welcome to our september edition of the effas … · welcome to our september edition of the effas...

Welcome to our September edition of the EFFAS News!

IntegrityQualification

Communication

EFFAS THE EUROPEAN FEDERATION OF FINANCIAL ANALYSTS SOCIETIES

Dear EFFAS friends,

During the past 12 months we have intensified our efforts to develop and coordinate projects for the benefit of our member societies, with the objective of enhancing EFFAS’s visibility and reputation within the financial community and with EU and international regulatory institutions.

An important project was the release of the EFFAS Principles of Ethical Conduct. The EFFAS Principles seek to ensure the highest standards of ethical conduct by investment professionals. Primarily, these principles are directed at mem-bers of EFFAS’s national member societies, but they also aim to set standards for everyone in the profession. The design of the EFFAS Principles was large-ly influenced by the European regulatory environment.

Another core project was the creation of a Training Manual on European Regulation of Financial and Capital Markets to support the European National Examination within the CEFA and CIIA programmes.

An important concept elaborated in the past year was the new CEFA Entry Level Scheme. This lower-level scheme was developed, first of all, to reduce the loss of candidates at the entry level, but also because there are many in-dividuals as members who are still at the beginning of their careers and who need this lower level as their starting point.

Moreover, EFFAS continues to broaden its borders, the latest entry having been Bosnia Herzegovina at our Annual Meeting in June 2011. We have also strengthened our relations with our UK member, the Chartered Institute for Securities & Investments, which changed its status from Associate to Ordinary member. I personally believe that this represents a milestone in a long-term and fruitful cooperation between CISI and EFFAS.

The overall mission to establish EFFAS as a standard-setter for investment professionals’ requirements is continuing thanks to the hard work and high level of competence of EFFAS working commissions with their proactive working approach.

Overall, EFFAS is nearing its key 50th anniversary in 2012 (i.e. already next year) in a strong institutional position, with sound organisational and finan-cial structures, and with the benefit of solid cohesion among its members.

With best regards,

Giampaolo Trasi EFFAS Chairman

EFFASTHE EUROPEAN FEDERATION OF FINANCIAL ANALYSTS SOCIETIES

Frankfurt am Main

Claudia StinnesMainzer Landstrasse 47aDE-60329 Frankfurt am Main

Telephone: +49 69 26 4848 300Telefax: +49 69 26 4848 335Email: [email protected]: www.effas.com

EFFAS News | September 2011

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Contents

Chairman’s Note 1

EFFAS AGM hosted by the Croatian Society of Financial Analysts HUFA/CAFA

2

Highlights from the EFFAS AGM 3

Newly elected EFFAS Executive Management Committee Member

3

EFFAS Principles of Ethical Conduct (PoEC) 4

European Regulation of Financial and Capital Markets Manual

4

New CEFA Entry Level Scheme 5

A warm welcome to the new EFFAS Member Society from Bosnia Herzegovina

6

Portuguese APAF joined ACIIA as the 34th member society

9

EFFAS 2011 Summer School – 4th Edition 10

Changes to the Board of the EFFAS Member Societies

11

SPECIAL CONTRIBUTION Carsten Zielke EFFAS Representative in EFRAG

13

Should corporate governance for SMEs be more relaxed?

23

Interview with Prof. Otto Lucius 25

Miscellaneous 26

Calendar of Events and Conferences 29

EFFAS Annual General Meeting hosted by the Croatian Society of Financial Analysts HUFA/ CAFA


The Annual General Meeting of ACIIA (Association of Certified International Investment Analysts) and EFFAS took place in Dubrovnik on 29th and 30th June at the invitation of the Croatian as-sociation HUFA.

At the Annual General Meeting, EFFAS was able to welcome a new full mem-ber, CISI UK (Chartered Institute for Securities & Investment), and thus to ac-tivate this important representative of-fice in London. CISI Managing Director Ruth Martin said: “We are very pleased to have become a member of EFFAS. This will enable us to learn from our partners in Europe about their experience work-ing at the sharp end of the European financial services market. It will be partic-ularly beneficial for our members work-ing in the wholesale markets”.

The General Meeting approved the Society for Market Studies /DTS/SMS) from Bosnia-Herzegovina as a new EFFAS associate member society.

The “EFFAS Principles of Ethical Conduct” were presented and ratified along with the manual of the “European Regulation of Financial and Capital Markets”.

During the Annual General Meeting of EFFAS on 30 June 2011 in Dubrovnik, two EMC members were elected. Vincent Bazi from SFAF was re-elected for a three-year term and Frank Klein, member of the Board of DVFA (Society of Investment Professionals in Germany), was newly elected as member of the EFFAS Management Committee (EMC), the highest council of the European umbrella association of Investment Professionals in Europe.

Giampaolo Trasi was confirmed as Chairman for a further year and will head the umbrella organisation on its 50th anniversary in 2012.


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Newly elected EFFAS Executive Management Committee Member

During the Annual General Meeting of EFFAS on 30 June 2011 in Dubrovnik, DVFA Board Member Frank Klein was elected to the EFFAS Executive Management Committee (EMC), the highest council of the European umbrella association of Investment Professionals in Europe.

Frank Klein works for DB Advisors, which he joined in 2007. Having held a posi-tion within Deutsche Asset Management Investment as Global Head of Product Management, he is currently working for the Investment Solutions Europe di-vision of DB Advisors. Prior to this, he spent eleven years at Sal. Oppenheim Kapitalanlagegesellschaft KAG GmbH, where he served in a number of positions in the Research Department focusing on German and European equity portfolios for domestic and foreign institutional clients, as head of the mid- and small-cap team, international asset management, Oppenheim Pramerica Fonds Trust.

Before joining Sal. Oppenheim, Frank Klein worked for Deutsche Bank AG in a broad range of fields. He has been a speaker at a number of large interna-tional conferences.

Frank Klein assured the EFFAS General Meeting that, quote, “I do consider myself the European ambassador to Germany, and not the German ambas-sador to Europe.”


Frank Klein


Many of the newly established societies do not have their own code of conduct, and usually they use blueprints of codes of conduct from other established so-cieties. Due to the synergies within the EFFAS Member Societies drawn also from the EFFAS benchmarking grid (a common denominator of all National Member Societies Code of Conduct) conducted by the MSC Commission, it was seen as nec-essary to draft EFFAS’s own Principles of Ethical Conduct.

The European regulatory environment has largely influenced the design of the

EFFAS Principles, although the latter do have things in common with the ACIIA Principles of Ethical Conduct, released by the ACIIA, Association of Certified International Investment Analysts, in 2005. The EFFAS PoEC will be useful for the area of training and qualification and were also included in the European National Specific syllabus manual devel-oped specifically for the EFFAS member societies. Following a period of consulta-tion and implementation of the suggest-ed changes, the PoEC were presented and ratified at the EFFAS Annual General Meeting in June 2011.

A very valuable project for EFFAS was the development of a European Regulation of Financial and Capital Markets manual, which can be used either for the CEFA, or the CIIA, or national seminars potentially linked to the regulatory body in the re-spective country.

During the year, Otto Lucius presented the various versions, with the first part covering the EU framework, the institu-tional framework, legislative procedures (single market), etc., and the second part covering issues relating to European su-pervision, IOSCO and the Rating commit-tee, and giving useful recommendations

on compliance. Recommendations also include areas examined by the European Monetary Union (EMU). Following a pe-riod of consultation within EFFAS, the European Regulation of Financial and Capital Markets manual was presented for ratification to the Annual General Meeting in June 2011.

