Council of the EU

ECA Publishes a Communication on Access to ECB Banking Supervision Documents and Information


On January 14, the European Court of Auditors (“ECA“) published a communication to the European Parliament on the European Central Bank’s (“ECB“) position on the ECA’s access to audit documents and information relating to its banking supervision role under the single supervisory mechanism (“SSM“). READ MORE

Council of the EU Publishes Notes on Proposed Regulation and Directive for Supervision Investment Firms


On January 4, the Council of the EU published the following notes from the Council Presidency to its Permanent Representatives Committee (“COREPER“) relating to the European Commission’s proposed Regulation and Directive establishing a new framework for prudential requirements for investment firms:

  • A note (5022/19) setting out the Presidency compromise proposal on the proposed Directive on the prudential supervision of investment firms and amending the CRD IV Directive (2013/36/EU) and the MiFID II Directive (2014/65/EU) (2017/0364 (COD)) (the proposed Investment Firms Directive (“IFD“)).
  • A note (5021/19) setting out the Presidency compromise proposal on the proposed Regulation on the prudential requirements of investment firms and amending the Capital Requirements Regulation (Regulation 575/2013) (“CRR“), the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) and the EBA Regulation (Regulation 1093/2010) (2017/0358 (COD)) (the proposed Investment Firms Regulation).

The previous compromise proposals were published in October 2018. The notes do not explain the changes that have been made in the latest revised versions. However, it appears that new text is marked in underlined bold and deletions are indicated in strikethrough.

Political Agreement Reached on Relocation of EBA


On October 17, the Council of the EU published a press release announcing that it and the European Parliament have reached political agreement on the proposed Regulation on the relocation of the European Banking Authority (“EBA“) (2017/0326 (COD)). The press release can be found here.

The Regulation amends Article 7 of the EBA Regulation (Regulation 1093/2010) to state that the EBA will have its seat in Paris. The European Commission adopted the legislative proposal for the Regulation in November 2017.

The Council and the Parliament presumably reached agreement on the version of the text of the Regulation (13175/18) published by the Council on October 16 that was stated to be the confirmation of the final compromise text.

The next steps will be for the Regulation to be submitted to the Parliament for a vote at first reading and to the Council for final adoption. The Regulation will apply from March 30, 2019.

Council of EU Confirms the Ten Delegated Regulations on RTS under BMR


On October 9, The Council of the EU published the minutes of a meeting held in its configuration as the Environment Council (12898/18).

Page 11 of the minutes confirms that the Council has decided not to object to ten Delegated Regulations setting out regulatory technical standards (“RTS“) under the Benchmarks Regulation ((EU) 2016/1011) (“BMR“) that were adopted by the European Commission in July 2018.

The European Parliament’s next step is to consider the Delegated Regulations and decide whether to object to them. If the Parliament does not object, the Delegated Regulations will be published in the Official Journal of the EU (“OJ“). The Regulations will enter into force 20 days after their publication in the OJ and apply two months after the date of publication.

Council of the EU Publishes Progress Report on Commission’s Initiatives to Strengthen the Banking Union

On November 29, 2017, the Council of the EU published a report on the progress of the European Commission’s initiatives to strengthen the banking union, including the proposed Regulation establishing the European deposit insurance scheme (EDIS) (14932/1/17).

The report provides an overview of the progress of the Commission’s banking reform legislative package, adopted in November 2017, and also refers to a progress report from the Presidency of the Council on the progress of the EDIS Regulation.

This progress report highlights several issues which are currently under discussion with the European Council. Such issues include:

  • alternative measures to prevent the failure of credit institutions;
  • the methodology for calculating risk-based contributions;
  • the scope of EDIS and the inclusion of branches of third-country credit institutions established in a member state and of non-CRD IV deposit-taking entities that are covered by existing deposit guarantee schemes (DGSs);
  • non-compliance by DGSs and the procedure for the disqualification; and
  • the design of EDIS, including the merits of the full insurance and reinsurance models.

The progress report is available here.

Mitigating Risks Associated with SFTs: European Commission Publishes Report

The European Commission has published a report to both the European Parliament and the Council of the EU under Article 29(3) of the Regulation on reporting and transparency of securities financing transactions ((EU) 2015/2365), (the “SFTR“).

Pursuant to Article 29(3) of the SFTR, the Commission is required to report on progress in international efforts to mitigate the risks linked with securities financing transactions.

The report provides a brief assessment of European securities financing transaction markets as well as discusses the Financial Stabilities Board’s (the “FSB“) recommendations aimed at mitigating securities financing transaction risks.

The report concludes that the FSB’s recommendations have been addressed in the EU through specific provisions within various financial services legislation and guidelines and the adoption of the SFTR.

To view the report, click here.

Council of EU Presidency Compromise Proposal on Proposed Regulation Amending CCR


The Council of the EU has published the final Presidency compromise proposal on the proposed Regulation amending the Capital Requirements Regulation (Regulation 575/2013) (“CRR“) as regards the transitional period for mitigating the impact on its own funds of the introduction of International Financial Reporting Standard 9 (“IFRS 9“) and the large exposures treatment of certain public sector exposures denominated in nondomestic currencies of member states.

