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Regulatory updates

We have an ongoing regulatory watch system

Management Solutions compiles new regulations published in recent weeks by different regulatory and supervisory authorities (with a focus on the financial industry).

Relevant publications


Market risk

(30/06/2017) BCBS – Consultative Document on the simplified alternative to the standardised approach to market risk capital requirements
The BCBS has published a Consultative Document on the simplified alternative to the SA to market risk capital requirements. This document sets out a reduced sensitivities-based method (R-SbM) that represents a simplified version of the sensitivities-based method (SbM), which is the primary component of the SA.

CCAR 2017

(29/06/2017) Fed – Comprehensive Capital Analysis and Review 2017: assessment framework and results
The Fed has published the assessment framework and results of the CCAR 2017 that includes both a quantitative assessment (in which 34 institutions have participated) that evaluates a firm’s capital adequacy and planned capital distributions, and a qualitative assessment (in which 13 institutions have participated) of capital planning practices.

Data protection

(29/06/2017) Government – Anteproyecto de Ley Orgánica de protección de datos de carácter personal (APLOPD)
The Government has published an Anteproyecto de Ley Orgánica de protección de datos de carácter personal (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).

UK leverage ratio

(28/06/2017) FPC – Consultation Paper on changes to the UK leverage ratio framework relating to the treatment of claims on central banks – CP11/17 / Financial Stability Report, June 2017
The Financial Policy Committee (FPC) has published a Consultation Paper on changes to the UK leverage ratio (LR) framework relating to the treatment of claims on central banks. This document is relevant to PRA-regulated banks and building societies with retail deposits equal to or greater than £50 billion on an individual or a consolidated basis. Moreover, the FPC has published the Financial Stability Report of June 2017.

Money laundering and financing of terrorism

(27/06/2017) ESAs – Final Guidelines on the risk factors financial institutions should consider when assessing the money laundering and terrorist financing risk / Final RTS on the criteria for determining the circumstances in which the appointment of a central contact point (CCP) is appropriate and its functions
The ESAs have published Final Guidelines (GL) on the risk factors that financial institutions should consider when assessing the money laundering/terrorist financing (ML/TF) risk associated with a business relationship or occasional transaction. Moreover, the ESAs have also issued Final RTS on Central Contact Point (CCP) to help Member States determine when payment service providers and electronic money issuers should appoint a CCP to support the fight against ML/FT risk.

DFAST 2017

(23/06/2017) Fed – Dodd-Frank Act Stress Test 2017: Supervisory Stress Test Methodology and Results
The Fed has published the methodology and results for the Dodd-Frank Act Stress Test 2017 (DFAST 2017), in which 34 BHCs have participated. In conducting its supervisory stress tests, the Fed calculated its projections of a BHC’s balance sheet, risk-weighted assets (RWAs), net income, and resulting regulatory capital ratios under the adverse and severely adverse scenarios. For DFAST 2017, the Fed updated the calculation of projected capital to incorporate the supplementary leverage ratio (SLR).

Recovery planning

(22/06/2017) PRA – Consultation Paper: Recovery planning
The Prudential Regulation Authority (PRA) has now published a Consultation Paper on recovery planning that supersedes Supervisory Statement (SS18/13) and proposes a new SS to enhance the quality of recovery plans. The update sets out proposals on: i) recovery planning; ii) recovery planning for UK subsidiaries of non-EU banks; and iii) amendments to SS8/16 on ‘Ring-fenced Bodies’ (RFBs).

Remuneration and misconduct risk

(21/06/2017) FSB – Consultative Document on Supplementary Guidance to the Principles and Standards on Sound Compensation Practices
The FSB has published a consultative document on Supplementary Guidance to the FSB Principles and Standards (P&S) that specifically address the link between compensation and conduct. In particular, this document sets out 8 recommendations regarding: i) governance of compensation and misconduct risk; ii) effective alignment of compensation with misconduct risk; and iii) supervision of compensation and misconduct risk.

US financial regulatory system

(13/06/2017) US Treasury – Report on a financial system that creates economic opportunities – Banks and Credit Unions
The US Department of the Treasury has published a Report examining the US financial regulatory system and recommending executive actions and regulatory changes that could simplify and reduce regulatory costs while maintaining high standards of safety and soundness. Given the breadth of the financial system, Treasury has divided its review into a series of reports. Thus, this report covers only the depository system (i.e. banks, savings associations and credit unions).

