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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

 

COVID-19

(25/06/2020) FDIC – Final Rule to Mitigate the Deposit Insurance Assessment Effect of Participation in the Paycheck Protection Program (PPP), the PPP Liquidity Facility, and the Money Market Mutual Fund Liquidity Facility
The Federal Deposit Insurance Corporation (FDIC) has published the Final Rule to Mitigate the Deposit Insurance Assessment Effect of Participation in the Paycheck Protection Program (PPP), the PPP Liquidity Facility, and the Money Market Mutual Fund Liquidity Facility which will remove the effect of participation in the PPP and borrowings under the PPPLF on various risk measures used to calculate an IDI’s assessment rate, remove the effect of participation in the PPP and MMLF program on certain adjustments to an insured depository institution’s assessment rate, provide an offset to an insured depository institution’s assessment for the increase to its assessment base attributable to participation in the PPP and MMLF, and remove the effect of participation in the PPP and MMLF when classifying insured depository institutions as small, large, or highly complex for assessment purposes.

(22/06/2020) FCA – Finalised Guidance: Business interruption insurance test case
The Financial Conduct Authority (FCA) has published the Finalised Guidance: Business interruption insurance test case with the aim of highlighting the particular steps firms should be taking to identify the potential implications of the test case on their decisions to reject claims, keep policyholders informed about the test case and its implications for policies, claims and any settlement offers and treat policyholders fairly when the test case is resolved.

(09/06/2020) FCA –  Guidance for firms on mortgages and insurance firms on product value
The Financial Conduct Authority (FCA) has published a Guidance for firms on mortgages and coronavirus which addresses the problems arising for customers that have to resume payments at the end of a payment deferral period. Furthermore, the FCA has also published a Guidance for insurance firms on product value and coronavirus which sets out FCA expectations for insurers and insurance intermediaries to consider the value of their products in light of the exceptional circumstances arising from COVID-19. Both guidance are temporary due to the situation caused by the coronavirus pandemic.

(04/06/2020) IOSCO – Statement on Importance of Disclosure about COVID-19
The International Organization of Securities Commissions (IOSCO) has published a Statement on Importance of Disclosure about COVID-19 which seeks to ensure that investors and other stakeholders have the timely and high quality financial information that they need, along with transparent and entity-specific disclosures, including information about the impact of COVID-19 on the issuer’s operating performance, financial position, liquidity, and future prospects.

(03/06/2020) EBA – Final Report Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis
The European Banking Authority (EBA) has published a Final Report Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis which sets out the following reporting and disclosure requirements for: monitoring the use of payment moratoria and the evolution of the credit quality of the exposures subject to such moratoria in accordance with the GL on moratoria; the new loans subject to specific public guarantees set up to mitigate the effects of the COVID-19 crisis; and reporting requirements on other forbearance measures applied in response to COVID-19 crisis.

 

CRR II

(17/06/2020) EBA –  CP on Draft RTS on the prudential treatment of software assets
The European Banking Authority (EBA) has published a Consultation Paper (CP) on Draft Regulatory Technical Standards (RTS) on the prudential treatment of software assets which specifies the application of the exemption to the deduction of intangible assets from CET 1 and the materiality of the negative effects on the value which do not cause prudential concerns. In this sense, the EBA aimed at achieving an appropriate balance between the need to maintain a certain margin of conservatism/prudence in the treatment of software for prudential purposes, and the acknowledgment of the relevance of software assets from a business and economic perspective, in a context of increasing digital environment.

(16/06/2020) EBA –  CP Draft RTS on the calculation of the stress scenario risk measure under CRR2
The EBA has published the Consultation Paper (CP) Draft Regulatory Technical Standards (RTS) on the calculation of the stress scenario risk measure with the aim of setting out a clear methodology is deemed necessary to ensure a level playing field among institutions in the European Union. In particular, these draft RTS set out the methodologies that institutions are required to use for the purpose of determining the extreme scenario of future shock that, when applied to the NMRF, provides the SSRM. This CP identify two over-arching approaches, although only one of the two will be kept after consultation, that may be used by institutions for determining an extreme scenario of future shock.

(08/06/2020) EBA – Consultation Paper (CP) on Draft Regulatory Technical Standards (RTS) on own funds and eligible liabilities
The EBA has published a CP on draft Regulatory Technical Standards (RTS) on own funds and eligible liabilities which main objective is to adapt the existing RTS on own funds to the new provisions introduced with CRR II. In particular, this draft RTS updates the current own funds requirements, defines harmonise criteria for qualifying as eligible liabilities and amends the rules relating to the supervisory permission for reducing own funds and eligible liabilities instruments..

