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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


G-SIB

(31/03/2017) BCBS – Consultative document on Global systemically important banks (G-SIBs) - revised assessment framework
The BCBS has published a consultative document on G-SIB revised assessment framework, where it proposes 7 changes to the G-SIB assessment methodology and seeks feedback on the introduction of a new indicator for short-term wholesale funding.

Regulatory treatment of accounting provisions

(30/03/2017) BCBS – Final standards on the regulatory treatment of accounting provisions – interim approach and transitional arrangements
The BCBS has published final standards setting out the regulatory treatment of accounting provisions for an interim period. Given the limited time until the effective date of IFRS 9, the BCBS has decided to retain the current treatment under the Basel framework. Further, these standards also set out the transitional arrangements to take effect from 1 January 2018, should individual jurisdictions choose to implement them.

Pillar 3

(30/03/2017) BCBS – Final standards on Pillar 3 disclosure requirements - consolidated and enhanced framework
The BCBS has published now final standards on Pillar 3 disclosure requirements that represent the second phase of the BCBS' review and which cover: i) consolidation of all existing disclosure requirements into the Pillar 3 framework; ii) two enhancements to the Pillar 3 framework; and iii) introduction of revisions and additions.

RDA&RR

(29/03/2017) BCBS – Progress in adopting the Principles for effective risk data aggregation and risk reporting
The BCBS has published its fourth Progress report on bank´s adoption of the principles for effective risk data aggregation and risk reporting (RDA&RR). This report provides, among others, an overview of banks’ extent of compliance with the principles.

Repealing Circular 4/2004

(29/03/2017) BdE – Consulta pública previa sobre la nueva Circular del BdE que reemplaza la Circular 4/2004
The BdE has launched a previous public consultation on the approval of a Circular repealing Circular 4/2004 on public and confidential financial information standards and financial statement formats, aimed to adapt this Circular to IFRS 9 e IFRS 15.

IRB approach

(29/03/2017) PRA – Consultation Paper on Internal Ratings Based (IRB) approach: clarifying PRA expectations
The PRA has published a Consultation Paper on the IRB approach, which aims to introduce certain changes to the Supervisory Statement (SS) 11/13. This document clarifies, among other, PRA’s expectations on how firms can demonstrate that they meet the CRR requirements on ‘prior experience’ of using IRB approaches, and on the use of external data to supplement internal data for estimating PD and LGD for residential mortgages.

Stress test in UK

(27/03/2017) BoE and PRA – Stress testing the UK banking system: key elements of the 2017 stress test / Stress testing the UK banking system: 2017 guidance for participating banks and building societies / Variable paths for the 2017 stress test / Traded risk scenario for the 2017 stress test / Stress test model management
The BoE has published key elements of the 2017 stress test, specifying that it will include two stress scenarios: an annual cyclical scenario (ACS); and a biennial exploratory scenario (BES), which is run for the first time. Further, the PRA has published a letter on stress test model management principles, addressed to firms participating in the 2017 stress test.

Non-performing loans (NPLs)

(21/03/2017) ECB – Guidance to banks on non-performing loans
The ECB has published its final guidance to banks on NPLs with the objective of developing a consistent supervisory approach regarding the identification, measurement, management and write-off of NPLs.

Step-in-risk

(16/02/2017) BCBS – Consultative Document on Guidelines on identification and management of step-in risk
The BCBS has published the 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.

O-SIIs in the EU

(16/02/2017) EBA – 2016 List of O-SIIs in the EU notified to the EBA
The EBA has published the 2016 list of O-SIIs in the EU. This list has been drawn up by relevant authorities across the EU jurisdictions on the basis of the criteria provided in the EBA Guidelines, namely the size, importance (substitutability or financial system infrastructure), complexity (or cross-border activities) and interconnectedness of such institutions.

Amendments to Circular 1/2013

(13/02/2017) BdE – Consulta pública previa sobre la nueva Circular del BdE por la que se modifica la Circular 1/2013, sobre la Central de Información de Riesgos
The BdE has launched a consultation on a new Circular intended to amend the Circular 1/2013. This consultation aims to receive feedback from the institutions potentially affected by the amendments for the purpose of introducing the AnaCredit requirements into the Circular 1/2013. The BdE has not yet published any draft rule, so the institutions potentially affected by the amendments are referred to the existing documents in this regard.