EU-wide stress Test 2018

(08/06/2017) EBA – Draft Methodological Note of the EU-wide Stress Test 2018 / Draft 2018 EU-wide Stress Test Templates
The EBA has published the 2018 EU-wide stress test draft methodology for discussion, describing how banks should calculate the stress impact of the common scenarios. This document includes institutions participating. Further, this exercise is designed to inform the 2018 SREP and will consider, for the first time, the impact of the implementation of IFRS 9.


(06/06/2017) ESMA – Final Guidelines on MiFID II product governance requirements
The ESMA has published Final Guidelines (GL) on product governance under MiFID II, addressing the target market assessment by manufacturers and distributors of investment products to ensure they act in the clients’ best interest during all the stages of the life-cycle of products or services. These GL apply to firms subject to the product governance requirements under MiFID II, including among others investment firms and credit institutions that provide investment services and activities.

UK withdrawing from the EU

(01/06/2017) ESMA – Opinion on General principles to support supervisory convergence in the context of the United Kingdom withdrawing from the European Union
The ESMA has issued an Opinion on 9 general principles to support supervisory convergence in the context of the UK withdrawing from EU, addressed to the 27 national competent authorities (NCAs) which supervise investment firms.

Money laundering and financing of terrorism

(01/06/2017) ESAs – Consultation Paper on RTS on the measures credit institutions and financial institutions shall take to mitigate the risk of money laundering and terrorist financing where a third country’s law does not permit the application of group-wide policies and procedures
The ESAs have published a Consultation Paper (CP) on RTS on the implementation of group-wide anti-money laundering and countering the financing of terrorism (AML/CFT) policies and procedures in third countries. These RTS set out minimum actions that should be taken by credit and financial institutions to identify and manage the money laundering and terrorism financing (ML/TF) risk where a third country’s law does not permit the application of group-wide AML/CFT policies and procedures.


Other publications of interest

Climate-related financial disclosures

(29/06/2017) TCFD – Recommendations on climate-related financial disclosures
A Task Force of the FSB has published recommendations for effective disclosure of climate-related financial risk, which are applicable to organisations across sectors and jurisdictions. In particular, the recommendations are structured around four thematic areas: i) governance; ii) strategy; iii) risk management; and iv) metrics and targets.

OTC derivatives markets

(29/06/2017) FSB – Reports on reforms to OTC derivatives markets
The FSB has published three reports setting out progress on reforms to over-the-counter (OTC) derivatives markets. In particular, these reports address the effectiveness of the reforms of OTC derivatives markets, the progress in implementation of the reforms since June 2016, and the progress in addressing legal barriers to reporting and accessing OTC derivatives trade data.


(29/06/2017) EBA – Opinion on the European Commission’s intention to partially endorse and amend the EBA’s final draft regulatory technical standards on strong customer authentication and common and secure communication under PSD2
The EBA has published an Opinion responding to the European Commission's intention to amend Chapters 1, 3 and 5 of the EBA's RTS on strong customer authentication (SCA) and common and secure communication (CSC), in which the EBA voices its disagreement with three of the four concrete amendments the Commission proposes.

Consumer data

(28/06/2017) EBA – Report on innovative uses of consumer data by financial institutions
The EBA has published a Report presenting the conclusions of its assessment on the topic of innovative uses of consumer data by financial institutions, which looks at the risks and potential benefits of this innovation and identifies a number of requirements under EU law applying to financial institutions, which mitigate many of the risks identified by the EBA. The Report concludes that no additional, industry-specific legislative or regulatory requirements are needed at present.

Consumer trends report

(28/06/2017) EBA – Consumer Trends Report 2017
The EBA has published its annual Consumer Trends Report, which provides an overview of the trends observed in 2017, the issues that will or could have an impact on consumers and other market participants and the areas where the EBA may take an action, if needed. The report covers products such as mortgages, personal loans, electronic money, etc.

Stress test of CCPs

(28/06/2017) CPMI/OICV-IOSCO – Consultative report on framework for supervisory stress testing of central counterparties (CCPs)
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a consultative report on the Framework for supervisory stress testing of central counterparties (CCPs), which is intended to serve as a guide for relevant authorities seeking to conduct multiple CCPs stress test (multi-CCP SST). This framework sets out six components that describe the steps authorities should follow when designing and running a multi-CCP SST (e.g. governance arrangements, designing scenarios, etc.).

