Morning Bell  Regulators focus on shadow banking Critics say the shadow-banking system, which is about half as large as the global banking industry, could prompt the next financial crisis. The situation has global regulators taking note. The Financial Stability Board is concerned that shadow banks could be used to attract risky activities and avoid regulations. "What we're doing now is looking at the types of data that the FSB will be gathering," said Rick Watson of AFME. "The scope is pretty broad, but it's important to get the facts on table and consider what activities could pose a risk." Reuters(07 Feb.), AdvisorOne.com(07 Feb.)   Industry News        ECB reportedly makes key concessions on Greek bond holdings The European Central Bank helped narrow a gap in Greece's finances by making concessions on its holdings of the country's sovereign bonds, sources said. The move helps clear the way for another rescue for Greece. As long as Greece's debt-restructuring talks are successful, the ECB will swap its bonds at a price below face value. The Wall Street Journal(08 Feb.)  Portugal makes progress on fiscal plans, EFSF official says Klaus Regling, head of the European Financial Stability Facility, said the Portuguese government is moving forward with plans to improve its fiscal position. "Portugal is on track, but the markets are not rewarding it yet," Regling said. "I'm confident that with the new government that was elected with a mandate for change, they will continue." The Wall Street Journal(07 Feb.) Judge dismisses MBS suits against Deutsche Bank US District Judge Jed Rakoff dismissed lawsuits brought by Dexia and the Teachers Insurance and Annuity Association of America against Deutsche Bank. The plaintiffs alleged that the bank misrepresented the quality of mortgage-backed securities. Rakoff said the cases could be refiled if they focus specifically on MBS produced by the bank. The Wall Street Journal/Dow Jones Newswires(07 Feb.), Reuters(07 Feb.), Bloomberg Businessweek(08 Feb.)

Corporations expect banks to pass on costs of regulation
Corporate treasurers at an industry conference said they are concerned that the costs of new financial regulations will be passed on to them by banks. "The thing we are worried about is the cost of these regulations," one speaker said. "We think it is going to be difficult for banks to avoid giving the costs to us unless they're going to make more money out of other parts of the business." Risk.net (subscription required)(07 Feb.)

Regulatory Roundup

EU is willing to accommodate local supervision of banks
Exemptions to draft EU banking laws are possible, said Jonathan Faull, who leads the European Commission's financial-services division. "I am sure that this will end up in a perfectly reasonable set of rules which will respect the general principles, that we have wherever possible a single rule book in the EU," Faull told participants at an industry conference. Reuters(07 Feb.) 

Economy shouldn't delay reforms, FSB official says
Tiff Macklem, chairman of a key committee at the Financial Stability Board, said the dismal global economy should not prompt regulators to postpone reforms of the financial system. "In a risky world, the need to make the financial system safer and restore confidence is vital," he said. "If there is a reproach to be made, it is that progress has not been faster." Macklem said the FSB plans to propose rules governing shadow banking by the end of 2012. Reuters(07 Feb.)

EBA reviews recapitalisation plans of 31 banks
The European Banking Authority is reviewing the plans of 31 banks to fill a €115 billion gap in their capital cushions. "Whilst it is too early to comment on the feasibility of those plans, the EBA has been impressed with the banks' willingness to undertake all appropriate measures to meet the requirements set out in the EBA's recommendation," the regulator said. Reuters(07 Feb.)

ESMA needs more time for reforms, advisory group says
The European Securities and Markets Authority is facing overly restrictive deadlines in its efforts to write and implement reforms for the financial industry, according to an advisory body. The comments from ESMA's Secondary Markets and Securities Group echo those of AFME and other industry groups. Financial News Online (U.K.) (subscription required)(07 Feb.)

Foreign governments continue to pressure US on Volcker rule
Regulators and central bankers from the UK, Canada and Japan have already voiced concerns with US officials about the Volcker rule, but other foreign entities are expected to follow suit. The European Commission reportedly plans to speak with officials at the US Treasury Department. Rob Toomey, managing director and associate general counsel at SIFMA, said the group backs calls for exempting sovereign-debt trading. "We spot-on agree with the positions taken by these foreign authorities -- how they are viewing the restrictive interpretation of market making and how that impacts their debt," Toomey said. IFLR.com (subscription required)(07 Feb.)

• Other News

Analysis: ECB has bought time, but serious issues remain
Financial Times (tiered subscription model) (07 Feb.)

Regulator will ask global Japanese banks to increase reserves
Reuters (07 Feb.)

Australian central bank surprises by maintaining key rate
The Sydney Morning Herald (Australia) (07 Feb.)