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ACI’s 6th European Congress Hits the Right Notes

The 6th European Congress of ACI – The Financial Markets Association was recently held in Luxembourg, and was the usual good blend of business and social activities. Additionally, the ACI Council adopted several new proposals to push the association forward. The exhibition hall played host to 25 exhibitors, many of whom have, or are due to, release new products. Wall Street Systems demonstrated their new interest rate derivatives module, as previewed in Profit & Loss, May 2002 issue, other major vendor releases are carried elsewhere in this issue.

Delegates in the conference hall were treated to a series of speeches and panel discussions involving leading figures in the financial and political world. Luc Frieden, minister of treasury and budget in Luxembourg, got proceedings underway (after the welcome address from organising chairman Eugene Prim) with a speech on economic union, specifically tax harmonisation.

Taking the middle ground in the debate over tax, Frieden spoke about the need for competition in taxation within the European Union, but within generally agreed parameters. He also called for greater cooperation in the fight against the funding of terrorism, suggesting that some (unnamed) financial centres needed to step up their efforts in this area.

Confirming what appears to be the increasingly more comfortable relationship between politicians and the European Central Bank, Frieden also stated that monetary policy since the introduction of the euro has provided a stable currency and that there were no signs of misalignment in the Eurozone. He also pointedly stated that EU members should continue their efforts at budget convergence and stressed that pressure must be maintained on all members to ensure none divert from the agreed course.

Looking ahead, Frieden suggested that whilst some saw EU enlargement with fear, he did not agree, and saw it as the next challenge.


Panel one brought together two central bankers and two regulatory agencies for what turned out to be a lively debate. Michael Foot of the UK’s Financial Services Authority (FSA); Zdenek Tuma, governor of the Czech National Bank; Arthur Phillipe, director of Commission de Surveillance du Sector Financier, Luxembourg; and Paul Mercier, deputy director general of operations for the European Central Bank (ECB), all spoke with panel leader Maurice Lam, managing partner of Deloitte & Touche, Luxembourg, on financial markets and supervision.

Foot stated that the events of last year, the Enron and collapse and 9/11, proved that with preparation, leadership and cooperation, authorities can go a long way to help stabilise markets, but he also noted that one-third of financial institutions have no business continuity plans in place. He added that it was in the interests of these businesses that they put such plans in place, and was not necessarily a task for the regulators.

He stressed the need for a more comprehensive regulatory framework, adding that whilst the creation and destruction of wealth over the past three years will fascinate historians for years to come, if it took those events to get decent accounting rules and practices, then it was a price worth paying.

Mercier made the interesting point that in spite of coping well with the unforeseeable events of 9/11, there was a need for better communication between ECB and the markets. He spoke of the need for a legitimate contact point for the ECB amongst market players (such as occurs between the Federal Reserve Bank and the New York FX Committee) in order to discover what the market wants the authorities to do in times of crisis. ACI President Heering Ligthart, during the Q&A session later, offered the services of ACI – The Financial Markets Association as such a legitimate contact point.

On the subject of the accession of Eastern European countries to the EU, Tuma noted that the programme had been enormous, and that it was not just an economic decision, but a political one. He also suggested that the Czech Republic was waiting for the ECB to reach the levels of transparency of the National Bank, a claim refuted by Mercier, who stated that the ECB was the most transparent central bank in the world, primarily because press conferences are held immediately after council meetings.

In answer to the inevitable question why the ECB does not publish minutes of its monetary policy meetings if it is so transparent, Mercier found support from moderator LucienThiel, managing director of the Luxembourg Bankers’ Association who said that if minutes were published people would just read a speech at the meeting and the real decisions would be taken the night before at dinner.

Mercier also made the point that policy is set for the Eurozone as a whole, and not for individual countries, and that the idea was to avoid members having their votes publicly announced for fear of domestic political interference.

Back on the subject of accession, Mercier suggested it was wrong to look at the accession countries as a homogenous group because their individual economic circumstances were so different. Foot agreed and stated that it was in this area that the authorities had to show a united front.

The subject of Basel II came up in the panel discussion, most concern was expressed by the panellists for its impact on the smaller and medium-sized financial institutions, with Foot suggesting there was a danger that the authorities are building an auditory bias against such institutions. Concerns were also expressed about the timing of implementation and the dangers of the regulations being too prescriptive.

The Q&A session also brought up the thorny issue of regulation of the FX market, Phillipe suggested that there are so many parts to the FX market that he did not see how it could be regulated.


