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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

 

Stress test

(24/01/2018) EBA – Update. 2018 EU-wide stress test final methodology
The EBA has communicated, regarding the Final Methodology of the 2018 EU-wide stress test published on 20th November 2017, the launch of this exercise on 31 January 2018. Further, the EBA will publish the common macroeconomic scenarios on this date.

IFRS 9

(15/01/2018) EBA – Final Guidelines on uniform disclosures under the proposed draft Article 473a of CRR as regards the transitional period for mitigating the impact on own funds of the introduction of IFRS 9
Following the consultation launched in July 2017, the EBA has published Final Guidelines (GL) on disclosure of IFRS 9 transitional arrangements, which specify a uniform disclosure template to be applied by institutions in order to ensure consistency and comparability of data disclosed during the transitional period. In particular, the GL cover the scope of application and add an annex with the content, disclosure frequencies and format of the GL.

Risk management in USA

(05/01/2018) Fed – Proposed supervisory guidance on management of business lines and independent risk management and controls for large financial institutions
The Fed has now published a Proposed supervisory guidance on management of business lines and independent risk management and controls for large financial institutions aiming to clarify the Fed supervisory expectations regarding risk management for large financial institutions, and delineate the roles and responsibilities for individuals and functions related to such risk management. In particular, this proposed guidance identifies three core principles of: i) effective senior management, ii) management of business lines, and iii) independent risk management (IRM) and controls.

 

 

Other publications of interest 

 

Accounting regulation

(25/01/2018) IFRS Foundation – Standards and financial stability
The IFRS Foundation has published a document on standards and financial stability which explores the impact of accounting volatility on financial stability, how IFRS 9 Financial Instruments and IFRS 17 Insurance Contracts contribute to stability, and the relationship between the IFRS Foundation and regulators.

Risk dashboard 3Q17

(25/01/2018) EIOPA – Risk Dashboard Q3 2017
The EIOPA has published its updated Risk Dashboard based on the 3Q17 Solvency II data, which summarises the main risks and vulnerabilities in the EU insurance sector. The results show that the risk exposure of this sector remains overall stable, the solvency ratios have improved, among other aspects.

LCR

(19/01/2018) EBA – List of credit institutions subject to an LCR inflow cap derogation
The EBA has published an updated list of credit institutions exempted from or subject to a higher cap on liquidity inflows in the calculation of the LCR. In particular, this updated list adds three new institutions (FCE Bank Plc., John Deere Bank S.A., and Teambank AG Nürnberg) to the previous list published in May 2017.

Non-performing loans (NPLs)

(18/01/2018) EC – Progress in the Reduction of Non-Performing Loans in Europe
The European Commission (EC) has published its first progress report on the Action Plan to tackle non-performing loans (NPLs) in Europe, which includes an update on the EC´s ongoing work to deliver on the elements of the ECOFIN Action Plan. Further, this report includes, among others, the progress on realising the adoption of the EU-wide NPE Guidelines, the development of macroprudential approaches to tackle the build-up of future NPLs, etc.

Financial Services Compensation Scheme in UK

(18/01/2018) PRA / FCA – Consultation Paper (CP) 3/18 on Financial Services Compensation Scheme – Management Expenses Levy Limit 2018/19
The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have published the Consultation Paper (CP) 3/18 that sets out the proposals for the management expenses levy limit (MELL) for the Financial Services Compensation Scheme (FSCS). The MELL is proposed to be £77.7 million for 2018/19. This includes a management expenses budget of £72.7 million and an unlevied contingency reserve of £5 million.

Deposit guarantee schemes

(17/01/2018) EBA – Report on the implementation of its Guidelines on methods for calculating contributions to deposit guarantee schemes
The EBA has published a Report on the implementation of its GL on methods for calculating contributions to deposit guarantee schemes (DGSs), which assesses authorities' compliance with the principles outlined in the EBA GL. In this regard, the EBA’s analysis shows that the GL have broadly met the aim of introducing different contribution levels for institutions according to their riskiness, although the methods used should be reviewed in the future to ensure a more consistent approach.

Risk dashboard 3Q17

(16/01/2018) EBA – Risk Dashboard Q3 2017
The EBA has published a periodical update of its Risk Dashboard and parameters summarising the main risks and vulnerabilities in the EU banking sector by a set of Risk Indicators in 3Q17. The main findings identified are, among others, the strengthening of the EU bank’s capital ratios, a modest downward trend of the NPL ratio, and the stability of the leverage ratio.

Dividend distribution

(11/01/2018) ECB – Recommendation on dividend distribution policies
The ECB has published a recommendation regarding dividend distribution policies of credit institutions, which should be established using conservative and prudent assumptions in order to satisfy the applicable capital requirements and the outcomes of the supervisory review and evaluation process (SREP). In particular, these requirements for the payment dividends in 2018 for the financial year 2017 are established for 3 categories of credit institutions according to the satisfaction of the applicable capital requirements.

Solvency II in UK

(11/01/2018) PRA – Consultation Paper 2/18. Changes in insurance reporting requirements / Annex - Templates
The Prudential Regulation Authority (PRA) has published the Consultation Paper (CP) 2/18 on changes in insurance reporting requirements with the aim of reducing the burden for Solvency II firms. In particular, the PRA proposes, among others, to amend National Specific Templates (NSTs) such as ‘NS.01 With-profits value of bonus’; ‘NS.05 Revenue account life’ or ‘NS.06 Business model analysis (life)’ for the financial year-end 2018 submissions.

MiFID II

(09/01/2018) ESMA – MiFID II position management controls for commodity derivatives
The ESMA has published a first budget of position management controls for commodity derivatives under MiFID II. In this regard, the ESMA specifies that investment firms or market operators operating trading venues have to inform their national competent authority (NCAs) of the details of position management controls which are, among others, the ‘Financial Conduct Authority, UK’; the ‘Spanish CNMV’ or the ‘Swedish Financial Supervisory Authority’.

MREL in UK

(08/01/2018) PRA – CP 1/18 on Resolution planning: MREL reporting / Annex
La PRA has published the CP 1/18 on resolution planning regarding the MREL reporting which sets out its proposed expectations for reporting on the MREL through updates to Supervisory Statement (SS) 19/13 ‘Resolution planning’. In particular, the PRA proposes that firms provide information on MREL resources using three templates: i) ‘MREL Resources (MRL01.00)’, ii) ‘MREL Resources Forecast (MRL02.00)’, and iii) ‘MREL Debt (MRL03.00)’.

© GMS Management Solutions, S.L., 2018. 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.