CRD IV Directive

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

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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.

European Commission Implementing Regulation Amending Implementing Regulation 2016/2070 Published in the OJ

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The European Commission Implementing Regulation amending Implementing Regulation 2016/2070 in relation to benchmarking portfolios and reporting instructions under the CRD IV Directive (2013/36/EU) (Regulation 2017/1486) was published in the Official Journal of the EU (“OJ“) on August 31, 2017.

The Implementing Regulation 2016/2070 sets out the reporting requirements required from institutions and was published in the OJ in December 2016. The European Banking Authority (“EBA“) and other competent authorities use the information reported to assess the quality of the institutions’ internal approaches under Article 78 of CRD IV.

Pursuant to Article 78(1) of CRD IV, institutions must submit the calculations of their internal approaches at least once a year. Given that the reporting requirements evolve over time in line with the changing focus of the competent authorities’ assessments and EBA Reports, the Commission considered it necessary to amend Annexes I to VI to Implementing Regulation 2016/2070.

The amendments to Implementing Regulation 2016/2070 are limited, and as such, there was no public consultation. The Implementing Regulation will enter into force on September 20, 2017.

European Commission Report on Benchmarking of Diversity Practices Under CRD IV

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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).

European Commission Adopts Implementing Regulation on ITS for Reporting Results of Internal Approach Calculations under Article 78(2) CRD IV Directive

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On September 19, 2016, the European Commission adopted an Implementing Regulation implementing technical standards (ITS) for templates, definitions and IT solutions to be used by institutions when reporting the results of their internal approach calculations to the European Banking Authority (EBA) and to competent authorities under the CRD IV Directive (2013/36/EU).

The Implementing Regulation is based on the draft ITS submitted by the EBA to the Commission in March 2015 to which the EBA published an opinion agreeing to the Commission’s amendments to the ITS in May 2016. Once the Implementing Regulation has been published in the Official Journal of the EU (OJ) it will enter into force on the 20th day following its publication.

PRA Publishes Speech on Solvency II Models, Bonus Caps and Governance

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On October 16, the Bank of England (BoE) published a speech given by Andrew Bailey, BoE Deputy Governor, Prudential Regulation and Chief Executive Officer, Prudential Regulation Authority, that considered, among other things, the use of models under the Solvency II Directive, the merits of the CRD IV Directive bonus caps for bankers and reforms to the governance of banks and insurers.  Speech.

PRA Updates Webpages Following Implementation of CRD IV

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On January 1, the CRD IV Directive came into force, following the Prudential Regulation Authority’s (PRA) webpage update on reporting requirements for firms within the scope of CRDIV.  Reporting Requirements.

Additionally, the PRA updated the following passporting webpages:

European Banking Authority Consults on Material Risk Takers for Remuneration Purposes

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On May 21, the European Banking Authority (EBA) took into account the results of a 2012 survey and published a consultation on draft regulatory technical standards on criteria identifying categories of staff whose professional activities have a material impact on a financial institution’s risk profile under the proposed CRD IV Directive.  The draft standards are required under Article 90(2) of the proposed Directive and set out an identification process, as well as standard qualitative and quantitative criteria for characterizing material risk takers.

Comments can be made on the consultation paper until August 21, and the draft standards are due for submission to the European Commission by the end of March 2014.  Consultation Paper.