Panel two brought together eminent representatives of the private sector, who discussed the issues surrounding sell side research, especially in light of the Merrill Lynch settlement, as well as the robustness of the financial system. Predictably, the panel believed in less, not more, regulation, but agreed it was on the political agenda whether the markets like it or not.

There were mixed emotions over whether the euro had been a success. Thiel, again moderating, thought it an unequivocal success, however he did note that the currency had been undermined a little by the fact that there are 12 finance ministries holding the purse strings as opposed to one in the US.

Alessandro Lombardi, deputy general manager, Istituto per le Opere di Religione, Vatican, suggested it could not be considered a success yet because the acceptance of change is a social factor and does not happen overnight.

Neil MacKinnon, chief economist, the ECU group in London, suggested the answer depended upon who one asked. For Germany, he argued it has not been a success because they locked the euro rate in too high, but for Italy and Spain it has been more beneficial. He added that it had been impacted by the fact that it had not yet become a reserve currency and that it had lost 30% of its dollar value since inception. He also argued that the ECB had not done a good job compared to the Federal Reserve Bank and that the recent euro improvement was more to do with the weakness of the dollar rather than euro strength per se, and foresaw the impending expansion as complicating issues even more for the authorities.

Andre Roelants, CEO of Clearstream in Luxembourg, argued vehemently that it had been a success, pointing out that in 1992 the euro [in the form of the ECU] had been at 0.6 to the dollar so it had not lost 30% at all. He did acknowledge however that looking ahead, the EU had to think about development, competition and productivity and finding the right social balance, rather than concentrating solely on enlargement.

The panellists were then invited by panel leader David Arendt, chief financial officer of Cargolux, to give their predictions for euro/dollar on the first day of the 2003 ACI World Congress in Lebanon. Arendt himself plumped for 1.02, Thiel and Roelants predicted parity, MacKinnon foresaw 0.96 and Lombardi proved himself to be the most pessimistic – but still saw a rise – to 0.94.

New Initiatives

The 44th General Assembly of ACI was held at the Congress, at which the ACI Council unveiled its new marketing plan aimed at increasing awareness of ACI at all levels in the financial markets, with the associated growth in membership. ACI managing director Bill Hahn also released details of a comprehensive survey undertaken of national associations, which revealed a growing acceptance of the Model Code and the examination programmes of ACI.

The Model Code has been adopted in full in eight countries, and adopted in part in a further eight. The survey also revealed that the accreditation process, something ACI vice president Michael Eastaway believes to be inevitable, is moving ahead, with processes in place in 19 countries, of which 10 include ACI examinations as part of that process.

The Assembly commenced with ACI president Heering Ligthart leading a moment’s silence in memory of the victims of 9/11. He then went on to reveal a growth in membership of ACI after a downturn in recent years, and also expressed the hope that as the wider criteria agreed in Paris in 2000 worked through, membership would grow still further.

Reports were also delivered by the treasurer, the Board of Education, the vice president, managing director and the Committee for Professionalism (CFP). Members were also – for the first time at a General Assembly – given a presentation on the work of the Euribor ACI group.

Werner Pauw, head of the CFP spoke of issues facing the committee in its continuing work on the Model Code, while Board of Education chairman Eugene Prim revealed that the board was looking at a complete overhaul of the ACI Diploma, with the outsourcing of the examination database to a leading university in the UK. He also announced that the criteria for a pass in the Diploma was to be changed retrospectively, from a 50% general pass, with a pass in all topic baskets required, to a 65% general pass.


No ACI Congress would be complete without the social programme, and this year’s Congress was no exception. Delegates and their guests were treated to a lavish opening ceremony at Mondorf-les-Bains, which included a pyrotechnic show and accompanying music. Delegates then moved onto the Reuters-sponsored post-opening ceremony reception at the nearby casino, at which they were able to play the tables whilst a band entertained the audience with a concert that lured several would-be dancers to the floor.

By contrast, the next evening’s social programme revolved around a concert in the magnificent surroundings of the Echternach Basilica, which was followed by the gala dinner. The closing ceremony took place at Kochelscheuer, and included a dramatic show from the Cirque Royal and a Brazilian dance troupe, as well as the traditional handing over of the flag to ACI Lebanon. Delegates were also given the traditional invitation to join ACI in Lebanon from May 22 to 26, 2003, for what is expected to be another hugely interesting and entertaining Congress.

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