The manual was ratified, and in the first stage the EFFAS member societies can make use of the manual free of charge in electronic form. The AGM expressed their gratitude to the Austrian society and to Otto Lucius in particular.


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EFFAS Principles of Ethical Conduct (PoEC)

European Regulation of Financial and Capital Markets Manual


June 2011 EUROPEAN REgULATION OF FINANCIAL AND CAPITAL MARkETSPrepared by Prof. Otto LuciusLecturer Dept. Banking & Finance, University graz


The CEFA and the CIIA are designations of relevance for high level professionals. Many of the member societies are look-ing into lower level schemes and certifi-cates, which have not been offered by EFFAS in the past. Lower-level schemes have been called for first of all to reduce the loss of candidates at the entry level, but also because there are many indi-viduals as members who are still at the beginning of their careers and who need this lower level as their starting point. Even more important are the students who are already looking into what other certification they might obtain before starting their professional work.

Once candidates choose the CEFA entry level, they will be interested in moving on to the full CEFA or the CIIA. The TQC Review Panel prepared the relevant ma-terial for the introduction of the CEFA entry level and proposed a flexible scheme for member societies, suggest-ing minimum requirements rather than

detailed requirements and specifica-tions. The minimum requirement is four hours of common examination material, and the examinations should be mul-tiple choice. A syllabus was developed for the entry level scheme. The National Member Societies are to provide infor-mation to the Review Panel indicating that the scheme is consistent with the minimum requirement. Societies in-terested in introducing the CEFA entry level without already having a CEFA pro-gramme in place can do so provided that they fully inform the Review Panel about the syllabus and examination scheme they follow (i.e., CEFA entry level / level 1 syllabus plus the minimum four hour ex-amination). For emerging societies, this approach will definitely be a good start-ing point. The proposal was unanimously approved by the AGM in June 2011.


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New CEFA Entry Level SchemeEFFAS THE EUROPEAN FEDERATION OF FINANCIAL ANALYSTS SOCIETIES

DIPLOMAThis is to certify that

has satisfied the relevant examination requirements and has been awarded the title of

Certified European Financial Analyst CEFA

Giampaolo TrasiChairman of EFFAS


The Society for Market Studies – SMS - was recognized by the Ministry of Justice of Bosnia and Herzegovina in December 2009 as a non-profit organization dedi-cated to exploring, innovating and spreading best practices in financial markets analysis and ethics. Core ac-tivities are research and education, and membership in the Society consisting of portfolio managers, brokers, account-ing professionals, private investors, stu-dents and educators stands at 30 and is slowly growing. The Society’s structure consists of a Society Assembly and ad-hoc teams formed to fulfil specific tasks. Irfan Polimac, a US equity options trader and the Society’s president, says that small developing countries are an area in which greater understanding of financial markets is vital to their stable growth. “Investors’ confidence depends on per-formance and performance depends on skills and risk awareness,” says Polimac, explaining key ideas behind the Society, its philosophy and its activities.

About the Society for Market Studies (SMS)

Bosnia’s markets are in the early stage of development. Some of the commonplace investment products that could be found in countries like the Netherlands as early as 17th century were introduced only

recently to regional markets. State and corporate bonds are one such example. Consequently, there is a natural need for practical education, and the primary ob-jective of the SMS is to introduce best available practices in investment analy-sis. Using the accumulated knowledge and standards in ethics and analysis from mature markets is a smart way to achieve development. Not only can this have an effect on professional performance but can also bring confidence to the markets as a whole. The SMS assists the local fi-nancial, academic and general public by making practical investment and trad-ing skills and literature readily available. Portfolio managers, individual investors and students can learn locally to seize opportunities on domestic and interna-tional markets and to acquire a higher level of risk awareness. In this sense, the SMS aspires to serve as a catalyst for faster development of investment activity based on good practices from developed markets. Another reason for promoting investment skills is to activate idle financial resources, such as savings. One way to go about this is to introduce basic investment education and analytic standards.

On the other hand, the limitations of many of the predominant analytic and risk assessment tools become apparent


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A warm welcome to the new EFFAS Member Society from Bosnia Herzegovina

The EFFAS Annual General Meeting in Dubrovnik was pleased to welcome the Society of Market Studies (DTS/SMS) as a new member society. Together with DTS/SMS, EFFAS now comprises 27 member societies representing more than 17,000 investment professionals in the areas of equity and bond research, as-set management as well as investment advice. Irfan Polimac, chairman of the Association, was pleased to additionally introduce the Society in the current edition of EFFAS News.

Name Društvo za tržišne studije DTSSociety for Market Studies SMS

Established 2009 Objectives and Major Activities

To promote best practices in financial markets analysis. It gathers together members from financial and academic communities, including analysts, brokers, portfolio managers, traders, lecturers and students. The mission of SMS is to educate, innovate, exchange experience and cooperate in the interest of a better understanding of financial markets. To provide a networking platform.

Vision and Goals The difference between more and less developed markets is not only one of liquidity or size, but also of professional standards and the quality of investment decision making. SMS supports the integration of analytic methods and promotes coherent development in the financial industry of the region. SMS cooperates with the financial industry, governmental institutions, universities and the media. Being a young organisation in an emerging region, SMS will promote the development and dissemination of international professional standards in order to contribute towards a high level of quality in the professional practice of investment professionals. Ethical conduct combined with the training and qualification of the investment professionals remains a major goal. DTS/SMS will remain open for cooperation with national and European market and academic organisations.

Resources and Activities:

SMS Investment Library, located in Sarajevo, includes essential reading material for investment professionals and books and magazines relevant to financial markets participants. Among other resources, the complete reading list for the Certified International Investment Analysts exam is available in the library. SMS Investment Library is located at: Cemalusa 2, Sarajevo. SMS E-university is an electronic platform used for online training of members and the general public. It allows simultaneous training with real-time audio and video streaming. Conferences and trainings session on various topical issues are organised on a regular basis.

Website www.trzisnestudije.org Contact Society for Market Studies / Drustvo za trzisne studije

[email protected] Dobrinjske bolnice 2, 71000 Sarajevo +387 33 450 816 +387 62 544 114

FACT SHEET

Irfan Polimac


when the focus of attention is turned from the picture in South Eastern Europe to highly liquid markets like the US as well as events like 6 May of last year (sud-den drop in large cap NYSE stocks). Price turmoil during the quarterly earnings reporting season illustrate the extent to which an understanding of prices and drivers in equity markets is needed. Thus, the second task for the SMS is to inno-vate market analysis and introduce bet-ter analytic philosophies and tools. How does the interplay between fundamen-tals, price and investor behaviour result in what we see as market action? How do we reduce risks “below the radar” and apart from the risk-assessment tools we use today? What new techniques and tools should be introduced? These are the questions the SMS is focusing on in its research, education and cooperation with other organizations.

Past and Present Activities

The Society’s activities are designed to allow local access to best international experiences in market analysis on one hand, and to foster innovation on the other.