 

Transparency exercise

(11/06/2020) EBA – Spring 2020 EU-wide transparency exercise
The European Banking Authority (EBA) has published the Spring 2020 EU-wide transparency exercise with the aim of providing market participants with updated information on banks’ exposures and asset quality as of 31 December 2019, prior to the start of the crisis. The data included in the Spring 2020 exercise can serve a benchmark on the condition of the banking sector before the pandemic crisis and as a starting point for the analysis of the crisis impact. The direct impact from Covid-19 on the banking sector will be more evident with the disclosure of 2020 data in the next Transparency exercises.

 

Loan origination and monitoring

(08/06/2020) EBA – Guidelines on loan origination and monitoring
The EBA has published Guidelines on loan origination and monitoring with the aim to improve institutions’ practices and associated governance arrangements, processes and mechanisms in relation to credit granting, in order to ensure that institutions have robust and prudent standards for credit risk taking, management and monitoring, and that newly originated loans are of high credit quality. The guidelines also aim to ensure that the institutions’ practices are aligned with consumer protection rules and respect fair treatment of consumers. Finally, these guidelines apply to all subsidiaries of European financial institutions even if they are located outside the EU.


NPLs

(25/06/2020) BCBS – Technical amendment on the capital treatment of securitisations of non-performing loans
The Basil committee on Banking Supervision (BCBS) has proposed a technical amendment on the capital treatment of securitisations of NPLs to implement certain modifications, without changing any of the existing rules for securitisations of performing assets. The BCBS is of the view that securitisations of NPLs are subject to different risk drivers compared to securitisations of performing assets, which points to a need for a specific treatment to reflect these differences in a risk-sensitive and conservative way.


Deposits Guarantee Scheme

(23/06/2020) EBA – Report on the peer review of deposits guarantee scheme (DGS) stress tests and the resilience of DGSS
The EBA has published its first Peer review report of DGS stress test and resilience of DGSs which presents the EBA’s conclusions on the first peer review with two main purposes: to assess the resilience of DGSs based on the results of the DGS stress test and to identify good practices and areas for improvement.


Management control

(24/06/2020) EBA – Final report on draft regulatory technical standards (RTS) on criteria to define managerial responsibility and control functions, a material business unit and a significant impact on its risk profile, and categories of staff whose professional activities have a material impact on an institution’s risk profile
The European Banking Authority (EBA) has published the Final report on draft RTS on criteria to define managerial responsibility and control functions, a material business unit and a significant impact on its risk profile, and categories of staff whose professional activities have a material impact on an institution’s risk profile. The objectives of the draft RTS are to harmonise the criteria for the identification of staff whose professional activities have a material impact on an institution’s risk profile in order to ensure a consistent approach to the identification of such staff across the EU. In order to achieve this goal, the draft RTS set out qualitative and appropriate quantitative criteria for the identification of categories of staff whose professional activities according to CRD requirements.


MiFID II

(10/06/2020) ESMA – Guidelines on certain aspects of the MiFID II compliance function requirements
The European Securities and Markets Authority (ESMA) has published Guidelines on certain aspects of the MiFID II compliance function requirements with the aim to establish consistent, efficient and effective supervisory practices within the European System of Financial Supervision (ESFS) and to ensure the common, uniform and consistent application of certain aspects of the MiFID II compliance function. ESMA also expects these guidelines to promote greater convergence in the interpretation of, and supervisory approaches to, the aforementioned requirements by focusing on a number of important issues, and thereby enhancing the value of existing standards. These guidelines replace the ESMA guidelines on the same topic issued in 2012 and include updates that enhance clarity and foster greater convergence in the implementation, and supervision, of the new MiFID II compliance function requirements.