LCR

(09/03/2017) EBA – Final Guidelines on LCR disclosure to complement the disclosure of liquidity risk management under the CRR
The EBA has published Final Guidelines (GL) on the LCR disclosure, which harmonise and specify both the qualitative and quantitative information that institutions are required to disclose on liquidity, and namely on the LCR.

IFRS 9

(07/03/2017) EBA – Opinion of the European Banking Authority on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9
The EBA has published an Opinion on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9, addressed to the EC, European Parliament and Council and to all competent authorities (CAs) across the EU.

Internal Models

(06/03/2017) EBA – Report on results from the 2016 market risk benchmarking exercise / Report on results from the 2016 high default portfolios (HDP) exercise
The EBA has published two reports on the consistency of RWAs: a Report on the results from the 2016 market risk benchmarking exercise and a Report on the results from the 2016 high default portfolios (HDP) exercise.

Internal models

(03/03/2017) EBA – Consultation Paper on RTS on the specification of the nature, severity and duration of an economic downturn
The EBA has published a Consultation Paper on RTS specifying the nature, severity and duration of an economic downturn, according to which institutions shall estimate the downturn LGD and CF.

TRIM, ICAAP e ILAAP

(03/03/2017) ECB – Guide to the Targeted Review of Internal Models (TRIM) / Guides on SSM on ICAAP and ILAAP

The ECB has published a Guide to the Targeted Review of Internal Models (TRIM) addressed to the management of significant institutions, which sets out its view on the appropriate supervisory practices and spells out how the ECB intends to interpret the relevant EU law on internal models and on general model governance topics. Moreover, the ECB has initiated a multi-year project to develop comprehensive SSM Guides on ICAAP and ILAAP for significant institutions.

Sensitivity analysis

(01/03/2017) ECB – Sensitivity analysis focused on effects of interest rate changes
The ECB has announced that it will conduct such an exercise for the banks under its direct supervision in 2017, which will consist on a sensitivity analysis of the banking book, with a focus on interest rate changes.

Monitoring report

(01/03/2017) BCBS/EBA – Basel III Monitoring Report / CRD IV/CRR Monitoring exercise
The BCBS has published the results of its latest Basel III monitoring report. In parallel with this report, the EBA has conducted its eleventh report of the CRDIV-CRR/Basel III monitoring exercise on the European banking system.

Insurance distribution

(28/02/2017) DGSFP – Borrador de Anteproyecto de Ley de distribución de seguros y reaseguros privados / Proyecto de Orden por la que se aprueban los modelos de información cuantitativa / Proyecto de Orden por la que se modifica el Plan de contabilidad de las entidades aseguradoras y reaseguradoras
The DGSFP has published a draft Anteproyecto de Ley de distribución de seguros y reaseguros privados, which will transpose the Directive 2016/97 on insurance distribution. Further, the DGSFP has published two Proyectos de Orden, one on quantitative information models and the other on accounting rules for insurance and reinsurance undertakings.

Pillar 2A in uk

(27/02/2017) PRA – Consultation Paper: refining the PRA’s Pillar 2A capital framework

The Prudential Regulation Authority (PRA) has published a consultation paper setting out proposed adjustments to the PRA’s Pillar 2A capital framework, which came into force on 1 January 2016.

 


Other publications of interest
 

RTS/ITS on benchmark

(30/03/2017) ESMA – Final Report on draft technical standards under the Benchmarks Regulation
The ESMA has published its final report containing RTS and ITS under the Benchmarks Regulation (BMR), which include the detailed rules to implement the new European regulatory framework aimed at ensuring the accuracy and integrity across the EU.

Regulatory capital in uk – statistics 4Q16

(28/03/2017) BoE – Banking sector regulatory capital: 2016 Q4
The Bank of England (BoE) has published its quarterly statistical on levels of capital and RWAs for the UK banking sector, including breakdowns of the movements in different tiers of capital and risk exposure types, and overall capital ratios.