Cooperation with Sarajevo Stock Exchange

“Promoting investment education and higher professional standards” was the focus of media reports on the Memorandum of Understanding (MoU) that the SMS entered into with Sarajevo Stock Exchange, SASE, in 2010. SASE is one Bosnia’s two exchanges and is com-mitted to proactive market development and using the best practices from glo-bal capital markets. The Istanbul Stock Exchange (ISE), ISE Settlement and Custody Bank Inc. (Takasbank) and the Central Registry Agency of Turkey Inc. recently became shareholders of SASE.

Online Conference for Financial Analysts

Countries in South Eastern Europe share common challenges and opportunities, and there are many reasons for cross-border activities. In May 2010, the SMS organized the first regional confer-ence for financial analysts, which was open to professionals from Bosnia and neighbouring countries. Hosted on an SMS e-learning platform, the confer-ence included speakers from Germany, Switzerland and the USA.

Investment Library

In June 2011, the SMS opened its first Investment Library in Sarajevo. The library includes 150 titles relating to trading, in-vestment, analysis and ethics. Reading material for Certified International Investment Analyst preparation can be found in the library, and also popular works by authors such as George Soros, B. Mandelbrodt, and Elaine Knuth. The library’s opening was organized in co-operation with representatives from the City of Sarajevo Authorities and the Association of Exchange Intermediaries.

IFTA 2011

For the first time in the region, a glo-bal gathering of analysts, portfolio managers and other market profes-sionals organized by IFTA (International Federation of Technical Analysts) will take place in Sarajevo. The SMS has the privilege of hosting this event and of shaping its content. The two-day confer-ence will start on 22 September and will focus on “Innovating Financial Markets Analysis”. It brings together some of the world’s top practitioners and minds who will share their insight with regional and global delegates. More information is available at www.ifta2011.trzisnestudije.org


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Vision and Future

As a young organization operating in an emerging region, the SMS will do its best to accelerate the transfer of best prac-tices to Bosnia and promote an environ-ment for innovation and new best ana-lytic practices in the country. The Society for Market Studies is looking forward to cooperating with national and European organisations in the interests of invest-ment professionals.


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The Portuguese Associação Portuguesa de Analistas Financeiros, APAF, joined ACIIA, the Association of Certified International Investment Analysts, as its 34th member society

Following the ACIIA meetings held in con-junction with the EFFAS meetings, APAF, the Portuguese Association of Financial Analysts (Associação Portuguesa de Analistas Financeiros), has become an as-sociate member of ACIIA.

Founded in 1984, APAF has 450 mem-bers and is currently playing an impor-tant supporting role in reinforcing the qualification requirements in Portugal, maintaining an open dialogue with the national regulator, the CMVM (Comissão do Mercado de Valores Mobiliários), and the relevant market players.

As an EFFAS member society, APAF will continue to promote the CEFA pro-gramme, with the option of being granted the CIIA Diploma. The diplomas will be offered in a joint venture with two prestigious Portuguese universities. Joining ACIIA was the next logical step towards promoting Financial Analyst qualifications in Portugal.

In April 2010, the Portuguese Stock Exchange Commission published new regulations on financial analyst and in-vestment advisor requirements, such as the registration and official recognition by CMVM, including the EFFAS and ACIIA certification. These new regulations rep-resent an outstanding opportunity for ACIIA promotion and acknowledgment, as it will boost the need for internation-al diplomas. To date, 700 students have completed a CEFA programme, and they will be the first potential candidates ap-proached in the promotion of the CIIA.

Raúl Manuel Simões Marques is chair-man of the APAF. Daniela Azeredo is the Secretary General.



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EFFAS 2011 Summer School – Fourth Edition

To enhance networking between exist-ing EFFAS designation holders, CEFA and CIIA candidates and other investment professionals, EFFAS, with the support of IEAF, the Spanish Association of in-vestment professionals and the Banco Santander Group, organised the fourth EFFAS Summer School in Madrid in the Santander Financial City (Boadilla del Monte – Madrid).

The number of participants exceeded all previous years, and those in attendance benefited from a wide range of work-shops and lectures on capital market, ac-counting and regulatory topics.

In 18 workshops, experienced speakers from major European financial institu-tions led sessions on equity valuation, fixed income, corporate finance, port-folio management, derivatives and ac-counting.

The conferences, however, covered top-ics such as pensions, the eurozone crisis and environmental, social and govern-ance issues. A total of three high-profile panel discussions and intensive debates were held on current events affecting the capital markets.

As in previous years, people like Santiago Fernández Valbuena, CFO Telefonica, and top representatives from Santander Group (such as, this year, José Antonio Soler, Head of Financial Management, Santander Group) were on hand to moti-vate participants with lively insights into the practical side of their experience and to provide food for thought in the dis-cussions.

The EFFAS Summer School supports the concept that, in addition to qualifica-tions, exchanging views and networking are key to professional development.



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Mindaugas Vaiciulis, newly-elected President of the Lithuanian Financial Analyst Association (FAA)

Paolo Balice is the newly-elected chairman of the Italian association

At the 2011 General Meeting of the Financial Analysts Association (FAA), a new management was elected for a two-year term. Mindaugas Vaiciulis be-came the President of FAA in Lithuania, and the previous president Daiva Rakauskaite was elected as a Board Member. Also joining the Management Board were three new members, Jurgis Rubazevicius, Gintaras Rutkauskas and Eladijus Kirijanovas, while two current members, Karolina Krisciukaityte and Darius Klimasauskas, were re-elected.

“Today we have more than 100 mem-bers and we are becoming an influen-

tial organisation of financial and invest-ment professionals in Lithuania,” said Mindaugas Vaiciulis, President of FAA. “The first CIIA exams took place success-fully in Lithuania in 2010, and now FAA’s efforts must focus on promoting the CIIA designation among financial profession-als and institutions.”

Mindaugas Vaiciulis is currently Head of the Asset Management department within the MP Bank Baltic Branch and has 15 years’ experience as an invest-ment professional. He has been on the Board of the FAA since 2002 and was President of the FAA from 2004 to 2007.

The newly-elected chairman of the Italian Association of Financial Analysts (AIAF), Paolo Balice, replaced the outgoing chair-man Mario Noera. Paolo Balice has been elected for a term of three years.

Paolo Balice currently works for Gruppo Azimut. Prior to this, he worked for UBS Italy as director of the Wealth Management division. As a long-standing AIAF member, Paolo Balice carried out a number of tasks within the Association, being a Member of the Board from 1994 to 2003, and again from 2010 to 2011, and was also a member of the Collegio dei Probiviri (the AIAF Arbitration Board) from 2008 to 2010.

Looking forward to his three-year term, Paolo Balice sees his main objectives at the European level as enhancing and strengthening AIAF’s contribution to EFFAS work through greater involve-ment in the EFFAS commission’s activities

and also through closer collaboration with the other member societies via the EFFAS network. Nonetheless, at a na-tional level the present Board wants to further promote the involvement of the individual members in the various activi-ties of the Association; to exploit the op-portunities for independent consultancy firms / or individual consultants as a re-sult of the new regulation; to continue to actively cooperate with the relevant financial institutions in order to attract further members; to further use the vari-ous services and qualifications as a tool to support those who want to embark on a career in the financial industry; and last but not least, to improve these qualifica-tions in order for them to be recognised and valued at the European level.

