Europe

ESMA Updates Q&As on BMR: May 2019

Posted on

 

On May 23, the European Securities and Markets Authority (ESMA) published an updated version (ESMA70-145-11) of its Q&As on the Benchmarks Regulation ((EU) 2016/1011) (BMR), which were previously updated in January 2019. The updated Q&As can be found here.

The Q&As have been updated to include:

  • A new Q&A 7.4 on the relevant time to determine the member state of reference in an application for recognition under Article 32(4) of the BMR.
  • A new Q&A 7.5 on the information on which national competent authorities may rely on in an external audit report of compliance with the International Organization of Securities Commission (IOSCO) principles for oil reporting agencies under Article 32(2) of the BMR.
  • A new Q&A 8.5 on the type of information that should be included in the field “contact info” of ESMA’s register of benchmark administrators.

FSB Launches Evaluation of TBTF for SIBs

Posted on

 

On May 23, the Financial Stability Board (FSB) published a press release announcing the launch of an evaluation of its too-big-to-fail reforms (TBTF) for systemically important banks (SIBs).

The evaluation (i) will focus on the effects of the FSB’s TBTF reforms for SIBs (including increased capital buffers, total loss-absorbing capacity, enhanced supervision and resolution regimes); and (ii) will analyze the impact of the reforms on global systemically important banks and domestic systemically important banks, and will cover all FSB jurisdictions.

The aims of the evaluation are to (i) assess whether the reforms for which implementation has been completed or is well underway are reducing the systemic and moral hazard risk associated with SIBs; and (ii) examine the broader effects of the reforms on the financial system.

The evaluation will be based on the FSB’s July 2017 framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms.

ESMA Establishes New CNS

Posted on

 

On May 23, the European Securities and Markets Authority (ESMA) published a press release which announced the establishment of a new coordination network on sustainability (CNS), which will be chaired by Ana María Martínez-Pina Garcia for two years with immediate effect. The CNS will:

  • Develop the coordination of national competent authorities’ (NCAs) work on sustainability.
  • Be responsible for the development of policy in this area, with a strategic view on issues related to integrating sustainability considerations into financial regulation.

The work will support the European Commission’s sustainability action plan in the areas of investment services and investment funds. The EU envisages a shift towards a more sustainable finance system in the medium and long term and securities regulators must therefore make sustainable finance a key part of their supervisory and enforcement activities.

ESMA Publishes Consolidated Guidelines on the Application of the Endorsement Regime Under CRA Regulation

Posted on

 

On March 20, the European Securities and Markets Authority (ESMA) published the official translations of its consolidated guidelines on the application of the endorsement regime under Article 4(3) of the Credit Rating Agencies Regulation (Regulation 1060/2009) (CRA Regulation) (ESMA33-9-282). READ MORE →

Commission Publishes Delegated Regulation Supplementing MLD4

Posted on

 

On May 14, a Delegated Regulation ((EU) 2019/758) supplementing the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) with regulatory technical standards (RTS) specifying the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries was published in the Official Journal of the EU (OJ). READ MORE →

FCA Updates Paper on Price Discrimination in Cash Savings Market

Posted on

 

On May 14, the Financial Conduct Authority (FCA) updated its webpage on its July 2018 discussion paper on price discrimination in the cash savings market (DP18/6).

The FCA states that it is considering the responses to the discussion paper in the context of its broader work on assessing the role and impact of Open Finance and the role of a duty of care in its future approach to regulation, as outlined in its 2019/20 business plan.

In DP18/6, the FCA set out a range of options to address issues faced by longstanding customers in the easy-access cash savings market and stated that it would publish a feedback statement in early 2019. It now intends to publish a consultation paper or feedback statement in the second half of 2019, which will outline the feedback received to the discussion paper and its next steps.