Solvency II statistics

(28/06/2017) EIOPA – Statistics: Key aspects accompanying note
The EIOPA has published its first set of comprehensive statistical information on the European insurance sector based on Solvency II regulatory reporting, alongside a description of the key aspects. This statistics, which will be published on a quarterly basis, contain up-to-date and high-quality data providing a comprehensive picture of the European insurance sector.


(27/06/2017) FSB – Report on the financial stability implications from FinTech
The FSB has issued a report on the financial stability implications from FinTech in which three priority areas have been identified as essential to safeguard financial stability: i) the need to manage operational risk from third-party service providers; ii) mitigating cyber risks; and iii) monitoring macrofinancial risks that could emerge as FinTech activities increase.


(27/06/2017) ESMA – Guidelines on calibration of circuit breakers and publication of trading halts under MiFID II
The ESMA has published its final guidelines on trading halts under MiFID II which provide guidance on the calibration of trading halts, the dissemination of information regarding the activation of mechanisms to manage volatility on a specific trading venue and the procedure and format to submit the reports on trading halts’ parameters to ESMA.

Credit unions

(24/06/2017) Government – Real Decreto-Ley de medidas urgentes en materia financiera
The Council of Ministers of Spain has approved a royal decree-law aiming to amend the credit unions’ legal framework by setting out Mecanismos Institucionales de Protección (MIP). Moreover, this royal decree-law establishes a new category of liabilities to ease compliance with the minimum requirement on own funds and eligible liabilities (MREL) in case of resolution or bankruptcy proceedings, and amends the Stock Market Law.


(23/06/2017) EP – Amendments to the Regulation on the transitional period for the introduction of IFRS 9
The European Parliament (EP) has published its amendments to the Regulation on transitional arrangements to phase in the regulatory capital impact of IFRS 9.

Insurance and reinsurance undertakings

(23/06/2017) Consejo de Ministros – Real Decreto por el que se modifica el Plan de contabilidad de las entidades aseguradoras y reaseguradoras y normas sobre la formulación de las cuentas anuales consolidadas de los grupos de entidades aseguradoras y reaseguradoras
The Consejo de Ministros has approved a royal decree which aims to amend the Accounting Plan for insurance and reinsurance institutions, and the rules regarding the formulation of consolidated annual financial statements, to adapt them to the EU accounting framework.

Countercyclical capital buffer

(22/06/2017) BCBS – Range of practices in implementing the countercyclical capital buffer policy
The BCBS has published a document on range of practices in implementing the countercyclical capital buffer (CCyB) policy following the 2010 Guidance on key requirements that national authorities should follow in designing their policy framework and making buffer decisions. The document examines how jurisdictions have used their flexibility in designing their CCyB and underlines discretionary elements across them (e.g. governance structures, indicators, etc.).

Structural FX

(22/06/2017) EBA – Discussion Paper on Treatment of structural FX under Article 352(2) of the CRR
The EBA has launched a Discussion Paper on the application of the structural FX provision, which outlines the rationale behind the treatment of structural positions as well as broader issues related to the structural FX concept. This paper also examines potential inconsistencies in the articulation of the FX requirements, as it could lead to significant differences in capital requirements across institutions with similar exposures.

Credit valuation adjustment (CVA) risk

(21/06/2017) EBA – RTS on determining proxy spread and limited smaller portfolios for CVA under Article 383(7) of the CRR / 2015 CVA Monitoring exercise / Instructions for 2016 CVA risk monitoring exercise
The EBA has published its draft RTS on credit valuation adjustment (CVA) proxy spread, proposing limited amendments to the Commission Delegated Regulation (EU) No 526/2014. Further, the EBA has announced that it has put on hold its draft Guidelines on the treatment of CVA risk under SREP until further notice, due to continued developments in the CVA risk framework at international level. Moreover, the EBA has published a report on the 2015 CVA risk monitoring exercise; and the instructions for the 2016 CVA risk monitoring exercise, which institutions should complete by 14 September 2017.