Antonio Tognoli and Paolo Guida were elected vice-presidents of AIAF, and Franco Biscaretti di Ruffìa is Secretary General.

Mindaugas Vaiciulis

Paolo Balice


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The new chairman of HACSA - the Hellenic Association of Investment ProfessionalsThe newly elected chairman of the Hellenic association, Panagiotis Alexopoulos, replaced the outgo-ing chairman Konstantinos Vergos. Mr. Alexopoulos is currently a senior investor relations officer at ATEbank, a leading Greek bank, after years of ex-perience as a buy and sell side analyst at ATEbank's securities and asset man-agement arms. He hopes to further strengthen the Association to promote the development and dissemination of

international professional standards so as to contribute towards a high level of quality in the professional practice of investment professionals. In their role as the representative association of in-vestment professionals in Greece, their main aim is to represent the interests of all their members at the political, social and economic level and to be a strong partner for ACIIA and EFFAS in the area.

SPECIAL CONTRIBUTION


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How to solve the financial crisis by accounting means – current projectsDr. Carsten Zielke, Senior insurance ALM-analyst Société Générale, Member of EFRAG-TEG

EFFAS is represented at the official counseling body of the European Commission -EFRAG TEG (Technical Expert Group of the European Financial Reporting Advisory Group) by Carsten Zielke, insurance analyst. The last two years have been dominated by the question whether or not the financial crisis was ac-celerated by accounting rules. In this article, Carsten sets out to outline recent developments in financial instruments and insurance accounting and provides a short update on lease accounting and revenue recognition.

IFRS 4 and 9 –never ending stories

The International Accounting Standard Board (IASB) seemed very determined to publish standards on revenue recogni-tion, leases, financial instruments and insurance by the end of June 2011. This also happens to be when the mandate of the head of the IASB comes to an end.

Stakeholders felt the dynamics of the dis-cussions but were overwhelmed by un-clarified consequences of the proposals.

Then, at the end of April 2011, the IASB acknowledged that it would not be able to meet the deadline and pushed two projects to the end of December: Financial Instruments and Insurance.

But given that the US standard setter FASB lags around six months behind as far as insurance accounting is concerned (they will only publish an Exposure Draft shortly), and given that the FASB is still deliberating on financial instruments, we think it unlikely that we will see a standard on these two projects before the spring of 2012. The IASB is planning first-time adoption of IFRS 9 by 2015.

Financial Instruments

The IASB started a complete revision of IAS 39 back in the spring of 2009. They decided to split the project into five steps

(plus a separate step amending the off-setting guidance of IAS 32):

- Financial instruments: classification and measurement

- Fair value option for financial liabilities impairment

- General hedge accounting

- Portfolio hedge accounting

- Asset liability offsetting

Step 1: Financial instruments: classifica-tion and measurement

In the autumn of 2009 the IASB published Phase 1, Classification and measurement. Under this standard, financial assets managed for collection of contractual cash flows are measured at amortized cost, provided that those contractual cash flows are solely payments of prin-cipal and interest. Equities have to be booked at fair value but it is also possible to elect to book the price movements un-der other comprehensive income (OCI). Dividends would affect the main profit and loss account (P&L), but not realized gains or losses. These would be directly booked in shareholders’ equity.

For all other financial assets (instruments with embedded derivatives, derivatives,



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instruments with cash flows other than solely payments of principal and inter-est), these would be booked at fair value through P&L.

In November 2009 the European Commission decided not to seek acceler-ated endorsement of IFRS 9 at that stage, because it was necessary to have a com-plete overview of all aspects of the new standard.

An example of this is the recognition at fair value of financial assets with any form of contractual cash flows other than solely payment of principal and interest (such as embedded derivatives or certain ‘closely-related’ interest rate indexa-tions). It has been observed that that the new requirements would have meant, for example, that for a lot of European banks state regulated loans and savings would have had to be booked at fair val-ue as the standard provides for options which are not market-dependent (for in-stance state subsidized home loans). For

life insurance companies, realized gains in equities would have led to losses in the P&L as they were not allowed to book them in the P&L while having to pass on the benefits to the policyholder.

The European Financial Advisory Group (EFRAG) has repeatedly observed that, before finalizing the new standard, the entire package of the IASB proposals on accounting for financial instruments need to be considered as a whole.

For the time being, only one bank in Australia has shifted to IFRS 9 phase 1.

The FASB in May 2010 published an Exposure Draft in which basically all fi-nancial instruments had to be booked at fair value. As this proposal was heavily criticized, a re-deliberation started. The FASB now would permit amortized costs for debt instruments issued or acquired in the financing business. The following table compares the current IFRS9 and the FASB’s tentative decisions:

IFRS 9 classification FASB tentative decision

Financial instruments measured at fair value

Derivative financial as-sets and liabilities, except when designated for hedge accounting.

Equity securities, when the option to present changes in fair value in OCI is not elected.

Financial instruments held for trading (assets and liabilities) or financial instruments designated under the fair value op-tion.

Financial assets not held for trading that do not meet the characteristics of the instrument test.

Derivative financial assets and liabilities, except when designated for hedge accounting.

Equity securities and other financial instru-ments with variable cash flows.

Financial instruments held for trading (assets and liabilities) or sale (assets) or transfer (liabi-lities) or instruments ac-tively managed on a fair value measurement basis.



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Financial assets measured at amortised cost

Characteristics of the instrument test: Contractual cash flows are solely payments of principal and interest; and

Business model test: the asset is held in a business model whose aim is to collect contractual cash flows.

Characteristics of the in-strument criterion: Non-derivative financial in-strument with an amount transferred at inception and returned at maturity, that cannot be settled in such a way that the inves-tor would not recover substantially all of its ini-tial investment.

Business model criterion: Financial instruments issued or acquired for which an entity’s business strategy, at origination or acquisition of the instru-ment, is to manage the instruments through cus-tomer financing (lending or borrowing) activities, with ability to manage credit risk by renegotiat-ing cash flows with cus-tomers.

Financial assets measured at fair value through OCI

Irrevocable option (in-strument by instrument) at initial recognition to present in OCI subse-quent changes in the fair value of an investment in an equity instrument not held for trading.

The amounts recognised in OCI shall not be sub-sequently transferred to profit or loss.

Characteristics of the in-strument criterion: Same as above.

Business model criterion: Instruments not held for sale, issued or acquired in a business activity for which the strategy is to invest the cash of the entity either to: maximise total return (by collecting contractual cash flows or selling the instrument); or to manage the interest rate or liquidity risk of the entity (by either hol-ding or selling the instru-ment).

Realised gains and losses from sales or settlements would be recognised in net income.



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Hybrid financial instru-ments

Bifurcation of financial assets is eliminated. Hybrid financial assets that do not meet the characteristics of the instrument test will be entirely measured at fair value through profit or loss.

Bifurcation guidance has been retained for finan-cial liabilities.

Bifurcation guidance is retained for both assets and liabilities. Bifurcated embedded derivatives are measured at fair value through profit or loss.

Source: IFRS and FASB website. The FASB tentative decisions are subject to change.

