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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

 

IFRS

(28/03/2019) BdE – Consulta pública previa a la elaboración del Proyecto de Circular del Banco de España, a establecimientos financieros de crédito, sobre normas de información financiera pública y reservada, y modelos de estados financieros
The Bank of Spain (BdE) has launched a Public consultation prior to the preparation of the Draft Circular, addressed to SLIs, on public and confidential financial information rules and formats, with the aim to keep the convergence of the Spanish accounting standards of supervised institutions to the IFRS framework. In particular, the new Circular will establish general requirements for submitting financial information of the SLIs as well as a reference to the Circular 4/2017 regarding the rules on recognition, valuation, submission and disclosure of information.

IOSCO work program for 2019

(27/03/2019) IOSCO – Work program for 2019
The IOSCO has published its work program for 2019, in order to enhance its own effectiveness and the impact of its policy work on global securities markets. In particular, it has identified five priority issues for 2019 in accordance with the risks, trends and other issues addressed in its annual Risk Outlook, namely: i) crypto-assets, ii) artificial intelligence and machine learning, iii) passive investing and index providers, iv) retail distribution and digitalization, and v) market fragmentation. This document summarises ongoing and planned initiatives relating to these priorities.

Basel III reform

(21/03/2019) BCBS/EBA – Basel III Monitoring Report (BCBS) / Basel III Monitoring Exercise (EBA) / Report on Liquidity Measures (EBA)
The BCBS has published the results of its latest Basel III monitoring report which sets out the impact of the finalisation of the Basel III reforms, although it does not reflect the finalisation of the market risk framework published in January 2019. In parallel with this report, the EBA has issued a Report on its Basel III monitoring exercise which includes a preliminary assessment of the impact of the Basel reform package on EU banks, assuming its full implementation. Along with this document, the EBA has also published a Report on liquidity measures that monitors and evaluates the liquidity coverage requirements currently in place in the EU.

O-SIIs list

(20/03/2019) EBA – 2018 List of O-SIIs in the EU notified to the EBA
The EBA has published the 2018 annual list of Other Systemically Important Institutions (O-SIIs) in the EU. This list has been drawn up by relevant authorities across the EU jurisdictions on the basis of the following criteria provided in the EBA Guidelines: size, importance (substitutability or financial system infrastructure), complexity (or cross-border activities) and interconnectedness of such institutions.

Real estate

(20/03/2019) Gobierno de España – Proyecto de Real Decreto de desarrollo de la Ley reguladora de los contratos de crédito inmobiliario
The Spanish Government has published a Draft Royal Decree to develop the Law 5/2019 regulating real estate credit agreements, with the aim to complete the transposition of the Directive 2014/17/UE, as well as to develop several aspects needed to ensure the borrowers’ rights in Law 5/2019. In particular, this Draft Royal Decree covers the following aspects: i) general provisions; ii) advisory service; iii) creditor’s obligations; and iv) telematic resources for the documentation submission to the notary by creditors, credit intermediary or its relevant representative.

EONIA / €STR

(15/03/2019) ECB – Recommendations of the working group on euro risk-free rates on the transition path from EONIA to the €STR and on a €STR-based forward-looking term structure methodology / Announcement of start date for euro short-term rate (€STR)
The ECB has published Recommendations on the transition path from EONIA to the €STR and on a €STR based forward-looking term structure methodology to market participants. In particular, these recommendations establish that market participants should gradually replace EONIA with the €STR for all products and contracts, making the €STR their standard reference rate and making certain adjustments to their IT systems; and that the European Money Market Institute (EMMI) should modify the current EONIA methodology to become the €STR plus a spread for a limited period of time in order to give market participants sufficient time to transition to the €STR; among others.

Crypto-assets

(14/03/2019) BCBS – Statement on crypto-assets
The BCBS has published a Statement on crypto-assets which sets out its prudential expectations related to banks' exposures to crypto-assets and related services for those jurisdictions that do not prohibit such exposures and services. In particular, this Statement provides that if a bank is authorised and decides to acquire crypto-asset exposures or provide related services, it should consider at a minimum certain conditions regarding: i) due diligence; ii) governance and risk management; iii) disclosure; and iv) supervisory dialogue.

