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Key Regulations

Basic regulations and standards for the industries in which we operate

This section lists, not exhaustively, some of the regulatory documents of particular interest for the financial sector.

 

Basel II

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Capital | Date of publication: June, 2006

Set of proposals for banking regulation reform whose aim to encourage banks to develop internal models that will allow them to further adjust requirements to their risk profile.

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Basel III: capital

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Capital; liquidity; leverage | Date of publication: June, 2011

Set of proposals for banking regulation reform that supplement BIS II, adding a capital buffer, leverage and liquidity requirements, and modifying the capital base as well as the calculation of minimum capital requirements.

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CRD IV/CRR

Scope: EU | Regulator: PE y C | Industry: Banking | Topic: Capital; Corporate governance | Date of publication: June, 2013

CRD IV/CRR transposes Basel III to European law. This text strengthens bank capital requirements, introduces a mandatory capital conservation buffer and a discretionary countercyclical buffer, and foresees a framework for new regulatory requirements on liquidity and leverage, as well as additional capital requirements for systemically important institutions.

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Reform package of the financial system

Scope: EU | Regulator: European Commission | Industry: Banking | Topic: Capital; liquidity; leverage; resolution | Date of publication: November, 2016

Reform package of the financial system, whereby the European Commission is proposing to amend the Capital Requirement Directive (CRD IV), the Capital Requirement Regulation (CRR), the Bank Recovery and Resolution Directive (BRRD), the Single Resolution Mechanism Regulation (SRMR), and the Regulation on EMIR. Some of the key elements of this reform are the leverage ratio (LR), the total loss absorbing capacity (TLAC) requirement, the net stable funding ratio (NSFR) and the capital requirements for market risk derived from the Fundamental Review of the Trading Book (FRTB).

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Revisions to the Standardised Approach for credit risk

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Credit risk; Capital | Date of publication: December, 2015

Second consultation on the BCBS’s proposal to revise the standardised approach (SA) for credit risk, in response to the issues raised in the 2014 proposal. This revision also includes a proposal to the credit risk mitigation (CRM) framework for exposures risk-weighted under the standardised approach.

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Constraints on the use of IRB approach - consultative document

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Credit risk; Capital | Date of publication: March, 2016

Consultative document setting constraints on the use of the IRB approach for certain portfolios. Moreover, it proposes to adopt exposure-level, model-parameter floors; replace the current capital floor; and provide greater specification of parameter estimation practices.

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Standards on the regulatory treatment of accounting provisions for an interim period

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Credit risk; Capital; Provisions | Date of publication: March, 2017

Final standards that set out the regulatory treatment of accounting provisions for an interim period. Given the limited time until the effective date of IFRS 9, the BCBS retains the current treatment under the Basel framework that period. Further, the final standards set out the transitional arrangements that institutions may choose to implement from 1 January 2018, aiming to smooth any potential significant negative impact on regulatory capital arising from the introduction of expected credit losses (ECL) accounting.

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Changes to the IRB method

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Credit risk; Capital | Date of publication: March, 2015

Deals with key actions that need to be implemented to improve the IRB approach framework.

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RTS on assessment methodology for IRB approach

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Credit risk | Date of publication: July, 2016

RTS on the assessment methodology for IRB, which pretend to harmonise its implementation across all Member States in the EU. In particular, it rectifies the issues identified in this regard in the EBA Report on the comparability of the IRB models and provides enhanced clarity on various aspects of the IRB Approach application.

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Guidelines on the application of the definition of default

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Credit risk | Date of publication: September, 2016

Guidelines specifying the application of the definition of default, which clarify aspects such as the days past due criterion, the indications of unlikeliness to pay, the application of the definition of default in external data, the criteria for the return to a non-defaulted status, etc.

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Guidelines on estimation of IRB risk parameters (PD and LGD)

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Credit risk | Date of publication: November, 2016

Consultation on Guidelines on estimation of the IRB risk parameters, which are focused on the definitions and modelling techniques used in the estimation of risk parameters for both non-defaulted (PD and LGD) and defaulted exposures (best estimate of expected loss (ELbe) and LGD-in defaulted).

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Operational risk – Standardised Measurement Approach (SMA)

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Operational risk; Capital | Date of publication: March, 2016

Second consultative document which develops the Standardised Measurement Approach (SMA) for the estimation of the operational risk. The SMA is a single non-model-based method for the estimation of operational risk capital which will withdraw the AMA, although the implementation calendar has not been specified yet.

