Posts by: Rebecca Grevitt

European Commission Report on Benchmarking of Diversity Practices Under CRD IV

Posted on

 

On December 8, 2016, the European Commission published a report on benchmarking of diversity practices under the CRD IV Directive (2013/36/EC).

Article 161(5) of the CRD IV Directive requires the Commission to review and report to the Council of the EU and the European Parliament on the results reached under the diversity benchmarking, including the appropriateness of benchmarking diversity practices.

The Commission discusses the EBA’s report and reaches the conclusion that:

  1. It would not be useful at this stage to envisage putting forward a legislative proposal to amend the provisions of the CRD IV Directive diversity provisions, given that it is satisfied with the added value of the benchmarking diversity practices;
  2. There is still considerable room for improvement both in having diversity policies in place and achieving greater diversity of the management bodies of institutions;
  3. The majority of the sampled institutions were not compliant with the CRD IV Directive requirement of putting in place a policy promoting the diversity of their management bodies; and
  4. The majority of the institutions that had set a gender diversity target had not yet met it or had not set a timeline for doing so (or both).

Council of EU Postpones PRIIPS Regulation by One Year

Posted on

 

On December 8, 2016, the Council of the EU announced that it has adopted a Regulation postponing the application date of the Regulation on key information documents (KIDs) for packaged retail and insurance‑based investment products (“PRIIPs“). (Regulation 1286/2014) (PRIIPs Regulation).

The PRIIPs Regulation will now apply from January 1, 2018 rather than December 31, 2016.

In the Council’s press release on December 8, 2016, the Council explained that the delay will enable regulatory technical standards (RTS) to be defined, leaving enough time for the industry to adapt to the new rules.

The Council published a document (PE-CONS 51/16) setting out the text of the Regulation postponing the application of the PRIIPs Regulation.

Implementing Regulation on Information for Calculation of Technical Provisions and Basic Own Funds for Q4 2016 Reporting Under Solvency II Adopted by European Parliament

Posted on

 

On November 11, 2016, the European Commission adopted an Implementing Regulation laying down information for the calculation of technical provisions and basic own funds for reporting with reference dates from September 30 until December 30, 2016, in accordance with the Solvency II Directive (2009/138/EC).

EIOPA provided the Commission with the technical information related to end of September 2016 market data on October 11, 2016, which was published in accordance with Article 77E(1) of Solvency II.

The aim is that by setting out technical information on relevant risk-free interest rate term structures, fundamental spreads for the calculation of the matching adjustment and volatility adjustments for every reference date, conditions for the calculation of technical provisions and basic own funds will be uniform across all insurance and reinsurance undertakings for the purposes of Solvency II.

The annexes to the Implementing Regulation set out the technical information to be used by reinsurance and insurance undertakings for the reference dates from September 30 to December 30, 2016, are as follows:

  • Annex I: the relevant risk-free rate term structures.
  • Annex II: the fundamental spreads for the calculation of the matching adjustment.
  • Annex III: the volatility adjustments for each relevant national market.

European Parliament Writes to EBA About the Development of Regulatory Technical Standards (RTS) on Strong Customer Authentication and Secure Communication

Posted on

 

On November 11, 2016, the EBA published a letter (dated October 24, 2016) from the European Parliament in relation to the development of regulatory technical standards (“RTS“) on strong customer authentication (“SCA“) and secure communications under the Revised Directive on Payment Services (“PSD2“) in the internal market ((EU) 2015/2366).

The European Parliament’s negotiating team is of the view that payment initiation service providers and account information service providers should have direct access to the payer’s account without being required by an account servicing payment service provider to use a particular business model. In its letter, the European Parliament therefore raised its concerns surrounding the EBA’s proposal for a dedicated interface that could give rise to account servicing payment service providers excluding or limiting direct access to a payer’s account via existing online banking facilities. Article 98(2) of PSD2 mandates that the EBA develop RTS in order to secure and maintain fair competition among all payment service providers and to ensure technology and business model neutrality, and the introduction of the dedicated interface will go against this principle.

The European Parliament also stated in its letter that it is of the view that the RTS are unclear in relation to the exemptions from the SCA (notably, whether the exemptions are optional or mandatory).

Econ Vote on Resolution on Basel III Revisions

Posted on

 

On November 10, 2016, the European Parliament published a press release on a vote taken by its Committee on Economic and Monetary Affairs (“ECON“) in relation to revisions to Basel III, which are currently under consideration by the Basel Committee on Banking Supervision (“BCBS“).

The text of the resolution has not been published, yet the release states that it calls on the European Central Bank (“ECB”), the European Commission (“EC”) and the EBA to engage in the BCBS’s work and report to the ECON on their progress. Furthermore, the press release states that the revisions should:

  • strengthen the overall financial provision of European banks but should not significantly increase overall capital requirements;
  • respect the principle of proportionality and the important role played by banks in financing the European economy; and
  • consider and mitigate the differences between jurisdictions and, at the same time, avoid penalizing the EU banking model.