CCAR 2019

(08/03/2019) Fed – Comprehensive Capital Analysis and Review 2019 Summary Instructions / Final rule on amendments to the Capital Plan Rule
The Fed has released the 2019 CCAR Summary instructions which provide information regarding the requirements and expectations for CCAR 2019, the stress testing and capital planning cycle. In particular, this document includes information about the Fed’s qualitative and quantitative assessments of capital plans submitted by firms in connection with this year’s CCAR exercise. Along with these instructions, the Fed has also published a Final rule on amendments to the Capital Plan Rule in order to limit the scope of potential objections to a firm’s capital plan on the basis of qualitative deficiencies in the firm’s capital planning process (qualitative objection).

LGD

(07/03/2019) EBA – Final Guidelines for the estimation of LGD appropriate for an economic downturn (‘Downturn LGD estimation’)
The EBA has published Final Guidelines (GL) for the estimation of LGD appropriate for an economic downturn, which set out requirements for the quantification of the calibration target used for downturn LGD estimation. In particular, these GL are an addendum to the GL on PD estimation, LGD estimation and the treatment of defaulted assets which were published by the EBA in November 2017, in order to reduce unwarranted variability of risk parameters and own funds requirements.

UK stress test

(06/03/2019) BoE – Stress testing the UK banking system: Key elements of the 2019 stress annual cyclical scenario / Stress testing the UK banking system: 2019 stress guidance for banks and building societies / Variable paths for the 2019 stress test / Traded risk scenario for the 2019 stress test
The Bank of England (BoE) has published a document on key elements of the 2019 UK stress test scenarios which provides details on the 2019 baseline scenario and ACS. Moreover, the BoE has also released a Guidance for participating banks for conducting their own analysis for the 2019 stress test. Along with these two documents, the BoE has also published two additional documents covering the variable paths, as well as the traded risk scenario for the 2019 stress test.

Brexit / Deposits

(04/03/2019) EBA – Opinion on deposit protection issues stemming from the withdrawal of the UK from the EU
The EBA has published an Opinion on deposit protection issues stemming from the withdrawal of the UK from the EU, which is addressed to Deposit Guarantee Schemes Designated Authorities (DGSDAs), in order to ensure that depositors in the branches of the UK credit institutions in the EU are adequately protected by the EU Deposit Guarantee Schemes (DGSs), in case of a withdrawal of the UK from the EU with no ratified agreement in place.

Financial stability

(04/03/2019) Gobierno de España – Real Decreto 102/2019, por el que se crea la Autoridad Macroprudencial Consejo de Estabilidad Financiera, se establece su régimen jurídico y se desarrollan determinados aspectos relativos a las herramientas macroprudenciales
The Spanish Government has published the Royal Decree 102/2019, that sets out the Macroprudential Authority on the Financial Stability Council (AMCESFI), establishes its legal regime, and develops certain aspects regarding macroprudential tools. In particular, this authority replaces the Financial Stability Committee (CESFI) created in 2006, and this Royal Decree sets out the structure, legal regime, functions and powers of the AMCESFI. Moreover, with the establishment of the AMCESFI and the provision of new tools to sectoral supervisors through the Royal Decree-law 22/2018, the institutional reform of the macroprudential supervisory system is finalised.

Corporate governance

(28/02/2019) CNMV – Guía Técnica 1/2019 sobre Comisiones de nombramientos y retribuciones (CNR)
The CNMV has published the Technical Guide 1/2019 on Nomination and Remuneration Committees (CNR), in order to foster a proper functioning of CNR within the firms. In particular, this document covers a set of principles, good practices and standards on how these committees can improve the performance of their function.

A-IRB approach

(26/02/2019) EBA – CP GL on CRM for institutions applying the IRB Approach with own estimates of LGDs
The EBA has published a Consultation Paper (CP) on Guidelines (GL) on CRM for institutions applying the advanced internal rating-based (A-IRB) approach that aims to eliminate the remaining significant differences in approaches in the area of CRM, which are either due to different supervisory practices or bank-specific choices. In particular, this CP provides guidance on the application of the CRM provisions of the CRR; and clarifies the eligibility requirements for different CRM techniques, namely funded and unfunded credit protection (e.g. collateral and guarantees), available to institutions.