Step 2: Fair value option for financial li-abilities

In early 2010 the IASB published Phase 2 of the IFRS 9 project, Liability account-ing. They had to split this bit off from Phase 1 as people were uncomfortable about own debt being booked at fair value. In the financial crisis a number of banks showed profits because their own credit spread widened, whereas they now show losses as these spreads narrow again. Stakeholders felt that this was misleading users and urged the IASB to amend their proposals. The Board there-fore retained the former IAS 39 bifur-cation criteria for embedded derivatives in order to keep the scope of amortized cost measurement unchanged, while changing the way of presenting changes in own debt. These now appear in other comprehensive income and do not affect the main P&L.

While the comments on this standard were positive from EFRAG, no endorse-ment advice has been given as this has not yet been asked for by the Commission.

Step 3: Impairment

In response to the global financial crisis and pushed by the bank regulators, the G20, the Financial Stability Board, the

Financial Crisis Advisory Group and oth-ers, the IASB came up with some drastic proposals: whereas until now, bonds and loans have had to be impaired only when there is evidence of the risk of default (incurred loss principle), they now want-ed to implement an expected-loss model.

The Exposure Draft was issued in November 2009. According to this ap-proach, banks right from the beginning of the investment would have to book expected losses. Banks also had to pub-lish vintages of their loan books so that users would be able to qualify wheth-er the bank had a good track record in managing loans.

Whilst regulators and users welcomed this move, the industry did not. They claimed that the implied change would be too costly and burdensome to be ap-plied. The FASB on the other hand was troubled that the impairment provisions would not be high enough if there was evidence of default.

The IASB therefore changed its proposal and in the supplement to the exposure draft of January 2011 suggests applying its impairment methodology only for the good book and only if the provision charges were higher than those of a de-fined floor. This floor is set to be equal to



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the losses expected in the foreseeable fu-ture, a concept developed initially by the FASB. This period had to be at least a 12 months’ horizon. For the bad book the incurred loss model would basically be maintained. No information about the loan vintages will be provided, as it is not considered to be applicable to open loan portfolios. As a final proposal the IASB has introduced a third book: the middle book where impairments are purely driv-en by macro-economic factors.

EFRAG and users are not happy with this modified proposal. The approach is con-sidered too complicated and especially burdensome for non-financials as they always have to make calculations for the good book in order to find out what the right provisions are. For users it will be hard to compare financial institutions, and without the vintage information it will be hard to judge the quality of the loan management.

What strikes are the current critics about the impairment policy on Greek govern-ment bonds. It shows that the IWF and also the IASB still much favor the fair value concept by ignoring the decisions taken on IFRS 9 Phase 1.

Step 4: General hedge accounting

The IASB published an Exposure Draft on general hedge accounting in December 2010. This ED only concerns closed port-folios and general hedges. Hedges on open portfolios (‘macro-hedges’) are scoped out of this project.

As in classification and measurement, the IASB want to integrate the view of the business model in their approach. They explicitly want to establish a link between hedge accounting and risk management.

The major consequence of this is that only risks that really affect the P&L are eligible items:

- Non-derivative financial assets and li-abilities measured at fair value through profit and loss are eligible as hedging instruments.

- A combination of an exposure and a de-rivative may be designated as a hedged item.

- A separately identifiable and reliably measurable risk component is eligible as a hedged item.

This broadens the eligibility of instru-ments that can be hedged. However, credit risk and equities through OCI were not admitted. EFRAG did not agree with this decision and said so in their com-ment letter. In the meantime the IASB have revised their decision on the equi-ties through OCI and has not yet re-de-liberated on eligibility of credit risk as a hedged item.

However, a major decision has been tak-en:

The 80-125 percent range has been re-placed by an objective-based assessment.

This now makes it easier to claim the ef-fectiveness of hedges applied. A hedg-ing relationship meets the effectiveness requirements when it:

- produces an unbiased result and mini-mizes expected hedge ineffectiveness; and

- is expected to achieve more than ac-cidental offsetting.

EFRAG very much welcomes this deci-sion. Also, the movements of fair value hedges are now booked in other com-prehensive income, with only the inef-fective part being recognized in P&L. This will make it more transparent to us-ers what the objective of the hedging strategy applied is about.



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Another major change relating to the business model has been applied:

- When the effectiveness assessment is no longer met, but the risk manage-ment objective remains the same, an entity should rebalance.

- Hedge discontinuation only when the relationship ceases to meet the qualify-ing criteria (i.e. not permitted when the hedging relationship still meets the risk management objective).

This makes the link to risk management compulsory. Earnings management by opening or closing hedges based on their performance will not be possible under this approach. We very much welcome this decision.

The standard is expected for the 3rd quarter of 2011.

Step 5: Portfolio Hedge Accounting

The IASB only started working on this project in April 2011. EFRAG affirmed that they could only give a positive en-dorsement if proposals on open portfo-

lio hedging were acceptable.

Macro hedges are much more impor-tant in Europe than in the US. Whilst in the US most refinancing is done directly via financial markets (70%), the share in Europe is only 30%. That means that banks in Europe provide most of the financing for the economy. This is also reflected in the accounting there. As their role in accumulating savings and distributing loans is very large, it makes no sense to hedge individual items but rather portfolios.

In many countries, governments inter-vened to regulate crediting or loan rates given their importance for the economy.

In France, for instance, no interest is paid on current accounts. However, flows are very regular. In addition, it is not infre-quent for banks to have access to fund-ing indexed below the interest bench-mark.

In 2008 the European Union decided to carve out passages of IAS 39 in order to permit hedges on these 0% accounts:

The requirements concerned were sub-stantially reintegrated into the Exposure Draft on general hedge accounting. Consequently, if the project of portfo-lio hedge accounting is not addressed, the European Union cannot endorse a

standard on general hedge accounting without giving up the carve-out.

In our view this issue is crucial for the whole endorsement process of IFRS 9.

The carve-out as of 1 January 2008 has deleted certain provisions related to hedge accounting from IAS 39 as endorsed by the EU. IAS 39 as adopted by the EU intended to:

(a) relax the effectiveness testing in order to avoid that under-hedging would lead to ineffectiveness;

(b) Allow hedging of the interest rate component of core deposits that are re-munerated at a zero interest rate or below market interest rate;

(c) Allow fair value hedging of a portfolio of financial instruments including core deposits.

Source: European Commission website - IAS 39 with highlighted carve-out



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Step 6: Asset-liability offsetting

Basel 3 is supposed to be a global project, though Europe seems to be in a bigger rush than the US to implement the new solvency rules. As a result, European banks have taken a closer look at their US counterparts to be able to compete fairly. It was this motivation that re-vealed that US banks generally have a lower total balance sheet number than European ones (by a third) to which the new leverage ratio would be applied.

The reason is that offsetting derivatives with the same counterpart is more wide-ly permitted in the US than under IFRS.

The banking lobby therefore called for convergence. The IASB in January 2011 then promptly produced an exposure draft to clarify the position. Actually, convergence would require US-GAAP reporting entities that do not have an unconditional, legally enforceable right of set-off or which do not intend to set-tle one another’s positions on a net ba-sis and simultaneously to show the gross amounts on the balance sheet. Hence, the total balance sheet numbers will be grossed up for US banks. The IASB/FASB proposal is summarized in the following slides:

Source: IASB



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Insurance Accounting

Insurance is a long-term business. So is the insurance accounting project. We had hoped that the fixed deadline for 30 June would have given the impetus to finish off the 13-year project, but unfor-tunately this did not happen. The IASB had to admit at the end of April that they needed more time to deliberate but also for stakeholders to give input. In particu-lar, the FASB is lagging behind schedule and is only just about to publish an expo-sure draft. They claim that users seem to be rather surprised by the new approach. The IASB therefore set December 2011 as a new target, knowing, however, that the FASB will publish a standard only in the spring of 2012 at the earliest.