Investment firms

(25/06/2020) FCA – Discussion Paper (DP) 20/2: A new UK prudential regime for MiFID investment firms
The FCA the Discussion Paper (DP) 20/2: A new UK prudential regime for MiFID investment firms (IFs) for comments on the possible development in the UK of the requirements that the Directive on the prudential supervision of investment firms (IFD) and the Regulation on the prudential requirements of investment firms (IFR) places on EU firms and competent authorities (CAs) with the aim to low regulatory costs, increase the alignment of requirements to business models, strengthen supervisory dialogue, improve competition and obtain better prudential outcomes. In particular, the main changes described in this DP include: i) an update to the initial capital required for authorization, ii) changes to the rules on the definition of capital, iii) new own funds requirements (including the introduction of the K-factor approach), iv) new rules on prudential consolidation, group risk and concentration risk, v) liquidity requirements to all IFs, vi) a new approach for IFs’ internal risk and prudential assessments, and the supervision of those requirements, vii) new requirements on remuneration policies, and viii) changes to reporting and disclosure requirements.

(15/06/2020) EBA – The new regulatory framework for investment firms: EBA Roadmap on Investment Firms / CP on draft RTS prudential requirements for investment firms / EBA data collection for investment firms - Instructions / EBA data collection for investment firms - Template / CP on draft ITS on reporting and disclosures for investment firms and draft RTS on the monitoring of information related to the thresholds for credit institutions reporting requirements for investment firms / Annexes / CP on draft RTS on instruments for investment firms remuneration / CP on draft RTS on pay out in instruments for variable remuneration under IFD.
The EBA has published its roadmap for the implementation of the new regulatory framework for IF and launched consultation papers (CP) on its first set of regulatory deliverables on prudential, reporting, disclosures and remuneration requirements, with the aim to strength the supervision, which will rely more directly on the risks faced by the clients and the investment firms themselves.


Financial statements

(17/06/2020) BoS – Circular 2/2020 / 3/2020 por la que se modifica la Circular 4/2017, a entidades de crédito, sobre normas de información financiera pública y reservada, y modelos de estados financieros
The Bank of Spain (BoS) has issued Circulars 2/2020 and 3/2020 amending Circular 4/2017 to credit institutions on public and confidential financial reporting standards and financial statement formats. The first one aims to adapt Circular 4/2017 to the changes in the international regulations on information requirements for credit institutions, and the second one to allow institutions to make greater use of flexibility in credit risk management practices and the accounting of expected credit losses (ECL).


Solvency II

(02/06/2020) PRA – Supervisory Statement 1/20 on Solvency II: Prudent Person Principle
The Prudential Regulatory Authority (PRA) has published a Supervisory Statement (SS) 1/20 on Solvency II: Prudent Person Principle (PPP) which sets out the PRA’s expectations on firms in accordance with the requirements under the PPP under the Solvency II Directive regarding: i) their development and maintenance of an investment strategy; ii) their management of risks arising from investments and their internal governance within the investment function; and iii) their investment in assets not admitted to trading on a regulated market (hereafter “non-traded assets”) and intragroup loans and participations.


Digitalization on the insurance sector

(17/06/2020) EIOPA – Discussion paper on (re)insurance value chain and new business models arising from digitalisation
The European Insurance and Occupational Pensions Authority (EIOPA) has published a Discussion paper (DP) on (re)insurance value chain and new business models arising from digitalisation, which main aim is to get a better picture on possible fragmentation of the EU insurance value chain and supervisory challenges in order to plan for next steps. In this sense, this DP acts as a first step scrutinising the situation with the purpose to support supervisors in these challenges. To achieve this, the EIOPA expects from interested parties their views on whether they agree with view of the risks and benefits, and whether they have any comments or additional proposals on proposed solutions and/or next steps.


Financial resources

(19/06/2020) FCA –  FG 20/1 Our framework: assessing adequate financial resources
The  Financial Conduct Authority (FCA) has published the Finalised Guidance 20/1 Our framework: assessing adequate financial resources with the aim of providing their approach to the assessment of adequate financial resources, for all FCA solo-regulated firms subject to threshold conditions and/or the Principles for Businesses (PRIN). In particular, this Guidance set outs the role of assessing adequate financial resources, expected practices to be adopted by firms when assessing adequate financial resources, and the expectations as to the practices firms should adopt in their assessment of adequate financial resources. It should be highlighted that this guidance does not place specific additional requirements on firms because of COVID-19, but the crisis underlines the need for all firms to have adequate resources in place.


Outsourcing

(10/06/2020) ESMA – CP on Draft Guidelines on outsourcing to cloud service providers
The ESMA has published a Consultation Paper (CP) on Draft Guidelines (GL) on outsourcing to cloud service providers with the aim to help firms to identify, address and monitor the risks that may arise from their cloud outsourcing arrangements (from making the decision to outsource, selecting a CSP, monitoring outsourced activities to providing for exit strategies).

