implementing technical standards (ITS)

EBA Amends ITS on Benchmarking of Internal Approaches for 2018 Benchmarking Exercise

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On May 4, 2017, the European Banking Authority (“EBA“) published an amended version of its implementing technical standards (“ITS“) on benchmarking of internal approaches under Article 78(8) of the CRD IV Directive (2013/36/EU) (EBA ITS 2017 02).

The final draft ITS are contained in a zip file that has been added to the EBA’s dedicated webpage on regulatory technical standards (RTS) and ITS on benchmarking portfolios. They are intended for use by the EBA and competent authorities in their 2018 assessment of internal approaches for credit and market risk. The ITS have been amended to reflect updates to the Single Rulebook. They also reflect updates to the benchmarking portfolios that were necessary to facilitate the 2018 benchmarking exercise for both credit and market risk so that they remain relevant for supervisors.

The amendments are expected to apply to the submission of initial market valuation data in November 2017 and of other market and credit risk data in April 2018. The EBA has submitted the updated ITS to the European Commission, but the Commission has not yet adopted them.

The EBA aims to annually update the ITS to ensure future benchmarking exercises are relevant and successful.

EBA Requests European Commission to Revise Deadlines for the Submission of Certain Draft Technical Standards Under the CRD IV and the CRR

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On January 3, 2017, the EBA published a letter (dated December 23, 2016) that was sent to the Director-General Financial Stability, Financial Services and Capital Markets Union (“FISMA“), by Andrea Enria, EBA Chairman, requesting the revision of deadlines for the submission of certain draft technical standards required under the CRD IV and the CRR.

In the letter, the EBA states that it cannot deliver on all the mandates required under the CRD IV and the CRR due to a “significant workload” and “considerable resources constraints” and goes on to request submission within new time limits for the following mandates, which were due to be delivered by the end of December 2016:

  • Regulatory technical standards (“RTS”) and implementing technical standards (ITS) on the authorization of credit institutions. The EBA currently expects to be able to accomplish these mandates during 2017, most likely around mid-2017.
  • RTS on consolidation methods under Article 382(5) of the CRR. The EBA currently expects to deliver on this mandate by the end of 2017, subject to developments relating to revisions of the CRR.
  • RTS on the exclusion of transactions with non-financial counterparties established in third countries under Article 382(5) of the CRR. The EBA expects to submit the RTS during Q1 2017.
  • RTS on disclosure of encumbered and unencumbered assets under Article 443 of the CRR. The EBA intends to deliver these during Q1 2017.

The letter goes on to address some of the remaining mandates given to the EBA under the CRD IV and the CRR, which, in the light of EU and international developments, were assessed as less meaningful by the supervisory community. Mr. Enria notes that these are continuously re‑prioritized due to scarce EBA resources. He highlights the following:

  • With regard to the credit risk mitigation (“CRM”) framework, in particular the RTS on immaterial portfolios for the internal ratings approach, RTS on conditional guarantees and RTS on eligible collateral within the CRM framework.

With regard to the operational risk area, in particular the RTS on the combined use of different approaches.

ESMA Consults on Remaining MiFID II Draft ITS

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On August 31, 2015, the European Securities and Markets Authority (ESMA) published a consultation paper on the remaining draft implementing technical standards (ITS) under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR).

The consultation will close on October 31, 2015, and focuses on three key areas: the timing and format of publications and communications in case of suspension and removal of financial instruments from trading on trading venues; notification and provision of information for data reporting services providers; and weekly aggregated position reports for commodity derivatives, emission allowances and derivatives thereof to deliver transparency and support monitoring of the new position limits regime.