Resolution

(25/02/2019) EBA – Handbook on valuation for purposes of resolution
The EBA has published a Handbook on valuation for purposes of resolution, which is addressed to national and EU RAs, aiming to foster the convergence and consistency of valuation practices as well as the interaction with independent valuers across the EU. In particular, this Handbook aims to bridge the resolution regulatory approach with the valuation practices, by providing concrete guidance on the practical steps of the valuation process, on the specific valuation criteria applicable to the various resolution tools

Outsourcing

(25/02/2019) EBA – Final Guidelines on outsourcing arrangements
The EBA has published Final Guidelines (GL) on outsourcing arrangements, which repeal the existing Committee of European Banking Supervisors’ (CEBS) GL, and aim to establish a more harmonised framework for all financial institutions that are within the scope of the EBA's mandate. In particular, these GL cover the following aspects: i) governance of outsourcing arrangements; ii) IT outsourcing, including FinTech and outsourcing to cloud service providers; and iii) supervision and concentration of risks.

 

 

Other publications of interest

 

ESRB Risk dashboard

(28/03/2019) ESRB – Risk Dashboard, March 2019 (Issue 27)
The European Systemic Risk Board (ESRB) has published its Risk Dashboard relevant to March 2019, which is a set of quantitative and qualitative indicators of systemic risk in the EU financial system. In particular, this document covers the interlinkages and composite measures of systemic risk, macro risk, credit risk, funding and liquidity, market risk, profitability and solvency, structural risk as well as risk related to central counterparties.

EMIR

(28/03/2019) ESMA – Public Statement on implementation of the new EMIR Refit regime for the clearing obligation for financial and non-financial counterparties
The European Securities and Markets Authority (ESMA) has published a Statement on the implementation of the new EMIR Refit regime for the clearing obligation for financial and non-financial counterparties. In particular, this Statement provides guidance on when they need to determine whether they are subject to the clearing obligation under the new regime introduced by Refit, and equally when they need to notify ESMA and their relevant competent authority that they are indeed subject to the clearing obligation (i.e. on the day the Refit text enters into force).

Investment funds

(28/03/2019) ESMA – Consultation Paper on RTS under the European Long-Term Investment Fund (ELTIF) Regulation
The ESMA has published a Consultation Paper (CP) on RTS under the European Long-Term Investment Fund (ELTIF) Regulation seeking stakeholders’ input on various subjects that are critical for the functioning of the ELTIF Regulation. In particular, this CP determines the criteria for establishing the circumstances in which the use of financial derivative instruments solely serves hedging purposes; the circumstances in which the life of an ELTIF is considered sufficient in length; or the facilities available to retail investors; among others.

MiFID II / MiFIR

(28/03/2019) ESMA – Q&A on MiFID II and MiFIR investor protection and intermediaries topics
The ESMA has added new Q&As and updates on the implementation of investor protection topics under MiFID II and MiFIR in order to promote common supervisory approaches and practices in the application of these rules. In particular, this document provides new Q&As on provision of investment services and activities by third-country firms, product governance, suitability report, or information on costs and charges, among other aspects. Moreover, the ESMA has also updated two Q&As regarding suitability report and information on costs and charges.

Brexit

(28/03/2019) ESMA – Public Statement on update on the UK’s withdrawal from the European Union - preparations for a possible no-deal Brexit scenario on 12 April
The ESMA has published a Statement updating on its preparations for a no-deal Brexit scenario in view of recent developments on timing. In particular, the ESMA modifies the reference day of 29 March 2019 to 12 April 2019 for the following measures and actions regarding clearing and settlement on the access to UK central counterparties (CCPs) and the UK central securities depository (CSD); counterparties to uncleared OTC derivatives; and databases and IT systems.

Countercyclical capital buffer

(28/03/2019) BdE – Colchón de capital anticíclico
The Bank of Spain (BdE) has decided to maintain the countercyclical capital buffer (CCB) at 0% for credit exposures in Spain, during the second quarter of 2019.