(02/06/2020) IOSCO – Consultation Report on outsourcing principles
The IOSCO has published a Consultation Report on outsourcing principles which comprise a set of fundamental precepts and seven principles. The fundamental precepts cover issues such as the definition of outsourcing, the assessment of materiality and criticality, affiliates, sub-contracting and outsourcing on a cross-border basis. The seven principles set out expectations for regulated entities that outsource tasks, along with guidance for implementation.

 

Other publications of interest

 

 

COVID-19

(25/06/2020) ECB – New Eurosystem repo facility to provide euro liquidity to non-euro area central banks
The European Central Bank (ECB) has decided to set up a new backstop facility, called the Eurosystem repo facility for central banks (EUREP), to provide precautionary euro repo lines to central banks outside the euro area. EUREP addresses possible euro liquidity needs in case of market dysfunction resulting from the COVID-19 shock that might adversely impact the smooth transmission of ECB monetary policy. Under EUREP, the Eurosystem will provide euro liquidity to a broad set of central banks outside the euro area against adequate collateral, consisting of euro-denominated marketable debt securities issued by euro area central governments and supranational institutions. EUREP will be available until the end of June 2021.

(23/06/2020) Fed – Federal and state regulatory agencies issue examiner guidance for assessing safety and soundness considering the effect of the COVID-19 pandemic on financial institutions
The Federal Reserve (Fed), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC) and National Credit Union Administration (NCUA) in conjunction with the state bank and credit union regulators have issued examiner guidance to promote consistency and flexibility in the supervision and examination of financial institutions affected by the COVID-19 pandemic. However, no action on the part of supervised institutions is required. The interagency guidance instructs examiners to consider the unique, evolving, and potentially long-term nature of the issues confronting institutions due to the COVID-19 pandemic and to exercise appropriate flexibility in their supervisory response.

(22/06/2020) FASB – Q&A document on how to apply the taxonomy to COVID-19 pandemic and relief measures
The Financial Accounting Standards Board (FASB) Taxonomy staff has issued a question-and-answer document (Q&A) that responds to frequently asked questions about the application of the US Generally Accepted Accounting Principles (GAAP)  Financial Reporting to disclosures related to the effects of the coronavirus pandemic and relief efforts. The FASB developed this Q&A to provide information on applying the Taxonomy related to disclosures for this unique and evolving situation on the basis of the information and feedback it has received to date.

(22/06/2020) OCC –  Interim Final Rule Reduces Assessments in Response to COVID-19
The OCC has approved an interim final rule (IFR) that will reduce assessments due to be paid to the OCC on September 30, 2020. The OCC is providing this relief in response to the impact of the national emergency related to coronavirus. Under the IFR, assessments due on September 30, 2020, for national banks, federal savings associations, and federal branches and agencies of foreign banks will be calculated using the December 31, 2019, "Consolidated Reports of Condition and Income" for each institution, rather than the June 30, 2020 call report, unless this one is lower. This change will result in lower assessments for most OCC-supervised banks and ensures all banks pay the lower of the two options.

(19/06/2020) EP – COVID-19: Easing rules to encourage banks to lend to companies and households
The European Parliament (EP) has approved an amended to the capital requirement regulation (CRR) to temporarily ensure favourable conditions for banks. This will support credit flows to companies and households and absorb losses, mitigating the economic consequences of the COVID-19 lock-down. The adopted changes include: i) deferred application of the leverage ratio buffer by one year to January 2023; ii) pensioners or employees with a permanent contract will be able to get a loan under more favourable prudential conditions; iii) advanced application of both the SME and infrastructure supporting factor; iv) banks will now be able to treat some software as their own capital, an exemption that will kick in earlier than planned; and v) liquidity measures provided by central banks in a crisis context will be effectively channelled by banks to the economy.

(19/06/2020) BoE – Update on the Contingent Term Repo Facility (CTRF)Changes to the provision of US dollar repo operations from July 2020
The Bank of England (BoE) has announced that, in light of continued improvements in funding market conditions and recent usage patterns, it will discontinue 1-month Contingent Term Repo Facility (CTRF) operations at the end of June 2020. The final operation is scheduled to take place on 26 June 2020. Furthermore, the BoE, in co-ordination with other central banks, has decided to reduce the frequency of 7-day maturity operations from daily to three times per week commencing 1 July 2020, which provide liquidity via the standing US dollar liquidity swap line arrangements.