FinTech

(24/03/2017) EC – Consultation Document on FinTech: a more competitive and innovative European financial sector
The European Commission (EC) has published a consultation document on FinTech, seeking input from stakeholders to further develop its policy approach towards technological innovation in financial services. This document focuses on new technologies' impact on the European financial sector and on fostering principles of technologic neutrality, integrity and proportionality.

RCAP

(24/03/2017) BCBS – Regulatory Consistency Assessment Programme (RCAP): summary of post-assessment follow-up actions
The BCBS has published a summary of the follow-up actions taken by member jurisdictions after the Regulatory Consistency Assessment Programme (RCAP) to address material and potentially material findings identified. It covers those jurisdictions whose RCAP assessment reports were published by December 2015.

Central Securities Depositaries (CSDs)

(23/03/2017) ESMA – Final Report on CSDR Guidelines on Access by a CSD to the Transaction Feeds of a CCP or of a Trading Venue / Final Report on CSDR Guidelines on Participant default rules and procedures under Regulation (EU) No 909/014
The ESMA has issued final reports on two sets of guidelines regarding the implementation of the Central Securities Depositary Regulation (CSDR). On the one hand, the guidelines on CSDs’ access to central counterparties (CCPs) or trading venues’ transaction feeds specify the conditions under which access could be refused. On the other hand, the other set of guidelines provides recommendations on the rules and procedures a CSD should define in order to address the insolvency of one or several of its participants.

SSM Annual Report

(23/03/2017) ECB – Annual Report on supervisory activities 2016
The ECB has published its annual report on supervisory activities, which describes the activities carried out by the ECB Banking Supervision in 2016 and the progress made in integrating and harmonising supervisory practices across the euro area.

Supervisory colleges

(22/03/2017) EBA – Report on the functioning of supervisory colleges in 2016
The EBA has published its annual assessment of EU supervisory colleges, which are established for the effective supervision of EU cross-border banking groups. The Report highlighted a number of achievements made by them, including a good level and quality of engagement, and also identified areas for improvement as well as topics for supervisory attention for 2017.

ESAs

(21/03/2017) EC – Public Consultation on the operations of the European Supervisory Authorities
The European Commission has released a public consultation regarding the ESAs’ (EBA, EIOPA and ESMA) activity to seek views on possible changes to their current framework of operation in order to promote a stronger and integrated regulatory background, to ensure high level, effective and consistent regulation and supervision and to better protect consumers of financial services.

Money laundering and terrorist financing

(16/03/2017) FCA – GC17/2: Guidance Consultation on treatment of politically exposed persons (PEPs) under the Money Laundering, Terrorist Financing and Transfer of Funds
The FCA has published a guidance consultation on the treatment by financial services firms of politically exposed persons (PEPs) to clarify who should be considered a PEP, and the steps that firms should take when dealing with higher or lower risk PEPs.

Unique transaction identifier (uti)

(13/03/2017) FSB – Consultation document on Proposed governance arrangements for the unique transaction identifier (UTI)
The FSB has published a consultation document which sets out proposals for the governance arrangements for a global UTI, as a key harmonised identifier designed to facilitate effective aggregation of transaction reports about OTC derivatives markets.

Supervisory reporting

(10/03/2017) 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.

Money laundering and terrorist financing

(09/03/2017) EP and Council – Report on the Proposal for a Directive amending Directive (EU) 2015/849 (AML and FT Directive)
The European Parliament and Council have published a document with the amendments to the European Commission’s proposal amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

Recovery and resolution

(08/03/2017) ECB – Opinion on a proposal for a directive of the European Parliament and of the Council on amending Directive 2014/59/EU (BRRD)
The ECB has published an opinion on a proposal for a directive of the EP and of the Council on amending the BRRD regarding the ranking of unsecured debt instruments in insolvency hierarchy.