CCAR and DFAST

(28/03/2019) Fed – Additional information on the Fed’s stress testing program
The Fed has released a document providing additional information on its stress testing program and stress test models that are used to project bank losses. In particular, this document sets out additional information for Fed’s models regarding: ranges of loss rates for loans that are grouped by distinct risk characteristics; portfolios of hypothetical loans; and model’s enhanced descriptions.

MiFID II / MiFIR

(27/03/2019) ESMA – Q&As on MiFID II and MiFIR commodity derivatives topics
The ESMA has updated its Q&As on MiFID II and MiFIR, providing clarification on issues related to the MiFID II/MiFIR regime for commodity derivatives, including position limits, position reporting and ancillary activity. In particular, this updated version clarifies the scope of the ancillary activity test and updates a previous Q&A on the deadline for the notification to make use of the ancillary activity exemption.

Prospectus regulation

(27/03/2019) ESMA – Q&As relating to Regulation (EU) 2017/1129 (Prospectus Regulation)
The ESMA has published nine Q&As relating to Regulation (EU) 2017/1129 (Prospectus Regulation) in order to help market parties effectively manage the transition from the Prospectus Directive to the Prospectus Regulation by determining the effect of the entry into application of the Prospectus Regulation and helping market parties to draw up prospectuses for approval under the Prospectus Regulation. In particular, these Q&As provide clarification on the following issues: i) the scope of the grandfathering of prospectuses approved under the national laws of Member States implementing Prospectus Directive; ii) the applicability of the current level 3 guidance concerning the Prospectus Directive after the entry into application of the Prospectus Regulation; iii) the process of updating the information included in registration documents and universal registration documents.

IFRS

(27/03/2019) ESMA – Annual Report on the enforcement and regulatory activities of accounting enforcers within the EU
The ESMA has published its Annual Report on the enforcement and regulatory activities of accounting enforcers within the EU. In particular, this report provides an overview of the activities of the ESMA and the accounting enforcers in the European Economic Area (EEA) when examining compliance of financial information (i.e. IFRS 15 on revenue from contracts with customers and IFRS 9 on financial instruments) provided by issuers in 2018; an overview of the main activities performed at European level; quantitative information on enforcement activities in Europe; and ESMA’s contribution to the development of the single rulebook in the area of corporate reporting.

FinTech and InsurTech

(27/03/2019) EIOPA – Report on best practices on licencing requirements, Peer-to-Peer Insurance and the principle of proportionality in an InsurTech context / Report on Outsourcing to the Cloud: EIOPA's Contribution to the EC FinTech Action Plan
The European Insurance and Occupational Pensions Authority (EIOPA) has published a Report on best practices on licencing requirements, Peer-to-Peer Insurance and the principle of proportionality as well as a Report on outsourcing to the cloud regarding InsurTech and FinTech respectively. In particular, the first Report presents a mapping of current authorising and licencing approaches to financial innovation; an assessment of how the principle of proportionality is applied in practice; and an analysis of the approach to InsurTech start-ups operating as peer-to-peer (P2P) insurers: among others. The second Report sets out an overview of cloud computing (e.g. shared responsibility model) and an overview of market practices (e.g. EU regulatory framework).

Benchmarking

(25/03/2019) EC – Commission Implementing Regulation (EU) 2019/482, amending Commission Implementing Regulation (EU) 2016/1368 establishing a list of critical benchmarks used in financial markets pursuant to Regulation (EU) 2016/1011
The European Commission (EC) has published the Commission Implementing Regulation (EU) 2019/482, which modifies the list of critical benchmarks used in financial markets of the Regulation (EU) 2016/1011. In particular, this Implementing Regulation introduces the Warsaw Interbank Offered Rate (WIBOR), administrated by GPW Benchmarks SA. in the list of critical benchmarks.

Economic bulletin

(21/03/2019) ECB – Economic Bulletin. Issue 2/2019
The ECB has published the Economic Bulletin 2/2019 which provides a comprehensive analysis of the economic and monetary developments, including an evaluation of macroeconomic projections by Eurosystem experts. In particular, this document covers the following aspects: i) external environment, ii) financial developments, iii) economic activity, iv) prices and costs, v) money and credit, and vi) fiscal developments.