We believe that for EFRAG it will be dif-ficult to give a positive endorsement ad-vice if the IASB is willing to change the new IFRS 4 Phase 2 standard shortly after it had been adopted. Similar comments came from the Canadian standard setter. So it is quite likely that we will not see a final standard before the spring of 2012 – 14 years after debates started.

Since Phase 1, most assets have to be booked at fair value while the liabilities would follow national accounting rules - book values in most cases. This created a lot of mismatches, especially in volatile financial markets.

Phase 2 sought to eliminate that mis-match by also applying fair values to liabilities. But then came the financial crisis and IFRS 9 classification and meas-urement was born. Here, the default cat-egory for bonds is amortized cost which would put most of the insurers’ assets at book value, whereas now liabilities would be at fair value.

The IASB struggled a lot to cope with this inverted mismatch, and its standard an-swer was that insurers were able to use the fair value option for assets.

EFRAG clearly outlined in their comment letter that insurance companies should be able to fully use IFRS 9 in the same way as other industries.

The IASB staff duly took note of that and came up with a proposal under which li-abilities would be valued depending on the choice of asset categorization made. So assets at book value would be reflect-ed with a liability at book value while assets at fair value would correspond to liabilities at fair values.

In practice, discounting would take place at an asset-based discount rate using ei-ther current market values or contrac-tual rates depending on the asset choices made.

Any other financial mismatches, as long as they are of pure accounting nature, will be reflected in other comprehensive income.

Discount rates

In the insurance working group we again discussed the discount rates to be applied. The IASB now accepts discount rates which are calculated top down and reflect the asset structure of the insur-ance company. For the time being they still propose only one yield curve for the whole entity but reactions to that were very heated during the insurance work-ing group session. We therefore believe they will admit several yield curves in-stead.

OCI

Amongst the accounting mismatches be-ing reflected in OCI are realized gains or losses in equities attributed to policy-holders. This means that insurance com-panies with participating business must not fear to book equities through OCI, as the policyholder accounts would also be credited in OCI.



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Options & guarantees

Under the current proposal only options & guarantees which are in the money would affect P&L, whereas the Board is still undecided as to whether those which are out of the money should be shown in OCI. In our view the value of the latter would be meaningless to users as these options are not traded.

Unbundling

Unbundling was again discussed. The conclusion, however, is that only separa-ble activities without interlinkage should be unbundled.

Short-term contracts

The IASB accepts an unearned premium approach for short-term contracts (very common in non-life) if the results are not that different from the building-block approach. The coverage period must not be longer than 12 months. This can be seen as a concession to American non-life companies which often have contract durations of only six months and appar-ently do not take account of the time value of money for pricing. We would have preferred a reference to the set-tlement period, since costs matter in a potentially high-inflation environment.

Presentation

The IASB has introduced a new presen-tation format. An expanded margin ap-proach with top line number and sources of earnings would be envisaged. Hence, a somewhat traditional element would be retained. This corresponds to what EFRAG had suggested.

We very much welcome the recent de-velopments, but fear that the dynam-ics we felt have led to concessions, such as the consideration of IFRS 9, could be jeopardized with an expanded deadline. Also, we fear that Solvency II now more

than ever could claim not to rely on IFRS numbers as the standard is not finished. In our view this would harm comparabil-ity and coherence.

Other major projects

Leases

The IASB wants to issue a new standard on leases. The problem is that currently there seems to be some ambiguity what is an operational lease and what is a fi-nance lease.

Big industries normally have an inter-est in reducing their total balance sheet number by qualifying aircrafts, for in-stance, as operational leases. The leased aircrafts then do not appear on the bal-ance sheet.

The question is: What are the rights which qualify a lease?

The IASB in their Exposure Draft has come up with the following criteria which qualify a lease:

(a) The fulfilment of the transaction is dependent on the use of an identifi-able asset (the “under ly ing asset”);

(b) The arrangement conveys the right of use of the underlying asset.

If these criteria are met, then the les-see puts an asset in their balance sheet which quantifies the right of use bit.

This project is very much debated and the IASB is going back and forth with new proposals. Until a few weeks ago they had re-introduced the operational lease, just before dropping it again.

From a user perspective, I think that it is most useful if we get comparable ac-counts. If the airline has a clear right to hand back the leased aircraft at any mo-



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ment, it has a different value than if it had purchased it. But if the rights are similar to property, it should also be re-flected in the accounts.

Revenue recognition

The IASB wanted to clarify what it under-stands as revenue. The core of the defini-tion was the client’s satisfaction:

However, the problem is how to define when the control is transferred to the customer and to know whether he is really satisfied. This applies especially for services. Also, concerns were raised about a probability weighted amount which would have had to be applied. A lot of estimates and assumptions are nec-essary here which lead to big operational problems. Therefore, the IASB decided to prepare a new Exposure Draft accompa-nied by field tests.

What we users don’t need is to allow companies to define themselves what they think their turnover number is. We need clear standards enabling compara-bility.


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Should corporate governance for SMEs be more relaxed?

From time to time the European Commission will restart discussions as to whether corporate governance princi-ples for small- and medium-sized com-panies (SMEs) could be more relaxed as compared with the principles governing the really big companies. Those ques-tions were repeated again in the last Green Paper on the EU corporate gov-ernance framework that was released for public consultations in April 2011. A total of 25 questions were asked in the document, but No. 1 was the most crucial and comprised several sub-questions:

Should EU corporate governance meas-ures take into account the size of listed companies? How? Should a differenti-ated and proportionate regime for small and medium-sized listed companies be established? If so, are there any appro-priate definitions or thresholds? If so, please suggest ways of adapting them for SMEs where appropriate when an-swering the question below.

I submitted to the Commission my per-sonal response to all the questions asked in the Green Paper, but as the discussion on SMEs looks like a never ending story, I elaborated that topic more extensively. Since I hope it might be of interest to you, the result is provided below:

When we start with the first question, the answer seems obvious: the size of the company should be taken into ac-count. But the answer to the following questions is much more difficult and is no more obvious. The ‘spread’ between small and big companies is extremely wide. For example, in Poland the market value of companies listed on the Warsaw Stock Exchange (WSE) is between € 0.5

million and € 13 billion. That means that the largest listed company is about 26 thousand times bigger than the small-est one. And those are only Polish com-panies – some of the foreign companies listed on the WSE are even bigger than that. Even if we were able to define a medium-sized listed company, it might be treated as a small one or a big one in another country (at another stock exchange). So it is impossible to define what exactly SMEs are, as this is a de-scriptive category that is valid in a spe-cific context only.

Just as it is impossible to define SME pre-cisely, it is also impossible to set a differ-ent regime for them as a legal require-ment. However, this can be done at the corporate governance level, understood as a set of principles (soft law) that should be applied on a comply-or-explain basis. A very good example may be found in Corporate Governance Guidance and Principles for Unlisted Companies in Europe, established by ecoDa, that are cited at the Green Paper. They are split into two phases of principles: Phase 1 principles applicable to all unlisted com-panies and Phase 2 principles applicable to large and/or more complex unlisted companies. What is important is that no strict definition is given there as to which companies should be treated as ‘large and/or more complex’ ones. It is left as a matter of self-evaluation and explanations provided by the companies themselves.