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Criteria for allowing the use of AMA methods

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Operational risk; Capital | Date of publication: June, 2015

Regulatory Technical Standards (RTS) specifying the qualitative and quantitative requirements on which Competent Authorities should base their decisions as to whether to allow banks to use advanced methods (AMA) for the calculation of capital for operational risk.

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Minimum capital requirements for market risk

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Market risk; Capital | Date of publication: January, 2016

Final standards by the BCBS proposing a revised market risk framework, after conducting the Fundamental Review of the Trading Book. This revised market risk framework consists of the following key enhancements: i) revised boundary between the banking book (BB) and trading book (TB); ii) revised Standardised Approach (SA); and iii) revised Internal Models Approach (IMA).

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Circular 1/2017, amending Circular 1/2013 on the Risk Information Centre

Scope: Spain | Regulator: BdE | Industry: Banking | Topic: Reporting | Date of publication: July, 2017

Circular 1/2017 on the Risk Information Center (CIR), which will supersede Circular 1/2013, aimed to adapt the CIR to the information requirements established by AnaCredit Regulation.

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RTS on the assessment methodology of IMA for market risk

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Market risk | Date of publication: November, 2016

RTS that specify, among other aspects, the methodology that competent authorities shall apply to assess compliance of an institution with the requirements to use an Internal Model Approach (IMA) for market risk.

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Guide to Targeted Review of Internal Models (TRIM)

Scope: SSM | Regulator: ECB | Industry: Banking | Topic: Internal models | Date of publication: March, 2017

ECB guide to the TRIM, which aims at enhancing the credibility and confirming the adequacy of approved Pillar I internal models (for credit, market and counterparty credit risks) permitted for use by significant institutions when calculating own funds requirements. The Guide provides information on supervisory practices and the interpretation of the EU regulatory framework.

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Guides on ICAAP and ILAAP

Scope: SSM | Regulator: ECB | Industry: Banking | Topic: ICAAP and ILAAP | Date of publication: March, 2017

Multi-year ECB project to prepare comprehensive SSM Guides on ICAAP and ILAAP, aimed to encourage significant banks to develop and maintain high quality processes, and to clarify the type of information they should share with the SSM.

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CP on Review of the CVA risk framework

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: CVA | Date of publication: July, 2015

The proposed revision of CVA establishes two different frameworks: a FRTB-CVA framework, for banks that satisfy several conditions related to CVA calculation and management and have received supervisory approval; and a Basic CVA framework.

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Interest rate risk in the banking book

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Interest rate risk; Capital | Date of publication: April, 2016

Final standards which update the Pillar 2 Principles for the management and supervision of interest rate risk in the banking book (IRRBB). The BCBS also sets out a standardised framework which supervisors could mandate their banks to follow, or a bank could choose to adopt.

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Guidelines on identification and management of step-in risk

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Step-in risk | Date of publication: March, 2017

BCBS second consultative document on guidelines on the identification and measurement of step-in risk, which is defined as the risk that a bank decides to provide financial support to an unconsolidated entity that is facing stress, in the absence of (or in excess of) any contractual obligations to provide such support.

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Basel III leverage ratio framework and disclosure requirements

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Leverage | Date of publication: January, 2014

Leverage ratio framework and disclosure requirements to ensure this objective is met.

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Delegated Regulation to supplement the CRR with regard to the liquidity coverage ratio

Scope: EU | Regulator: Comisión Europea | Industry: Banking | Topic: Liquidity | Publication date; October, 2014

Delegated regulation detailing LCR.

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Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Liquidity | Date of publication: January, 2013

Introduces significant changes to the short-term liquidity coverage ratio (LCR), to make requirements less stringent.

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Basel III: the net stable funding ratio

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Interest rate risk; Capital | Date of publication: October, 2014

The BCBS has reinforced its liquidity framework through the development of two minimum standards for funding liquidity. The aim of the NSFR is to reduce funding risk over the longer term. For this, banks are required to fund their activities with stable sources of funding.

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Delegated Regulation amending the CRR with regard to the leverage ratio

Scope: EU | Regulator: Comisión Europea | Industry: Banking | Topic: Leverage | Date of publication: October, 2014

Delegated regulation introducing changes to the LR framework

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Guidelines on SREP

Scope: EU | Regulator: EBA | Industry: Banking | Topic: SREP | Date of publication: December, 2014

Guidelines addressed to Competent Authorities and intended to promote common procedures and methodologies for the supervisory review and evaluation process (SREP) and for assessing the organization and treatment of risks. Competent Authorities must ensure that SREP covers bank classification, monitoring of key indicators, assessment of specific areas and supervisory measures.