Amendments to IAS 16

(20/06/2017) IASB – Property, plant and equipment: Proceeds before Intended Use
The IASB has proposed narrow‑scope amendments to IAS 16 Property, Plant and Equipment. These amendments would prohibit deducting sales proceeds from the cost of an item while that asset is available for use and would require recognising those proceeds and costs in profit or loss.


(19/06/2017) ESMA – CP for trading obligation for derivatives under MiFIR
The ESMA has published a consultation paper regarding its draft RTS on specifying the trading obligation for derivatives under the Markets in Financial Instruments Regulation (MiFIR). The consultation is open for comments until 31 July 2017.

Solvency II and ORSA

(19/06/2017) EIOPA – Supervisory Assessment of the Own Risk and Solvency Assessment (ORSA)
The EIOPA has published a supervisory statement outlining the first experiences on how European (re)insurance companies have implemented the Own Risk and Solvency Assessment (ORSA) process, which is based on the Solvency II framework. Although the analysis shows good progress, EIOPA sees the need for further improvements (e.g. quality of stress test scenarios, scope of the risk assessment, etc.).

Residential mortgage

(19/06/2017) PRA – PS 13/17 on Residential mortgage risk weights
The PRA has published a Policy Statement (PS) on responses to Consultation Paper (CP) 29/16 ‘Residential mortgage risk weights’, which set out proposed changes to the calculation of risk-weighted capital requirements in relation to residential mortgage portfolios.

Ranking of unsecured debt instruments and IFRS 9

(16/06/2017) Council – Draft Regulation on the transitional period for the introduction of IFRS 9 / Draft Directive on the ranking of unsecured debt instruments
The Council has agreed its stance on part of a package of proposals aimed at reducing risk in the banking industry. In particular, these proposals are related to a draft Directive on the ranking of unsecured debt instruments in insolvency proceedings (bank creditor hierarchy); and on a draft Regulation on transitional arrangements to phase in the regulatory capital impact of IFRS 9.

Financial crisis

(16/06/2017) Banco de España – Informe sobre la crisis financiera y bancaria en España, 2008-2014
The Bank of Spain has published a report on the financial crisis that was initiated in 2007, which provides an exhaustive and systematic analysis of its impact on the Spanish financial system and details the regulatory, supervisory and intervention measures adopted from 2008 to 2014.

ESAs annual report - 2016

(15/06/2017) ESAs – EBA Annual Report 2016 / ESMA Annual Report 2016 / EIOPA Annual Report 2016
The ESAs have published their annual reports which provide a detailed account of all the work achieved in 2016 and anticipating the key areas of focus in the coming years.


(15/06/2017) EBA – Draft response to the EC Consultation Document on FinTech: a more competitive and innovative European Financial Sector
The EBA has submitted its response to the European Commission's (EC) Public Consultation on FinTech expressing its views on a subset of the EC questions. Separately, the EBA is currently developing a Discussion Paper on FinTech issues that will be published in the coming months.

Risk dashboard 1T2017

(14/06/2017) ESMA – Risk Dashboard 2017
The ESMA has issued its most recent iteration of its Risk Dashboard, which covers the main risks and vulnerabilities in the EU’s securities markets for 1Q2017. The ESMA considers political uncertainties (e.g. Brexit negotiations, election calendar in the EU, etc.) as the most important potential sources of risk in 2017.

Solvency II in UK

(12/06/2017) PRA – CP7/17 on Solvency II: Data collection of market risk sensitivities
The Prudential Regulation Authority (PRA) has published a consultation paper (CP) setting out its proposed expectations for the reporting of sensitivities of solvency positions to key market risks. This CP is relevant to Solvency II insurance and reinsurance firms holding, or intending to hold, material quantities of assets exposed to market risk.

Money laundering and financing of terrorism in UK

(12/06/2017) FCA – CP17/13 on Fourth Money Laundering Directive and Fund Transfer Regulation Implementation (DEPP and EG)
The Financial Conduct Authority (FCA) has published a CP on the implementation of the Fourth Money Laundering Directive (4MLD) and the Fund Transfer Regulation (FTR). In particular, this CP introduces several amendments to the Decision Procedure and Penalties manual (DEPP) and Enforcement Guide (EG) regarding financial penalties, FCA powers to cancel, suspend or restrict authorisations, etc.

Supervisory reporting

(09/06/2017) EBA – Revised list of ITS validation rules
The EBA has issued a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering IT problems.