In some specific situations there are some hard-law regulations applicable to SMEs at the EU level, but practice shows that they are often inappropri-ately implemented. A good example is

By Krzysztof Grabowski, member of PABIA and the EFFAS Market Structure Commission (MSC)



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the regulation of the Directive 2006/43/EC described in the Green Paper, accord-ing to which Member States are allowed to permit SMEs that are listed companies not to set up a separate audit commit-tee. In theory there are some measurable parameters specified in the Prospectus Directive (2003/71/EC), but in Polish law, for example, it is not those parameters that have been applied but quite a differ-ent rule which says that companies with a ‘small’ supervisory board (in Poland a two-tier system is obligatory for stock companies) are permitted not to set up a separate audit committee. In a listed company a ‘small’ supervisory board is a board with 5 members only (as this is the smallest number for a listed company under company law). In practice there are several companies listed at the WSE, much bigger than SMEs according to the ‘measurable’ definition taken from the Prospectus Directive that intention-ally limited the number of supervisory board members to 5 persons only sim-ply to avoid the necessity of creating a separate audit committee. This example shows that if some strict limits are to be defined in specific situations, a special care should be taken to be sure they are

appropriately applied with no possibility of abusing a not-too-perfect regulation.

To be quite clear: in some special (but very precisely defined) circumstances, company size could be taken into ac-count for defining its duties, but disclo-sure obligations should be exactly the same for all listed companies, since equal access to information for all market par-ticipants is an essential principle of the capital markets.

The Article was written by Chris Grabowski, member of PABIA and mem-ber of the EFFAS MSC Commission.



What was the rationale for the Manual?

The process of creating a single market for financial services has gained enor-mous speed over the past years. This in-evitably entails a harmonisation of legal and regulatory rules. In order to provide a meaningful guideline to the massive regulation edited within the last ten years, it seemed necessary to structure this harmonisation process and describe it in a way that non-legal people would understand.

To whom do you recommend the Manual?

To anyone interested in the regulation of capital markets, but primarily to students of CEFA and CIIA courses interested in gaining insights into the most important European regulations of capital markets. It can be used by lecturers at seminars. It is however written in a way that allows for home study.

How would you most like member socie-ties / users to respond to the Manual?

Any input via the EFFAS secretariat would be highly appreciated.

Are you planning regular updates?

This will definitely be necessary. Today there are few areas undergoing more rapid change than regulation.

What is the advantage of a European Manual?

As already pointed out, it contains brief and concise information on highly com-plex topics written in an easily under-standable language. And as we increas-ingly have a level playing field, national regulations tend to converge.

Will you use it in Austria?

Of course, we will use the Manual from our 2012 course onwards.

Would you be available to teach / present the Manual in other European cities?

If I could assist in such a way in spreading the information and helping students to get access to these topics more easily, I would love to.

How might EFFAS play an important role?

By helping to shape the future regula-tory environment in Europe, further de-veloping standards, and advocating our members and their high ethical stand-ards.

How would you define a perfect start to the day?

Good question: I cannot start into a pro-ductive day without an excellent break-fast, which of course includes a strong coffee.

How do you relax after a busy day?

By reading an excellent book, by listen-ing to classical music, or just sitting to-gether with friends and enjoying a nice evening.

Who do you turn to for advice?

Are you kidding? I am a married man ... ☺

Any favorite quote?

Whatever you do, do it diligently, and think of the outcome.


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EFFAS European Regulation of Financial and Capital Markets Manual Interview with Professor Otto Lucius by Claudia Stinnes

Otto Lucius is Managing Director of Österreichische Bank wissen-schaftliche Gesellschaft (Austrian Society for Bank Research) Austria and Secretary General of the Austrian Association of Financial Analysis and Asset Management ÖVFA. In addition, Otto Lucius is a member of the EFFAS Training and Qualification Commission (TQC), of the Market Structure Commission (MSC), and of the EFFAS Annual General Meeting. Distinctions: Decoration of Honour in Silver for Services to the Republic of Austria. Other activities: Professor at University Graz, and chairman of the Austrian Financial Planners Association.


5th Taking ESG into Account 2011_Integrated reporting or integrated anal-ysis? Advances in ESG mainstreaming. This year’s EFFAS ESG Conference will take place on 28 September 2011 in the Madrid Stock Exchange in collaboration with the Spanish Institute (IEAF), KPMG Spain and the Spanish Association for Investor Relations (Aeri). As the name and the profile of the organisers indi-cate, the event will cover topical ESG is-sues in the mainstream of capital markets and companies. Thanks to distinguished speakers, the conference will cover three main sessions. Session 1 will cover ESG Standardization and Integration of ESG with Financial Reporting; Session 2 will highlight the current ESG Research, Tools and ESG Data, and Session 3 will sum-marise the initiatives on ESG and col-laborative ventures. In this session, sev-eral organisations will present their work and their objectives. Attendance is free of charge, and EFFAS will be pleased to welcome as many of you as possible.

Economic Responsibility 3.0 - An Update on General ESG Responsibility. The fi-nancial, economic and debt crisis, the nuclear catastrophe in Japan and the cri-sis in the Arab region highlight the fact that we need to demand comprehensive global ESG responsibility. Responsibility and crises - measures and ideas geared towards avoiding financial, economic, confidence, social, and ecological cri-ses in the future. Author of the report is Fritz Mostboeck, Vice-Chairman of OVFA (Austrian Association for Financial Analysis and Asset Management) and Member of the Executive Management Committee of EFFAS. Fritz Mostboeck has been observing crises very carefully over the past years. The current global environment (catastrophe in Japan, cri-sis in the Arab region, commodity pric-es) required an update on the basis of the 1st and the 2nd OVFA Publication on Responsibility (November 2004 and June 2010). The current as well as the last report can be found on the website of the Austrian Association for Financial

Analysis and Asset Management’s at www.ovfa.at, on the EFFAS website at www.effas.net and on other relevant websites dealing with economic respon-sibility.

3rd AIFM Directive Conference. The 3rd AIFM Directive Conference will take place on 30 November and 1 December 2011 in London. The conference will provide up-to-date information and analysis on the measures put forward in the new AIFM Directive, and their likely implications. Richard Stobo from the European Securities and Markets Authority (ESMA) is already confirmed to speak at the event. Some of the key issues that will be discussed include: How the Level 2 provisions will impact on your business; Understanding the or-ganisational changes your company will have to implement to ensure legislative compliance; How the Directive impacts on depositary responsibilities and liabili-ties; What limitations are placed on lev-eraged funds; How third countries are treated under the legislation and what will happen in 2015. Members of EFFAS receive a 10% discount. When register-ing please use booking code EFFAS10. More information is available at w w w. e u r o m o n e y t r a i n i n g . c o m /AIFMConference.