Supervision

(21/03/2019) ECB – Annual Report on supervisory activities 2018
The ECB has published its Annual Report on supervisory activities 2018, which analyses how has the ECB carried out its supervisory tasks. In particular, this Report includes the following aspects regarding the implementation of the SSM model of supervision; the contribution to the EU crisis management and resolution framework; authorisations, enforcement and sanctioning procedures; the SSM as part of the European and global supervisory architecture; the organisational set-up of ECB banking supervision; reporting on budgetary consumption; legal instruments adopted by the ECB; and the European banking sector in figures.

Risk indicators

(20/03/2019) EBA – Revised EBA Methodological Guide - Risk Indicators and DRAT / List of EBA Risk Indicators and DRATs
The EBA has published an updated Methodological Guide on how to compile risk indicators and detailed risk analysis tools (DRATs), which describes how risk indicators are computed in EBA publications. In particular, this Guide provides guidance on indicator’s concepts, data sources, techniques upon which they are computed and clarity on methodological issues that may assist competent authorities (CAs) and users of EBA data in their accurate interpretation and use.

Brexit

(20/03/2019) EBA – Agreement on a template for the MoU to facilitate supervisory cooperation between the EU and UK supervisors in case of a no-deal Brexit
The EBA has agreed a template for the memorandum of understanding (MoU) outlining provisions of supervisory cooperation and information exchange between the EU supervisory authorities and the UK Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA), in order to ensure that there are no breakdowns in the supervision of cross-border financial institutions in the no-deal scenario. In particular, the template covers both general concepts of information exchange and supervisory cooperation, and specific aspects of cooperation in performing the most common supervisory tasks.

Insolvency Law

(20/03/2019) Spanish Government – Proyecto de Real Decreto Legislativo por el que se aprueba el Texto Refundido de la Ley Concursal
The Spanish Government has published the Proyecto de Real Decreto Legislativo por el que se aprueba el Texto Refundido de la Ley Concursal, in order to regulate, clarify and harmonise such Law. In particular, this Law covers the following aspects: i) the arrangement with creditors (e.g. the declaration of insolvency, the organs of the insolvency proceeding, and the effects of the declaration of insolvency); ii) the pre-insolvency right (e.g. communication of the opening of negotiations with creditors, refinancing agreements, and the out-of-court settlement agreement); and iii) the rules of private international law (e.g. applicable law, territorial procedure, and recognition of foreign insolvency proceedings).

Brexit

(20/03/2019) FCA – Primary Market Bulletin Issue 22
The FCA has published its 22th Primary Market Bulletin, which summarises the key changes to the relevant Handbook provisions, focusing on issues associated with the withdrawal of the UK from the EU. In particular, the Bulletin covers the key changes to the Listing Rules; the Disclosure Guidance and Transparency Rules; and the Prospectus Rules that will be applicable if the UK leaves the EU without an implementation period (a no-deal scenario).

Investment companies

(20/03/2019) SEC – Proposed rule on securities offering reform for closed-end investment companies
The Securities and Exchange Commission (SEC) has published a Proposed rule regarding the securities offering reforms for business development companies (BDCs) and registered closed-end funds with the objective of improving the access to capital and facilitate investor communications. In particular, this Proposed rule introduces amendments that would modify the registration, communications, and offering processes available to BDCs and registered closed-end funds, building on offering practices that operating companies currently use.

Regulation and supervision

(19/03/2019) BCBS - Results of a survey on proportionality practices in bank regulation and supervision
The BCBS has published the results of a survey it conducted on proportionality practices in bank regulation and supervision in order to take stock of the proportionality measures in place across jurisdictions. In particular, this survey shows that 34 of 45 respondents (75%) indicated that they currently apply proportionality measures. Furthermore, most jurisdictions apply some form of proportionality related to capital and liquidity requirements. These generally take the form of a modified / simpler version of existing Basel standards, particularly for the more complex risk categories, or an exemption from such requirements for certain banks.