Liquidity coverage ratio (LCR)

(08/06/2017) BCBS – The Liquidity Coverage Ratio framework: frequently asked questions
The BCBS has issued a second set of frequently asked questions (FAQs) and answers on Basel III's Liquidity Coverage Ratio (LCR) aiming to promote consistent global implementation of its framework requirements.

Capital markets union

(08/06/2017) EC – Mid-Term Review of the Capital Markets Union Action Plan
The European Commission (EC) has published its mid-term review on the progress made in implementing the 2015 Capital Markets Union (CMU) Action Plan. This review aims at ensuring the CMU’s Plan remains fit for purpose and sets 9 new priority actions (e.g. strengthen the effectiveness of supervision, harnessing the potential of FinTech, facilitate cross-border investment, etc.)

Money laundering and financing of terrorism

(07/06/2017) BCBS – Guidelines on Sound management of risk related to Money laundering and financing of terrorism: revisions to the correspondent banking annex
The BCBS has published a new release of the Guidelines on the Sound management of risks related to money laundering and financing of terrorism, which include revisions to the annex on correspondent banking and the annex on general guide to account opening.


(07/06/2017) ESMA – Response to the Commission Consultation Paper on Fintech: A more competitive and innovative financial sector
The ESMA has sent its response to the EC Consultation Paper on Fintech, which ESMA sees as a positive evolution as long as business models aim at improving financial consumer experience and financial inclusion. In particular, this document covers the ESMA responses to, among others aspects, artificial intelligence and big data analytics; outsourcing and cloud computing; and role of regulation and supervisors, etc.

Insurance - solvency II xbrl taxonomy

(07/06/2017) EIOPA – Release notes for the 2.2.0 Public Working Draft release of the Solvency II DPM and XBRL taxonomy
The EIOPA has published the 2.2.0 draft version of the Solvency II XBRL Taxonomy, which is a systematised description of all the Solvency II reporting requirements aimed at ensuring the harmonised XBRL reporting. This taxonomy is to be applied by insurance companies for reporting with the reference date of 31 December 2017.

Model risk management in USA

(07/06/2017) FDIC – Adoption of Supervisory Guidance on Model Risk Management
The Federal Deposit Insurance Corporation (FDIC) has published its version of the Supervisory Guidance on Model Risk Management previously issued by the Fed and the Office of the Comptroller of the Currency (OCC). This guidance addresses supervisory expectations for consistent model risk management across banking industry, including: i) model development, implementation, and use; ii) model validation; and iii) governance, policies, and controls.

Reform of the CRR

(06/06/2017) EP – Draft Report on the proposal for a regulation of the European Parliament and the Council amending CRR as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements and amending Regulation (EU) No 648/2012
The European Parliament has published a draft report on the EC proposal for a regulation amending CRR, including provisions regarding transitional arrangements for mitigating the impact on the introduction of IFRS 9 on own funds and large exposure treatment of certain public sector exposures. This draft falls under the Council proposal to split the two transitional provisions and to deal with them in a separate draft regulation aiming to allow for a timely entering into force of these transitional provisions.

CCAR and DFAST 2017

(01/06/2017) Fed – Schedule for results from Dodd-Frank Act stress tests and Comprehensive Capital Analysis and Review (CCAR)
The Fed has announced that the results from the latest supervisory stress tests conducted as part of the Dodd-Frank Act (2017 DFAST) will be released by 22 June 2017, and the results from the Comprehensive Capital Analysis and Review (CCAR) will be released by 28 June 2017. These exercises assess whether firms have sufficient capital to absorb losses and continue operating during stressful economic and financial conditions.


(31/05/2017) ECB – AnaCredit Reporting Manual: Part III. Case studies
The ECB has published Part III of the AnaCredit Reporting Manual. This part of the manual, which does not contain any additional requirements and has no binding legal status, presents various case studies and covers special scenarios (e.g. reverse repurchase agreements, instruments subject to securitization, etc.).


(31/05/2017) ESMA – MiFID II Q&As
The ESMA has updated its Questions and Answers (Q&As) regarding the implementation of MiFID II aiming to promote common supervisory approaches and practices in the application of MiFID II and MiFIR. The document includes answers on, among others, algorithmic trading, the extension of a pre-existing MiFID I waiver to equity-like instruments, etc.

© 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.