Innovating Financial Markets Analysis Conference. Innovating Financial Markets Analysis Conference will take place in Sarajevo, from 22-24 September 2011. The event will focus on price re-lated risks & analysis, institutional prac-tices & investment judgment. The confer-ence is being hosted by the Society for Market Studies, SMS, based in Bosnia, to-gether with the International Federation of Technical Analysts (IFTA) and EFFAS. Speakers from Zurich’s Rothschild Private Bank, Istanbul’s Bank Asya and Tokyo’s Mitsubishi UFJ Morgan Stanley Securities will elucidate best practices in analysis, investor communication and financ-ing. EFFAS will be represented by Hans Buysse, member of the EFFAS Executive

Miscellaneous


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5th Taking ESG into Account 2011_Integrated reporting or integrated analysis? Advances in ESG mainstreaming

Madrid28 September 2011

Sponsored by In collaboration with


Miscellaneous


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Management Committee and chairman of the Belgian association. The pro-gramme, venue, complete list of speak-ers, registration and other conference details are available at http://ifta2011.trzisnestudije.org.

Conference in Romania: Romania be-tween Past and Future. The Romanian Association of Financial Banking Analysts AAFBR together with EFFAS and FinMedia will organise the third edition of the AAFBR annual confer-ence on 9 November 2011. The confer-ence will be attended by international speakers and will tackle topics providing an overview and recapping past actions, will seek to outline recent developments and will make suggestions on future ac-tions. Mr. Mugur Isarescu, the governor of the National Bank of Romania, will deliver the opening speech. AAFBR is looking forward to welcoming as many participants as possible from Europe. Attendance is free of charge.

Seminars open to CIIA holders around the world. Global calendar of semi-nar events open to all CIIA graduates. Individual ACIIA Associations are open-ing their seminars to CIIA graduates worldwide so that diploma holders from abroad may attend along with the title holders registered with the Association in question. Participation is free for CIIA holders from abroad. A calendar of seminar events for 2011 open to all CIIA graduates is available on the ACIIA web-site. The calendar includes registration forms for the interested title holders to complete and send to the host society and an outline and overview of the top-ics. So far in 2011, SFAF France, DVFA Germany, SAAJ Japan, IEAF Spain and SFAA Switzerland have seminars open to CIIA holders worldwide. In 2010, IEAF Argentina, SFAF France, SAAJ Japan, IEAF Spain and SFAA Switzerland offered their seminars to CIIA holders world-wide. It is hoped that more societies will

participate in this important initiative and service for CIIA title holders. To view the seminar details please visit the ACIIA website www.aciia.org.

International Integrated Reporting Committee (IIRC). The International Integrated Reporting Committee (IIRC) is a powerful international cross-section of leaders from the corporate, invest-ment, accounting, securities, regulatory, academic and standard-setting sectors as well as civic society. This month the Discussion Paper, Towards Integrated Reporting – Communicating Value in the 21st Century was launched at www.theiirc.org. The paper is the result of ex-tensive input from experts around the world, whose contributions have shaped a vision for a 21st century standard of corporate reporting based on an inte-grated model. It presents the rationale for Integrated Reporting, offering ini-tial proposals for the development of an International Integrated Reporting Framework and outlining the next steps towards its creation and adoption. Its purpose is to prompt input from all those with a stake in better reporting, includ-ing producers and users of reports.

The IIRC will also be commencing a Pilot Programme in October 2011 to road-test this framework. This is an opportunity for a select group of companies to dem-onstrate global leadership in this emerg-ing field of corporate reporting. The Pilot Programme encompasses companies as well as the investor community, with expert support from the secretariat of the IIRC and peer-group feedback from other participants in the Programme. For more information, visit www.theiirc.org.


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FEE publishes Briefing Paper on Proportionality of ISAs. This Briefing Paper seeks to answer some common questions about the suitability of ISAs for SME audits and for use by SMPs and demonstrates that clarified ISAs can be used to audit very small entities in a proportionate way. The Briefing Paper argues that ISAs were not originally de-veloped by the IAASB for use primarily in auditing large public interest entities, that the ‘clarified’ ISAs’ additional re-quirements and ISQC 1 are not more on-erous for SMEs and that SMEs and SMPs were involved in the development of the standards. FEE welcomes your feedback on this Briefing Paper www.fee.be.

User participation crucial for EFRAG! During the summer, EFRAG launched its call for ERAG Technical Expert Group candidates with a deadline of preferably 1 October. It is of utmost importance that users’ views be fully considered in the EFRAG discussions. Carsten Zielke, our user member, will have served his maxi-mum period on EFRAG TEG at the end of March 2012. EFRAG is also keen to in-crease the number of EFRAG TEG mem-bers with user background from one to two. That is why EFRAG is in urgent need for suitable candidates with a user back-ground (www.efrag.org). EFRAG is also looking for candidates for EFRAG’s User Panel. Participating in the Panel requires a far lower time commitment compared with membership of EFRAG TEG and of-fers a good opportunity to become in-volved in EFRAG.

EFFAS Calendar of Events



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Updates can be found on the EFFAS website, www.effas.net

September 12 September 2011 ECMI: The Green Paper on modernising the Professional Qualifications Directive

Brussels (13:15-14:30)

14 September 2011 ECMI: Towards a More Comprehensive Common European Asylum System: The Role of EASO

Brussels (13:15-14:30)

15 September 2011 CIIA Foundation Exam 1 Africa/ Europe/ Americas

15-16 September TBLI Conference Tokyo



16 September 2011 CIIA Foundation Exam 1 Asia

16 September 2011 CIIA Final Examinations Europe/ Americas

17 September 2011 CIIA Final Examinations Asia

20 September 2011 ECMI: The Eurocrises: more Europe is need-ed – On the increasing importance of the EU for the economic policy of its member states

Brussels (13:15-14:30)

21 September 2011 ECMI: The Polish Presidency: A mid-term assessment

Brussels (18:00-19:30)

22 September 2011 ECMI: EU climate change policy in the tran-sition to the ‘new’ global climate change reality

Brussels (9:00-17:30)

22-24 September 2011

Innovating Financial Market's Analysis (Organised by SMS www.trzisnestudije.org)

Sarajevo

28 September 2011 EFFAS ESG Conference Madrid

29 September 2011 EFFAS EMC Meeting Madrid


Calendar of Events


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October 11 October 2011 TQC Meeting Lisbon

13 October 2011 EFRAG Anniversary Brussels

17-18 October 2011 EFFAS EBC Commission Meeting Paris

19 October 2011 MSC Commission Meeting Paris

19-22 October 2011 Challenges in the Nigerian Economy: The Capital Market Solution

Lagos

25-27 October 2011 23rd XBRL International Conference http://www.cvent.com

Montreal Canada

November 3-5 November 2011 International Conference “Accounting Renaissance”

Venice

8 November 2011 ILPIP / ACIIA Council Meeting Hanoi

9 November 2011 AAFBR Conference Bucharest

9 November 2011 ACIIA Seminar Hanoi

10-11 November 2011 TBLI Conference (and Workshop) For info: www.tbli.org

London

22 November 2011 CIIA Results examinations

30 November 2011 3rd AIFM Directive Conference www.euromoneytraining.com/AIFMConference

London

December 1 December 2011 3rd AIFM Directive Conference www.euro-moneytraining.com/AIFMConference

London

16 December 2011 EMC Meeting London

March 2012 9 March 2012 CIIA Final Examinations Europe/ New York/ South America/ Africa

10 March 2012 CIIA Final Examinations Asia

welcome to our september edition of the effas … · welcome to our september edition of the effas...

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