Liquidity risk

(19/03/2019) PRA – Consultation Paper 6/19 on Pillar 2 liquidity: Updates to the framework
The PRA has published the Consultation Paper (CP) 6/19 that sets out proposals for regulatory reporting amendments and clarifications to the Pilar 2 liquidity framework. In particular, the proposals include amendments on the following aspects: i) updates to the PRA110 template (i.e. regarding rows and columns) and reporting instructions; ii) deletion of reporting requirements for non-EU EEA banks; and iii) clarifications to the Pilar 2 liquidity framework (e.g. minor updates to the regulatory reporting part of the PRA Rulebook).

IFRS 9

(18/03/2019) ESRB – Report on the cyclical behaviour of the ECL model in IFRS 9
The European Systemic Risk Board (ESRB) has published a Report on the impact of the expected credit loss (ECL) approach in IFRS 9 on financial stability. In particular, this Report discusses concerns about potential procyclicality arising from the ECL approach.

Financial market infrastructures

(14/03/2019) IOSCO/BIS – Current status of Level 1 assessments
The International Organization of Securities Commissions (IOSCO) and the Bank for International Settlements (BIS) have published the updated information of the Level 1 assessments online tracker, where jurisdictions are making progress on implementing international standards for payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories. In particular, the current status of the Level 1 assessments shows that South Korea and South Africa have completed the process of adopting measures that will enable them to implement the Principles for Financial Market Infrastructures (PFMI) for all FMI types and Argentina, Chile and Indonesia have also reported progress in adopting measures that will facilitate their implementation of the PFMI.

IFRS standards

(14/03/2019) EC – Regulation (EU) 2019/402 of 13 March 2019 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 as regards International Accounting Standard 19
The EC has published the Regulation (EU) 2019/402 which introduces amendments to the Regulation adopting IFRS standards, regarding the IFRS 19 on employee benefits. In particular, this Regulation aims to clarify that, after a defined-benefit plan amendment, curtailment or settlement occurs, an entity should apply the updated assumptions from the remeasurement of its net defined benefit liability (asset) for the remainder of the reporting period.

Supervisory practices

(14/03/2019) EBA – Report on convergence of supervisory practices
The EBA has published its annual Report on the convergence of supervisory practices in the EU, which provides a summary of the EBA's observations on the current state of the convergence and highlights the EBA's activities carried out in 2018 to promote this convergence in accordance with its mandates as set out in its Founding Regulation and in the CRD IV. In particular, this Report covers the EBA's assessment of the convergence in the supervisory review and evaluation process (SREP) as well as the supervisory convergence in the continuum between ongoing supervision, recovery and resolution.

RegTech and SupTech

(14/03/2019) ESMA – RegTech and SupTech. Change for markets and regulators / Report on Trends, Risks and Vulnerabilities (TRV)
The European Securities and Markets Authority (ESMA) has published its analysis of the regulatory and supervisory technologies currently being developed. In particular, the results, which are presented in the TRV Report published on 28 February 2019, show that on the demand side, regulatory pressure and budget limitations are pushing the market towards an increased use of automated software to replace human decision-making activities, which is reinforced by supply drivers such as increasing computing capacity and improved data architecture. Moreover, the results also exhibit that the market participants are increasingly using new automated tools in areas such as fraud detection, regulatory reporting and risk management.

OTC derivatives

(13/03/2019) EC – Delegated Regulation (EU) 2019/397 of 19 December 2018 amending Delegated Regulation (EU) 2016/2251 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council as regards the date until which counterparties may continue to apply their risk-management procedures for certain OTC derivative contracts not cleared by a CCP
The EC has published the Delegated Regulation 2019/397 regarding risk-management procedures for certain OTC derivative contracts not cleared by a Central Counterparty (CCP), in order to ensure the smooth functioning of the market and a level playing field between counterparties established in the Union and in UK. In particular, this Delegated Regulation allows financial and non-financial counterparties continuing to apply the risk management procedures of non-centrally cleared OTC derivative contracts if they fulfil certain conditions (e.g. contracts should be novated for the sole purpose of replacing a counterparty established in the UK with a counterparty established in a Member State).