Supervisory reporting

(08/03/2017) EBA – Opinion on improving decision-making for supervisory reporting
The EBA has issued an Opinion addressed to the European Parliament, the Council and the Commission proposing that the decision-making framework for adopting supervisory reporting requirements be made more efficient and fit-for-purpose by replacing the Commission's ITS with decisions adopted directly by the EBA.

PRA rules

(07/03/2017) PRA – Strengthening accountability in banking and insurance: requirements on regulatory references (part II) - PS27/16
The PRA has published a reminder on the implementation of the Senior Managers & Certification Regime (SM&CR). The requirements related to these two aspects of the strengthening accountability regimes have taken effect this week.

Insurance

(06/03/2017) FCA – CP on Insurance Distribution Directive Implementation
The FCA has published a Consultation Paper on the Insurance Distribution Directive (IDD). This document paper covers FCA proposals regarding the application of the Directive, the professional and organisational requirements, the complaints handling etc.

Insurance

(06/03/2017) DGSFP – Circular 1/2017 de la Dirección General de Seguros y Fondos de Pensiones, por la que se fija el contenido del informe especial de revisión sobre la situación financiera y de solvencia, individual y de grupos, y el responsable de su elaboración
A Circular by the Dirección General de Seguros y Fondos de Pensiones (DGSFP) has been published in the Spanish Official Journal, which establishes the content of the special review report on the individual and group financial situation and solvency. This Circular develops the content of the Directive 2009/138, on access to insurance and reinsurance activity.

Asset encumbrance

(03/03/2017) EBA – Final draft RTS on Encumbered and Unencumbered Assets
The EBA has published its final RTS on the disclosure of encumbered and unencumbered assets for the provision of transparent and harmonised information, as laid down in the CRR.

Recovery planning

(02/03/2017) EBA – Consultation Paper on the coverage of entities in banking group recovery plans
The EBA has launched a consultation on its draft Recommendation on the coverage of entities in banking group recovery plans, which is aimed at defining common criteria to identify entities (subsidiaries and branches) that need to be covered in group recovery plans, and the extent of such coverage.
(01/03/2017) EBA – Good range of options in recovery plans but areas for improvement still remain
The EBA has published its fourth thematic comparative Report on recovery planning which aims at supporting supervisors in their assessment to identify the crucial elements that banks should consider when designing and selecting credible recovery options.

Financial reform

(28/02/2017) FSB – Assessment on implementation progress and effects of reforms
The FSB has reviewed the progress on the implementation of post-crisis reforms and the evaluation of their effects and effectiveness; discussed development of a consistent comprehensive framework for evaluating the post-implementation effects, among others.

MiFID II

(28/02/2017) ESMA – Final report / RTS on package orders for which there is a liquid market
The ESMA has published its final report on draft regulatory technical standards (RTS) regarding the treatment of package orders under MiFID II and MiFIR. In particular, this draft specifies how the MiFIR pre-trade transparency requirements apply to package orders.

XBRL Taxonomy in uk

(28/02/2017) BoE – XBRL taxonomy (v2.0.0)
The Bank of England (BoE) has published an update to its XBRL taxonomy (v2.0.0), including a Data Point Model (DPM) dictionary, annotated templates and validation rules.

2018 EU-stress test

(27/02/2017) EBA – Updates on the 2018 EU-wide stress test timeline
The EBA has agreed the tentative timeline of the 2018 EU-wide stress test. The exercise is expected to be launched at the beginning of 2018 and the results to be published in mid-year. The new methodology will be revised to take into account the implementation of IFRS 9 both in the starting points as well as in the projections. 

Mortgage lending

(27/02/2017) PRA – PS5/17 ‘Amendments to the PRA’s rules on loan to income ratios in mortgage lending’
The PRA has published a policy statement (PS) on amendments to the rules on loan to income ratios (LTI) in mortgage lending in order to provide feedback to responses to Consultation Paper (CP) 44/16 and to set out the final rules for the LTI flow limit to operate on a four-quarter rolling basis.

NSFR

(24/02/2017) BCBS – The Net Stable Funding Ratio: frequently asked questions
The BCBS has published a second document on frequently asked questions (FAQs) regarding the Basel III’s NSFR in order to promote consistent global implementation of these requirements.

© 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.