The European Parliament issued a resolution for the adoption of IFRS 9 in September 2016, and in November 2016 the European Commission, as part of its legislative proposals to revise the CRR and the CRD IV Directive (2013/36/EU), suggested transitional arrangements to mitigate the effect of the introduction of IFRS 9 on Common Equity Tier 1 capital resulting from the impairment requirements of IFRS 9. The EBA published an opinion on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9 in March 2017.

Council of EU Postpones PRIIPS Regulation by One Year


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.

European Commission Adopts Delegated Regulation Amending List of High-Risk Third Countries Under the Fourth Money Laundering Directive


On November 28, 2016, the Council of the EU published a Commission Delegated Regulation (C(2016) 7495 final) amending Commission Delegated Regulation (EU) 2016/1675 supplementing the Fourth Money Laundering Directive ((EU) 2015/849) (“MLD4“) by identifying high-risk third countries with strategic deficiencies.

The Commission adopted Delegated Regulation (EU) 2016/1675 in July 2016. The Delegated Regulation, for the first time, identified high-risk third countries with strategic anti-money laundering (“AML“) and counter-terrorist financing (“CTF“) deficiencies. The Commission advised at the time that it had taken into account the most recent Financial Action Task Force (“FATF“) public statements and that it would review the list, where appropriate.

The explanatory memorandum to the new Delegated Regulation explains that, as stressed in recital 28 to MLD4, the Commission will adapt its assessment to changes made to information sources from international organizations and standard setters, such as those issued by the FATF. As a consequence, the Commission aims to update the list to reflect the progress, or the lack of progress, made by high-risk third countries in removing the strategic deficiencies.

According to this latest information available to the Commission, it was found that Guyana has made significant progress on AML and CTF matters. On the basis of the progress made, with Guyana substantially completing all the action plan items agreed upon with the FATF, the FATF decided to conduct an on-site visit to Guyana to confirm that implementation had begun and that there is political commitment to continue to strengthen the AML and CTF regime. The FATF on‑site visit concluded that Guyana has a legal and institutional framework in place that addresses the strategic deficiencies of its AML and CTF regime. As a result, the FATF has removed Guyana from its document Improving global AML/CTF compliance: ongoing process.

The Commission’s analysis has similarly concluded that Guyana should no longer be considered to be a third country with strategic AML and CTF deficiencies. As a result, it is removing Guyana from the list of high-risk third countries under MLD4.

The Commission adopted the Delegated Regulation on November 24, 2016. The new Delegated Regulation states that it will enter into force the day after it is published in the Official Journal of the EU (OJ).

European Commission Work Program 2017


On October 25, 2016, the European Commission issued a communication outlining its 2017 Work Program (COM(2016) 710 final). The communication is addressed to the European Parliament, the Council of the EU, the European Economic and Social Committee (“EESC”) and the Committee of the Regions. Alongside the communication, the Commission has published a Q&As document, together with the following Annexes to the communication.

In Annex 1 of the Work Program, the Commission proposes 21 key initiatives for 2017 to implement 10 priorities for the year. In respect of finance matters, the Commission proposes to:

  • Follow up on a review of the European System of Financial Supervision to strengthen the effectiveness and efficiency of oversight at both macro- and micro- prudential levels; and
  • Present a mid-term review of the Capital Markets Union Action Plan identifying obstacles and any additional measures required in Q2 of 2017. New CMU measures will include a framework for an EU personal pension product in Q2 2017, a REFIT revision of EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012) in Q1 2017 and an action plan on retail financial services in Q1 2017. The Commission notes that the adoption of the Prospectus Regulation and the Securitization Regulation should be accelerated.

Annex 2 sets out 18 new REFIT initiatives being launched, and it complements the items listed with new initiatives in Annex I. REFIT is the Commission’s regulatory fitness and performance program. This is designed to make EU law simpler and reduce regulatory costs without compromising policy objectives. One of the new initiatives relates to the Regulation on cross-border payments in the Community (Regulation 924/2009).

The Commission has also published a scoreboard that shows the current state of play in the implementation of 231 REFIT initiatives, together with a summary of the key developments and results of REFIT.

Annex 3 sets out 35 priority‑pending proposals in relation to which the Commission wants the Parliament and the Council to take swift action. These include the proposals for a European deposit insurance scheme (“EDIS”) and the CMU reforms. For more information on the EDIS, see Practice note, European deposit insurance scheme (EDIS).

Annex 4 lists the intended withdrawal of 19 pending proposals. These are proposals assessed as no longer relevant, as they have either been blocked or no longer meet the Commission’s criteria.

Annex 5 contains a list of existing legislation that the Commission intends to repeal.

The Commission has also published a document that summarizes the legislation that will become applicable in 2017. This includes the Regulation on transparency of securities financing transactions (2015/2365/EU).