(18/06/2020) FCA – Updated guidance for firms: Personal loans and coronavirus / Credit cards and coronavirus / Overdrafts and coronavirus / Credit cards and personal loans instrument
The Financial Conduct Authority (FCA) has updated its guidance for firms related to the COVID-19 outbreak. The temporary guidances that have been updated are the ones related to: i) personal loans and coronavirus ii) credit cards (including retail revolving credit) iii) overdrafts and iv) COVID-19 credit cards and personal loans instrument.

(18/06/2020) EBA – EBA extends deadline for the application of its Guidelines on payment moratoria to 30 September
The EBA has decided to extend the application date of its Guidelines on legislative and non-legislative moratoria to 30 September 2020. With EU economies not yet fully opened, this extension shows the importance of a continued support to the measures taken by banks to extend loans in response to the extraordinary nature of the current situation. This extension would ensure that adequate treatment for borrowers is available across the EU, considering that the Covid-19 crisis has been affecting EU countries in a different way and at a different pace.

(15/06/2020) Fed – Federal Reserve Board announces it will be seeking public feedback on proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations
The Fed announced it will be seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations. As with the existing Main Street Lending Program, which targets small and medium-sized businesses, the proposed expansion would offer loans to small and medium-sized nonprofits that were in sound financial condition before the coronavirus pandemic and could benefit from additional liquidity to manage through this challenging period. Loan terms under the proposed Main Street nonprofit loans, including the interest rate, deferral of principal and interest payments, and five-year term, are the same as for Main Street business loans.

(12/06/2020) EC –  Commission Statement on consulting Member States on proposal to expand State aid Temporary Framework to further support micro, small and start-up companies and incentivise private investments
The European Commission (EC) has sent to Member States for consultation a draft proposal to further extend the scope of the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the coronavirus outbreak. The EC is proposing to further extend the scope of the Temporary Framework by enabling Member States (i) to support certain micro and small enterprises, including start-ups that were already in difficulty before 31 December 2019, and (ii) to provide incentives for private investors to participate in coronavirus-related recapitalisation measures.

(12/06/2020) EIB –  New EIB report: Banks in Central, Eastern and Southeastern Europe revise outlook for the coming months sharply
The European Investment Bank (EIB) has published a report which provides insights into banking group activities and business expectations in Central, Eastern and Southeastern Europe (CESEE). The report analyses portfolios, demand and supply for financing and the development of non-performing loans. The report includes a special analysis on banking group expectations before and after the impact of the coronavirus pandemic. According to the report, the banking sector in CESEE is likely to face one of its worst years since the global financial crisis in 2007-2008 due to the coronavirus pandemic. From a banking sector perspective, the region entered the crisis on a strong footing, with easing credit standards and robust demand for loans in the past six months.

(09/06/2020) EP –  COVID-19: Revised rules to encourage banks to lend to companies and households
The Economic and Monetary Affairs Committee of the European Parliament have approved more flexibility in EU banks prudential rulebook to focus on lending to the COVID-19 stricken economy. Among the adopted changes, it can be highlighted the extension by two years of the transitional arrangements for IFRS 9, deferred application of the leverage ratio buffer by one year to January 2023 and that banks will no longer be required to deduct certain software assets from their capital, supporting an accelerated digitalisation of the banking sector.

(09/06/2020) ECB –  ECB report shows areas for improvement in banks’ lending standards before the COVID-19 crisis
The ECB has published a report on banks’ credit underwriting standards, which highlights some weaknesses in the way banks have granted and priced new loans in recent years. The report, which is based on data on new lending by banks from 2016 to 2018, contains a number of industry-wide findings, including that banks with high levels of non-performing loans (NPLs) tended to grant housing loans more conservatively than other banks and that not all banks paid sufficient attention to risk-based pricing, particularly to ensure that loan pricing at least covered expected losses and costs.

(09/06/2020) ESMA –  ESMA extends deadline for responses to consultation on EMIR REFIT
The ESMA has decided, in view of the effects of the ongoing COVID-19 pandemic on stakeholders and market participants, to extend the response date for the consultation on the technical standards on reporting, data quality, data access and registration of Trade Repositories under EMIR REFIT from 19 June to 3 July 2020.