Shareholder Rights Directive: The Proxy Advisors Regulations 2019

Posted on

 

On May 14, the Proxy Advisors (Shareholders’ Rights) Regulations 2019 (SI 2019/926) were published. The regulations transpose into UK law Article 3j (transparency of proxy advisors) of the Shareholder Rights Directive (as amended by the Shareholder Rights Directive II). The Regulations will enter into force on June 10. READ MORE →

BCBS Publishes Progress Report on Implementation of Basel Regulatory Framework

Posted on

 

On May 7, the Basel Committee on Banking Supervision (BCBS) published its sixteenth progress report on BCBS members’ implementation of Basel III. The report can be found here.

The report, which looks at implementation as of the end of March 2019, focuses on the status of adoption of the Basel III standards to ensure they are transformed into national law or regulation in accordance with agreed timeframes. The Basel III standards reviewed include: risk-based capital standards, the leverage ratio, the standards for global and domestic systemically important banks and interest rate risk in the banking book, the net stable funding ratio (NSFR), the large exposures framework and the disclosure requirements.

The report states that since BCBS’s previous report, published in October 2018, member jurisdictions have made progress in implementing standards for which deadlines have already passed, including those relating to the revised securitization framework. However, progress has been limited in the implementation of other standards which have yet to be finalized and put into effect in a number of jurisdictions, including the NSFR, which took effect on January 1, 2018, but only 11 jurisdictions have final rules in place.

FSB Publishes Report on Third Thematic Review of Resolution Regimes

Posted on

 

As part of a review launched in June 2018, the Financial Stability Board (FSB) published a report (which can be found here) on its third thematic peer review of resolution regimes. The findings of the first and second peer reviews of resolution regimes were published in April 2013 and March 2016 respectively. The reviews are designed to support the timely and consistent implementation by FSB jurisdictions of the FSB’s key attributes of effective resolution regimes for financial institutions.

Bank resolution planning frameworks have been adopted in most FSB jurisdictions, with planning most advanced for global systemically important banks in jurisdictions that are home to them. The report recommends further work to be done to ensure that bank resolution plans can be put fully into effect:

  • FSB jurisdictions – take further steps to adopt and operationalize their resolution planning framework, including: adopt resolution planning frameworks, adopt resolvability assessment frameworks and provide powers to require banks to take measures to improve resolvability and participate in cross-border coordinating arrangements. By June 2020, jurisdictions identified as not having a resolution planning framework will need to report to the FSB.
  • FSB – undertake work to support member authorities’ resolution planning for banks other than G-SIBs that could be systemic in failure.
  • FSB – work with relevant authorities and other bodies, to promote the sharing of bank resolution planning experiences and practices in enhancing cooperation and information-sharing arrangements.

EBA Publishes Consultation Paper on RTS on Standardized Approach for Counterparty Credit Risk

Posted on

 

On May 2, the European Banking Authority (EBA) published a consultation paper on four draft regulatory technical standards (RTS) on the standardized approach for counterparty credit risk under Article 277(5) and Article 279a(3) of the proposed Regulation mending the Capital Requirements Regulation (575/2013) (CRR II). These proposals build on the proposals included in the discussion paper published in December 2017 (which can be found here) and include specifying methods for the mapping of derivative transactions to risk categories, a formula for the calculation of the supervisory delta of options mapped to the interest rate risk category and a method for determining whether derivative transactions are long or short in their risk drivers.

A three-pronged approach is proposed for the assignment of a derivative transaction to a risk category:

  • Qualitative approach – identifies derivative transactions that clearly have only one material risk driver.
  • Qualitative and quantitative approach – requires a more detailed assessment of, and is applicable to, derivative transactions for which the mapping cannot immediately be done on the basis of the first approach.
  • Third approach – identifyies all possible risk drivers of a transaction as material and allocating the transaction to all relevant risk-categories.

Comments can be made on the consultation paper until August 2. There will be a public hearing on June 17. The RTS are subject to change, as they are based on the proposed legislative text for CRR II and so will change to the extent the draft legislative text changes.