The resolution will be considered by the European Parliament in its plenary session between November 21, 2016 and November 24, 2016.

The package of reforms to Basel III is expected by the end of 2016 and will cover issues such as internal ratings-based (“IRB“) approaches and operational risk as well as the standardized approach for credit risk.

Compromise Proposal on the Regulation Amending EuVECA Regulation and EuSEF Regulation

Posted on

On October 13 2016, the Presidency of the Council of European Union published a compromise proposal (13168/16) in relation to the proposed Regulation amending the European Venture Capital Funds Regulation (Regulation 345/2013).

Additions to the previous compromise proposal published in September 2016 are highlighted by bold underline, and deletions are highlighted in strikethrough.

Implementing Regulations on its Credit Assessments of ECAIs under Solvency II and CRR Published in OJ

Posted on

On October 12, 2016, the Commission Implementing Regulation (EU) 2016/1799 of October 7, 2016 laying down implementing technical standards (ITS) with regard to the mapping of credit assessments of external credit assessment institutions (ECAIs) for credit risk in accordance with Articles 136(1) and 136(3) of the Capital Requirements Regulation and the Commission Implementing Regulation (EU) 2016/1800 of October 11, 2016 laying down ITS with regard to the allocation of credit assessments of ECAIs to an objective scale of credit quality steps in accordance with the Solvency II Directive were published in the Official Journal of the EU (OJ).

The aim on these ITS is to determine a prudential approach for cases lacking factual evidence and an objective approach for attributing risk weights to the assessment of ECAIs.

Draft versions of these ITS were published in November 2015 by the Joint Committee of the European Supervisory Authorities, who subsequently published an opinion in May 2016 rejecting the proposal by the European Commission to remove the more conservative mapping of ECAI credit assessments that the ESAs had proposed to be applied from January 1, 2019.

The ITS published in the OJ do not contain provisions relating to the introduction of the more conservative mapping, and the Commission has added wording to the recitals to explain its approach with regards to the issue.

The Implementing Regulations will enter into force on November 1, 2016.

Deposit Guarantee Scheme Co-Operation Agreement Published by EFDI

Posted on

On September 15, 2016, the European Forum of Deposit Insurers (EFDI) published its model deposit guarantee scheme co-operation agreement and supporting rulebook.

The recast Deposit Guarantee Scheme Directive (2014/49/EU) requires EU deposit guarantee schemes (DGS) to repay depositors in a cross-border branch through the DGS in the home state country.

The EFDI model co-option agreement covers the cross-border payment framework, mutual lending and the transfer of contributions between DGS. It also contains methodology implementing technical and functional co-operation for cross-border payments together with IT data requirements, funding and crisis communications.

European Parliament Announces Decision to Reject Delegated Resolution of RTS on Key Information Documents for PRIIPs

Posted on

On September 14, 2016, the European Parliament announced its decision to reject the European Commission’s proposed Delegated Regulation supplementing the Regulation on key information documents (KIDs) for packaged retail and insurance based products (PRIIPs) (Regulation 1286/2014) (PRIIPs KID Regulation). The text of the legislative resolution rejecting the proposed Delegated Regulation sets out a number of reasons why the Parliament decided to reject the Delegated Regulation, including:

  • The need for detailed guidance on the “comprehension alert” without which there is a risk of inconsistent implementation of this component in the KIDs within the single market;
  • The need for clarification surrounding the treatment of multi-option products; and
  • The risk that the rules within the Delegated Regulation are contrary to the purpose of the legislation which is to provide retail investors clear, comparable, non-misleading and understandable information on PRIIPs.

As well as calling on the Commission to submit a new delegated regulation, the European Parliament also calls on the Commission to postpone the application date of the PRIIPs KID Regulation, to ensure that the requirements in the Regulation and Delegated Regulation are implemented smoothly and avoid the application of level 1 without RTS being in force.

European Commission Calls to Accelerate the Capital Markets Union Reforms

Posted on

On September 14, 2016, the European Commission published a communication calling for an acceleration of the capital markets union (CMU) reforms (COM(2016) 601 final) in light of the current political and economic context.

Elements of particular interest to financial services practitioners include:

  • The Commission will support the co-legislators in reaching an agreement by the end of 2016 on the modernization of the prospectus rules;
  • The Commission calls on both the European Parliament and the European Council to finalize the Regulation amending the European Social Entrepreneurship Funds Regulation (Regulation 346/2013) (EuSEF Regulation) and the European Venture Capital Funds Regulation (Regulation 345/2013) (EuVECA Regulation) also by the end of 2016;
  • The prospect of a legislative proposal being tabled in 2017 relating to a simple, efficient and competitive EU personal pension product;
  • To reduce capital charges attaching to investments by insurers in infrastructure corporates, the Commission will adopt an amendment to the Solvency II Delegated Regulation (Regulation (EU) 2015/35);
  • In the hope of strengthening retail investor participation in capital markets and opening up the EU market for retail financial services, the Commission will present an action plan on retail financial services.

The Annex to the communication also provides an update on the CMU action plan initiatives.