(08/06/2020) ESRB / EIOPA / BoE & PRA – The ESRB takes second set of actions in response to the COVID-19 / EIOPA supports the ESRB’s call on enhanced monitoring of liquidity risks in the insurance sector / Joint statement by the BoE and PRA on the ESRB recommendations for the restriction of distributions
The European Systemic Risk Board (ESRB) has announced a second set of actions in response of the COVID-19 pandemic. Among the actions, it can be highlighted the establishment of an EU-wide framework to monitor the financial stability implications of the support measures. With this framework, the ESRB intends to complement and enhance what is being done at the national level by fostering the exchange of experiences and early identification of cross-sectoral and cross-border issues. The EIOPA has announced its support to the views expressed by the ESRB regarding the importance of improving the monitoring of liquidity risks in the insurance sector with the aim to enhance Europe’s preparedness to potential future shocks. Meanwhile, the BoE and the Prudential Regulation Authority have note that in the context of the UK’s withdrawal from the EU, this Recommendation applies to UK authorities during the transition period.

(08/06/2020) Fed – Federal Reserve Board expands its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support
The Federal Reserve (Fed) has expanded its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support. The Fed lowered the minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years, providing borrowers with greater flexibility in repaying the loans. Furthermore, the Fed expects the Main Street program to be open for lender registration soon and to be actively buying loans shortly afterwards.

(03/06/2020) Fed – Expansion in the number and type of entities eligible to directly use the Municipal Liquidity Facility
The Federal Reserve (Fed) has announced an expansion in the number and type of entities eligible to directly use its Municipal Liquidity Facility (MLF). Under the new terms, all US states will be able to have at least two cities or counties eligible to directly issue notes to the MLF regardless of population. Governors of each state will also be able to designate two issuers in their jurisdictions whose revenues are generally derived from operating government activities (e.g. public transit, airports, toll facilities, and utilities) to be eligible to directly use the facility.

(29/05/2020) PRA – Q&A on CRR requirements for property valuations
The PRA has published a set of Q&As answering some FAQs regarding residential and commercial property valuations for CRR purposes. In particular, given the disruption in the property market caused by COVID-19, firms have identified difficulties in conducting physical inspections due to social distancing measures, obtaining reliable property valuations and determining appropriate approaches to suspended or unreliable house price indices.


Annual reports

(18/06/2020) BoE/PRA – Bank of England Annual Report and Accounts 2020 / Prudential Regulation Authority Annual Report 2019/20
The Bank of England (BoE) and the Prudential Regulation Authority (PRA) have published its Annual Reports and Accounts for the period from 1 March 2019 to 29 February 2020, which provides information on their activities and finances for the preceding year. Among the main strategic goals of the PRA during this period, it can be highlighted: i) robust prudential standards; ii) adapt to changes in the external market; iii) ensure that firms are adequately capitalized; or iv) supervision of operational resilience.

(17/06/2020) CNMV – Informe anual sobre los mercados de valores y su actuación 2019
The Comisión Nacional del Mercado de Valores (CNMV) has published the annual report for 2019 on the stock markets and their performance. In 2019, the number of entities registered with the CNMV increased overall, especially the number of venture capital and closed-end investment company managers (SGEIC), but also the number of fund managers (SGIIC) and investment service companies (ESI). He also highlighted the activity of creating venture capital funds and companies. The supervision of institutions in aspects of conduct was particularly concerned with matters such as online operations, suitability and convenience tests and the marketing of complex products to retail investors. In addition, the CNMV opened 18 new disciplinary proceedings, with proposed fines of 9.3 million euros (5.01 million in 2018).

(17/06/2020) EIOPA – Report on supervisory Activities in 2019 / Annual report 2019
The EIOPA has published its Annual report and the Report on supervisory activities in 2019 highlighting activities and achievements throughout the course of the year, covering both prudential and conduct of business supervision. A key area of work in 2019 focused on proposing amendments to Solvency II in the context of the 2020 Review of Solvency II as a result of the identification of inconsistencies in the implementation of some areas of Solvency II. In the area of supervision of emerging risks, EIOPA concluded a thematic review on the use of Big Data analytics in motor and health insurance and carried out a public consultation on draft Guidelines on information and communication technology security and governance.