Pillar 2

(13/03/2019) PRA – Consultation Paper 5/19. Pillar 2 capital: Updates to the framework
The Prudential Regulation Authority (PRA) has published the Consultation Paper (CP) 5/19 which proposes to update the Pillar 2 capital framework to reflect continued refinements and developments in setting the PRA buffer. In particular, this CP covers aspects regarding: i) the hurdle rate in stress; ii) buffer interactions and usability; iii) the risk management and governance assessment; iv) updating benchmarks for assessing Pillar 2A credit risk; and v) minor corrections to drafting.

Remuneration

(11/03/2019) EBA – Report on high earners for 2017
The EBA has published its Report on high earners for 2017, which collects aggregated data on the number of individuals per institution that are remunerated with 1 M€ or more per financial year (high earners). In particular, the aggregated data shows that the number of high earners in EU banks slightly increased from 4,597 in 2016 to 4,859 in 2017, as well as the average ratio between the variable and fixed remuneration for high earners continued to fall from 104% in 2016 to 101.08% in 2017.

Reporting

(08/03/2019) EBA – Revised list of validation rules
The EBA has issued a revised list of validation rules in its ITS on supervisory reporting highlighting those, which have been deactivated either for incorrectness or for triggering IT problems.

Countercyclical Capital Buffer

(06/03/2019) Fed – The Countercyclical Capital Buffer (CCyB) remains at the current level of 0 percent
The Fed, after a vote, has decided to affirm the Countercyclical Capital Buffer (CCyB) at the current level of 0 percent. In particular, for making this determination, the Board followed the framework detailed in the Board's policy statement for setting the CCyB for private-sector credit exposures located in the US.

Derivatives

(05/03/2019) BCBS/IOSCO – Statement on the final implementation phases of the margin requirements for non-centrally cleared derivatives
The BCBS and the International Organization of Securities Commissions (IOSCO) have published a Statement that provides guidance to support timely and smooth implementation of the framework for margin requirements for non-centrally-cleared derivatives and clarify its requirements. In particular, this Statement establishes that market participants may need to amend derivatives contracts in response to interest rate benchmark reforms, but both, BCBS and IOSCO, consider that amendments to legacy derivative contracts do not require the application of the margin requirements, although the position may be different under relevant implementing laws.

Funding plans

(05/03/2019) EBA – Consultation Paper on Guidelines on harmonised definitions and templates for funding plans of credit institutions / Annex 1 to CP on Funding Plans (Instructions) / Annex 2 to CP on Funding Plans (Templates with tracked changes) / Annex 2 to CP on Funding Plans (Templates)
The EBA has published a Consultation Paper (CP) on Guidelines (GL) on harmonised definitions and templates for the reporting of funding plans, in order to reduce uncertainty as regards its implementation, increase the comparability and facilitate better and more automatic validations of data provided. In particular, this CP aligns the definitions and breakdowns of templates with those used in FINREP to facilitate the implementation and reduce reporting burden.

BRRD

(04/03/2019) EC – Delegated Regulation (EU) 2019/348 supplementing Directive 2014/59/EU with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution's failure on financial markets, on other institutions and on funding conditions
The European Commission (EC) has published the Delegated Regulation (EU) 2019/348, on the RTS specifying the criteria for assessing the impact of an institution’s failure of financial markets, on other institutions and on funding conditions. In particular, this Delegated Regulation establishes that competent authorities (CAs) and resolution authorities (RAs) should assess the impact of the failure of an institution (e.g. a credit institution or investment firm) could have through quantitative and qualitative assessments. For credit institutions, the quantitative assessment will consider its size, interconnectedness, complexity of activities and nature of business for calculating its quantitative score.

ESMA newsletter

(04/03/2019) ESMA – Newsletter Nº2
The ESMA has published the second edition of its newsletter providing the full list of publications from February. In particular, this newsletter includes 28 publications on, among others, stress test (e.g. public consultation on ESMA’s draft guidance regarding liquidity stress tests of investment funds), credit rating agencies (CRAs) (e.g. guidelines on the information which CRAs need to report), Brexit (e.g. recognition of three UK CCPs in the event of a no-deal Brexit).