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Guidelines on information and communication technology (ICT) risk assessment under SREP

Scope: Europe | Regulator: EBA | Industry: Banking | Topic: ICT; SREP | Date of publication: May, 2017

Final Guidelines on the assessment of the ICT risk under the Supervisory Review and Evaluation Process (SREP). These GL, addressed to competent authorities, are intended to promote common procedures and methodologies for the assessment of the ICT risk under the SREP.

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Guide to banking supervision

Scope: EU | Regulator: ECB | Industry: Banking | Topic: Supervision | Date of publication: November, 2014

Document explaining the operation of the Single Supervisory Mechanism (SSM) and providing guidance on SSM supervisory practices.

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Guidance on leveraged transactions

Scope: EU | Regulator: ECB | Industry: Banking | Topic: Credit risk | Date of publication: May, 2017

Guidance on leveraged transactions that summarises ECB key supervisory expectations concerning these transactions, and the ongoing monitoring of both syndication risk and the fundamental credit quality of leveraged exposures.

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Revised Pillar 3 disclosure requirements

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Disclosure | Date of publication: March, 2017

Final standards on Pillar 3 disclosure requirements that represent the second phase of the BCBS' review of the Pillar 3 framework, covering the consolidation of all existing BCBS disclosure requirements, enhancements to the Pillar 3 framework and revisions and additions to reflect ongoing reforms to the regulatory framework.

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RDA

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Information; Reporting | Date of publication: January, 2013

The RDA principles are a set of guidelines issued by the BCBS for effective risk data aggregation. Their main aim is for banks to be able to quantify their risk appetite levels and establish a robust infrastructure and control mechanisms to monitor and limit risk.

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COREP

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Supervisory Reporting | Date of publication: June, 2014

COREP is the standardized reporting framework issued by the EBA for CRDIV reporting. It covers credit risk, market risk, operational risk, own funds and capital adequacy ratios.

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FINREP

Scope: EU | Regulator: EBA | Industry: Banking | Topic: Supervisory Reporting | Date of publication: June, 2014

Standard reporting framework covering Financial Reporting for supervisory purposes in relation to International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS), as approved by the European Union.

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Regulation 2016/867 of the ECB on the collection of granular credit and credit risk data (AnaCredit)

Scope: EU | Regulator: ECB | Industry: Banking | Topic: Reporting | Date of publication: May, 2016

Regulation establishing a framework under which credit institutions in the euro area and foreign branches (in the euro area) of credit institutions shall report to the ECB, via their national central banks, information regarding their loans granted to legal entities, provided that the commitment amount of the debtor equals or exceeds €25,000.

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Circular 1/2017, amending Circular 1/2013 on the Risk Information Centre

Scope: Spain | Regulator: BdE | Industry: Banking | Topic: Reporting | Date of publication: July, 2017

Circular 1/2017 on the Risk Information Center (CIR), which will supersede Circular 1/2013, aimed to adapt the CIR to the information requirements established by AnaCredit Regulation.

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Corporate governance principles for banks

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Corporate governance | Date of publication: July, 2015

New corporate governance principles proposed by the BCBS concerning the Board, Senior Management, the three lines of defense, compensation, etc.

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Key Attributes of Effective Resolution Regimes for Financial Institutions

Scope: Global | Regulator: FSB | Industry: Banking | Topic: Resolution | Date of publication: October, 2014

Requires that G-SIFIs set up a recovery plan at the individual level, as well as resolution plans at both the individual and group level.

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Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution and Total Loss-absorbing Capacity (TLAC) Term Sheet November 2015

Scope: Global | Regulator: FSB | Industry: Banking | Topic: Resolution | Date of publication: November, 2015

New requirement for G-SIBs to hold a proportion of liabilities that can be written off or converted to equity in the event of resolution. By January 2022, the TLAC percentage should have reached at least 18% of RWAs and 6.75% of the denominator of the leverage ratio set by Basel III.

