On January 7, the Joint Committee of the European Supervisory Authorities (“ESAs“) (that is, the EBA, EIOPA and ESMA) published a report (JC 2018 74) on regulatory sandboxes and innovation hubs.
The ESAs set out in the report a comparative analysis of the innovation facilitators established to date within the EU, further to the mandate specified in the European Commission’s FinTech action plan, which was published in March 2018. READ MORE
On September 11, the Joint Committee of the ESAs published a report on the risks and vulnerabilities in the EU financial system (JC 2018 34), which sets out recommendations for policy action. The report can be found here.
The report states that in the light of ongoing risks and uncertainties, especially those around Brexit, supervisory vigilance and co-operation across all sectors remains key. As a result, the ESAs advise the following policy actions by financial institutions and by EU and national competent authorities:
On September 11, the European Parliament voted in plenary to adopt a resolution on relationships between the EU and third countries concerning financial services regulation and supervision (2017/2253(INI)). It has published the minutes of the vote, found here, and a provisional edition of the resolution, found here.
The resolution was set out in a report prepared by rapporteur Brian Hayes that was adopted in July 2018 by the European Parliament’s Committee on Economic and Monetary Affairs (“ECON“).
The resolution contains recommendations relating to the equivalence framework in financial services legislation. In particular, it recommends that third countries should keep the European Supervisory Authorities (“ESAs“) (that is, ESMA, EIOPA and the EBA) informed of any national regulatory developments through the EU’s equivalence framework and that the Commission should introduce a standardised process for the determination of equivalence.
Over the past two years the Joint Committee of the European Supervisory Authorities (“ESAs“) have been undertaking a monitoring exercise on the evolution of automation in financial advice in the securities, banking and insurance sectors. On September 5, they published a report setting out their results, and made the following conclusions:
The ESA considered that as there has been limited growth of automated financial advice and a lack of materialization of identified risks, no immediate action by the ESAs is necessary. The ESAs also stated that no new monitoring exercise will be undertaken until the market has further developed enough for a third monitoring exercise to be deemed warranted.
On July 11, 2018, the European Parliament’s Committee on Economic and Monetary Affairs (“ECON“) published a press release announcing that it had voted to adopt a draft report relating to the European Commission’s legislative proposals to reform to the European System of Financial Supervision (“ESFS“). READ MORE
The European Insurance and Occupational Pensions Authority (“EIOPA“) has published a press release on July 6, 2018 announcing the launch of an EU wide review on the use of Big Data. The focus of the review is on the motor and health insurance markets.
The review is intended to gather empirical evidence on the use of Big Data by insurance undertakings and intermediaries along the whole insurance value chain (including pricing and underwriting, in product development, in claims management, as well as in sales and marketing).
The review will analyze the potential benefits and risks for both industry and consumers to determine what (if any) supervisory and regulatory actions are required. It will assess new business models and data quality issues arising from Big Data, including implications for consumers.
EIOPA will conduct the review in co-operation with national competent authorities (“NCAs“) with a view to covering at least 60% of the motor and health insurance markets in each member state. The data is intended to be collected during July and August 2018. The following quantitative and qualitative questionnaires have been sent to NCAs, consumer associations and representative sample of insurance undertakings:
EIOPA intends to publish the review’s key findings in the first quarter of 2019.
The review follows the cross-sectoral review of the use of Big Data by financial institutions published by the Joint Committee of the European Supervisory Authorities (“ESAs“) in March 2018.
On June 15, 2017, ESMA, EIOPA and the EBA (the European Supervisory Authorities (“ESAs“)) each published their annual reports outlining the relevant ESA’s objectives, activities and key achievements in 2016.
ESMA’s annual report summarizes the work carried out by ESMA in 2016 under each of the following activities:
The EBA’s annual report outlines the EBA’s work in 2016, which included:
EIOPA’s annual report outlines the EIOPA’s work associated with the implementation of the Solvency II Directive (2009/138/EC) on January 1, 2016, such as the secure collection and storage of data. Other areas of work included:
Advice to the European Commission on a number of issues, including the development of a pan-European personal pension product and, within the context of the Joint Committee of the ESAs, on the key information documents for packaged retail and insurance-based investment products.
On July 28, 2016, The European Commission published a letter to the Joint Committee of the European Supervisory Authorities (ESAs) informing them that it intends to endorse, with amendments, the draft regulatory technical standards (RTS) on risk mitigation techniques for OTC derivative contracts not cleared by a central counterparty (CCP) under Article 11(15) of EMIR. The Commission also published the revised text of the draft RTS, together with the accompanying annexes.
The letter highlights that the Commission intends to make several clarifications and to restructure the legal text of the draft RTS. The changes include:
The ESAs now have six weeks to amend the draft RTS and resubmit them to the Commission in the form of a formal opinion.
On June 2, 2016, the European Commission published a press release announcing that it had adopted a proposal for a Council decision on the position to be taken by the EU on the incorporation of the Regulations on the European Supervisory Authorities (ESAs), and some of the related Regulations and Directives, into the Agreement on the European Economic Area (EEA).
The acts to be incorporated into the EEA Agreement include the ESAs Regulations (EBA, EIOPA and ESMA Regulations), the European Systemic Risk Board Regulation, the Alternative Investment Fund Managers Directive and related Delegated Acts, the Short Selling Regulation and related delegated acts, the European Markets Infrastructure Regulation (‘EMIR’) and the Credit Ratings Agency Regulations.
This is an important step towards the extension of the European System of Financial Supervision (ESFS) to the EEA EFTA countries: Norway, Iceland and Liechtenstein. The Commission explained that incorporating these acts into the EEA Agreement would ensure strong and co-ordinated financial supervision throughout the EEA.
The Joint Committee of the European Supervisory Authorities (ESAs) published its final draft regulatory technical standards (RTS) on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs). The draft RTS include a mandatory template, which includes certain mandatory texts and details of the layout to use, a methodology for the assignment of each PRIIP to one of the seven classes in the summary risk indicator, and the requirements relating to the presentation of costs.
An accompanying press release states that the proposed KIDs provide retail investors, for the first time across the EU, with simple and comparable information on PRIIPs. It is intended that the three page document will increase the transparency and comparability of information about the risks, performance and costs of PRIIPs.
The draft RTS have been submitted to the European Commission for endorsement and will enter into force on December 31, 2016.