Payment accounts

(01/03/2019) Spanish Government – Proyecto de Real Decreto xx, de xx, de establecimiento de un régimen gratuito de cuentas de pago básicas en beneficio del colectivo en situación de vulnerabilidad o con riesgo de exclusión social
The Spanish Government has published a Draft on a Royal Decree that establishes a free basic payment account regime for the benefit of the collective in a vulnerable situation or those at risks of social exclusion. In particular, this Draft covers the requirements that allow the most vulnerable collective to access to accounts free of charge, defining the concept of free basic payment account, the delimitation of the special situation of vulnerability, the vulnerability certification, the information provided to the client on the access to free accounts and the length of the conditions.

SEPA

(28/02/2019) ECB – SEPA Migration. Impact assessment
The ECB has published an Impact assessment report on the Single Euro Payments Area (SEPA) migration regarding euro credit transfers and direct debits which reflects its views on the fulfilment of the SEPA vision. In particular, this Report covers the following aspects: i) SEPA implementation reports, which reviews previously published literature on the impacts of SEPA migration; ii) impact of migration to the SEPA credit transfer (SCT) and SEPA direct debit (SDD) schemes, which details the actual impacts that adoption of the SEPA schemes has had, including the views of relevant stakeholders based on the feedback collected in all euro countries; and iii) post-SEPA migration challenges, which provides a more detailed look at the areas that still need to be addressed.

ESMA report on financial stability

(28/02/2019) ESMA – Report on Trends, Risks and Vulnerabilities (TRV) No. 1, 2019
The ESMA has published a Report on trends, risk and vulnerabilities (TRV) of EU financial markets for the 2H18. In particular, this Report analyses the main impacts on risks (e.g. overall risk levels for the EU’s financial markets remained stable); securities markets (e.g. they experienced several episodes of short-term volatility); investors; infrastructures and services; and products and innovation (e.g. FinTech continues to drive innovation in financial services). Moreover, the ESMA also provides more details regarding RegTech and SupTech; Alternative Investment Funds (AIFs); Double Volume Cap (DCV) mechanism; Money Market Funds (MMF) in the EU and new stress-testing requirements.

ESMA risk dashboard

(28/02/2019) ESMA – Risk Dashboard 1/2019
The ESMA has published its Risk Dashboard 1/2019, which assess the main risks by risk segments for markets, considering the main risk categories (operational, market, credit, contagion and liquidity risks) and risk sources (macroeconomic environment, political and event risk, interest rate environment, market functioning and EU sovereign debt markets). Moreover, this Risk Dashboard sets out that overall risk levels for the EU’s financial markets remained stable but at high levels for most risk categories, particularly liquidity, market contagion and credit risk.

Brexit / Reporting and disclosure

(28/02/2019) PRA – Supervisory Statement (SS2/19) on PRA approach to interpreting reporting and disclosure requirements and regulatory transactions forms after the UK’s withdrawal from the EU
The Prudential Regulation Authority (PRA) has published the Supervisor Statement (SS) 2/19 on the PRA’s approach regarding the reporting and disclosure requirement after the UK’s withdrawal from the EU. In particular, this SS outlines a general approach on this issue, which is in line with the approach taken more widely when nationalising European requirements; and three approaches to specific cases on reporting and disclosure requirements based on CRR, Solvency II and set out in the PRA Rulebook requirements.

Supervised entities

(27/02/2019) ECB – List of supervised entities (as of 2 January 2019)
The ECB has published the list of supervised entities considered as significant (a total of 117 entities) and less significant credit institutions. In particular, this list is compiled on the basis of significance decisions adopted and notified by the ECB that refer to events that became effective up to 2 January 2019.

CNMV activity plan for 2019

(25/02/2019) CNMV – Líneas estratégicas de la CNMV 2019-2020 y Plan de Actividades para 2019
The Comisión Nacional del Mercado de Valores (CNMV) has presented its Activity Plan for 2019, which includes 44 specific activities and objectives to be completed by the CNMV during the course of 2019, in order to improve the institution’s efficiency, increase its transparency, and promote the exchange of information to the market, investors, and supervised institutions. Further, this Plan defines the three major strategic lines of action that will guide its activity in 2019 and 2020: i) prioritising supervision; ii) boosting the competitiveness; and iii) strengthening the Spanish market and focusing on technological developments in the financial sector.

 

 

© GMS Management Solutions, S.L., 2019. 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.