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BRRD

Scope: EU | Regulator: PE y C | Industry: Banking | Topic: Recovery; Resolution | Date of publication: May, 2014

BRRD lays down rules and a standard procedure for the resolution of credit institutions of member States

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IAS 39

Scope: Global | Regulator: IASB | Industry: All | Topic: Provisions | Date of publication: February, 2011

Regulation that outlines the principles for the recognition and measurement of financial assets, financial liabilities and some contracts to buy and sell non-financial assets.

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IFRS 9

Scope: Global | Regulator: IASB | Industry: All | Topic: Provisions | Date of publication: July, 2014

The purpose of IFRS 9 is to establish the principles related to the reporting of financial assets and liabilities with the aim of improving and simplifying information on financial instruments.

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IFRS 9

Scope: Global | Regulator: IASB | Industry: All | Topic: Provisions | Date of publication: July, 2014

The purpose of IFRS 9 is to establish the principles related to the reporting of financial assets and liabilities with the aim of improving and simplifying information on financial instruments.

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Draft Circular on public and confidential financial information standards and formats

Scope: Spain | Regulator: BdE | Industry: Banking | Topic: Accounting | Date of publication: June, 2017

Draft Circular on public and confidential financial information standards and formats, which will supersede Circular 4/2004, aimed to adapt the current accounting framework of Spanish credit institutions to the accounting standards IFRS 9 and IFRS 15, which amend the criteria for recognising financial instruments and revenues, respectively.

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Final GL on definitions of NPE and forbearance

Scope: Global | Regulator: BCBS | Industry: Banking | Topic: Credit risk; Capital | Date of publication: April, 2017

Final Guidelines on the definitions of non-performing exposures (NPE) and forbearance, which are aimed to harmonise the scope, recognition criteria, and the level of application of both terms. These definitions have not been designed to replace those used for accounting purposes or the definitions of default which are used in the IRB approach or in the SA for credit risk, but to be used for other purposes (e.g. supervisory asset quality monitoring, Pillar 3 disclosure on asset quality, etc.).

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Guidelines on credit risk management practices and accounting for expected credit losses

Scope: UE | Regulator: EBA | Industry: Banking | Topic: Provisions | Date of publication: July, 2016

Consultation on draft Guidelines on credit institutions' credit risk management practices and accounting for expected credit losses, with the aim of harmonizing the criteria established by the BCBS and ensuring consistent interpretations and practices according to IFRS 9.

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Guidelines on credit risk management practices and accounting for expected credit losses (ECL)

Scope: Global | Regulator: EBA | Industry: Banking | Topic: Credit risk; accounting; provisions| Date of publication: May, 2017

Final Guidelines on credit institution’s credit risk management practices and accounting for ECL with the aim of harmonizing the criteria established by the BCBS and ensuring consistent interpretations and practices according to IFRS 9.

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Guidance to banks on non-performing loans

Scope: SSM | Regulator: ECB | Industry: Banking | Topic: Credit risk; Capital; Provisions | Date of publication: March, 2017

Guidance to banks on how they should tackle non-performing loans (NPLs). The guidance provides recommendations to banks and sets out a number of best practices that will constitute the ECB’s supervisory expectations going forward.

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Mifid II

Scope: EU | Regulator: PE y C | Industry: Banking | Topic: Consumer protection | Date of publication: May, 2014

Directive aimed at ensuring that financial markets are safer and more efficient and that investors are better protected.

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General Data Protection Regulation

Scope: UE | Regulator: EP y C | Industry: Various | Topic: Personal data protection | Date of publication: April, 2016

Regulation on the protection of natural persons with regard to the processing of personal data and on the free movement of such data. Among others,this regulation includes new rights for the natural persons (e.g. right to be forgotten), and a set of obligations for the controller and processor of personal data.

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Draft Law on personal data protection (APLOPD)

Scope: Spain | Regulator: Government | Industry: Banking | Topic: Data protection | Date of publication: June, 2017

Draft Law on personal data protection (APLOPD), which will repeal the current LOPD, in order to enhance the regulatory framework of this fundamental right and to adapt the Spanish law to the EU General Data Protection Regulation (GDPR).

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Solvency II

Scope: EU | Regulator: PE y C | Industry: Insurance | Topic: Insurance | Date of publication: November, 2009

EU Directive that governs and harmonizes insurance regulations in Europe. It deals mainly with the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.

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© GMS Management Solutions, S.L., 2017. All rights reserved. The information contained on this publication is of a general nature and does not constitute a professional opinion or an advisory service. The data used in this publication come from public sources. GMS Management Solutions, SL assumes no liability for the veracity or accuracy of such data.