EEA and plans to transpose the Directive into its law by 1 January 2007. We are keeping a close watch on what is happening in the neighbourhood.

Perspectives

The July 2004 issue of PWC Investment Management Perspectives (Google has stumbled across it only now for some reason) has a good section on pan-European pensions. While some of the transposition information is naturally dated by now, the fundamental arguments remain the same. I also like the figure on page 45 which displays the tax regimes of non-EET countries with regards to occupational pensions.

Commission takes action

The EU Commission has issued a reasoned opinion against Belgium, Cyprus, Czech Republic, Finland, France, Italy, Lithuania, Slovakia, Slovenia, Spain and the United Kingdom for non- or partial transposition of the Pensions Directive into their national law, thereby capturing all the member states that it has identified earlier for lagging. The next step in the infringement proceedings according to Art. 226 EU Treaty would be court action in front of the ECJ after two months time (via IPE).

Convergence

I've been invited to speak at the IASC Foundation Conference in Frankfurt about financial analysts' views on convergence of accounting standards, specifically the convergence of US GAAP and IFRS. Rather than going into the details, I addressed the direction which convergence should take in the longer term by summarising the 12 principles of the Comprehensive Business Reporting Modell of the CFA Institute. There were a lot of sceptic vibes to be felt from the huge audience (some 400 people), especially from preparers of financial statements about the full fair value postulate. But there you are: debate is only advanced by bold ideas - I think I can say that since those ideas are not mine alone. The presentation is available online.