(15/06/2020) ESMA –   2019 Annual Report / Updated 2020 Annual Work Programme
The ESMA has published its Annual Report, which reviews the achievements from 2019 against its mission of enhancing investor protection and promoting stable and orderly financial markets in the European Union. The Annual Report sets out ESMA’s key actions taken in the previous year. In addition to that and amid the COVID-19 outbreak, the ESMA’s work has been recently focusing on its response to the crisis. In order to reflect these challenging times for the financial markets, ESMA has also published a revised version of its 2020 annual Work Programme. The latter includes the Authority’s additional work on its immediate reaction to the crisis and indicates potential deprioritization regarding ongoing and future mandates.

(11/06/2020) EBA –  EBA publishes its 2019 Annual Report
The EBA published today its 2019 Annual Report, which provides a detailed account of all the work the Authority achieved in the past year and anticipates the key areas of focus in the coming year. EBA’s priorities for 2020 will be: i) supporting the deployment of the risk reduction package and the implementation of global standards in the EU; ii) providing efficient methodologies and tools for supervisory convergence and stress testing; iii) moving towards an integrated EU data hub and a streamlined reporting framework; iv) making AML a real priority  for the EU; v) contributing to the sound development of financial innovation and sustainability; vi) promoting an operational framework for resolution; and vii) ensuring effective cooperation with third countries.

(08/06/2020) BdE – Proyecciones macroeconómicas de la economía española (2020-2022):contribución del Banco de España al ejercicio conjunto de proyecciones del Eurosistema de junio de 2020
The Bank of Spain (BoS) has published macroeconomic projections of the Spanish economy for the period 2020-2022. The BoS projects that in the early recovery scenario Spanish GDP would fall by 9% this year, and rebound by 7.7% and 2.4%, respectively, in 2021 and 2022. Under the gradual recovery scenario, economic recovery would be slower, so that GDP would fall by 11.6% in 2020 and grow by 9.1% and 2.1% in each of the following two years. All components of demand, with the exception of public consumption and investment, would show substantial contractions in 2020 and rebound strongly thereafter. The general government deficit would rise to 9.5% this year in the early recovery scenario and 11.2% in the gradual recovery scenario.

(29/05/2020) EBA – Report on Convergence of supervisory practices for 2019
The EBA has published a Report on convergence of supervisory practices in 2019, with the objective of foster and promote supervisory convergence across the EU in order to bring about strong supervisory standards and a common supervisory culture. In particular, this report covers the following topics: i) supervisory convergence across the EU and EBA tools to promote it; ii) convergence in the supervisory review and evaluation process and in ongoing supervision; iii) convergence in the continuum between ongoing supervision, recovery and resolution; iv) convergence in supervisory colleges; v) EBA policy work supporting supervisory convergence; vi) training as a convergence tool; vii) EBA 2020 convergence plan, and viii) key tasks for supervisory colleges in 2020.


Supervisory convergence

(29/05/2020) ESMA – Ending of the Supervisory Coordination Network
The ESMA has announced the finalisation of the work of the Supervisory Coordination Network (SCN), which was established in 2017 in order to ensure a high level of consistency in authorisation and supervision, and to protect the integrity of the EU Single Market, by discussing the relocation cases of firms, activities or functions into the EU27. In particular, the SCN is ending its work because the ESMA with all the information compiled by the SCN, has set up a coordination model that facilitates open discussions and allows supervisors to reach practical common supervisory solutions.


Solvency II / MiFID II / AML/CFT Directive/MiFIR

(11/06/2020) MINECO –  Borrador RD sobre información estadístico-contable de los distribuidores de seguros y de transposición en lo concerniente al sector asegurador Solvencia II, MiFID II y la Directiva AML/CFT
The Ministry of Economic Affairs and Digital Transformation (MINECO) has published the draft Royal Decree on statistical-accounting information of insurance distributors and transposition with regard to the insurance sector of Solvency II, MiFID II and the Directive on the prevention of the use of the financial system for the purpose of money laundering and financing of terrorism (AML/CFT). The objective of this RD is to improve the convergent application of EU law in cases of cross-border insurance activity, establishing the notification requirements for cases where there is significant cross-border insurance activity or a crisis situation, as well as the conditions for the creation of cooperation platforms. Reinforce communication to the European Insurance and Occupational Pensions Authority (EIOPA) by the Directorate-General for Insurance and Pension Funds in cases of application for authorisation of use and modification of internal models.

(11/06/2020) ESMA –  ESMA publishes statement on MiFIR open access and COVID-19
The ESMA has issued a public statement to clarify the application of the MiFIR open access provisions (OAP) for trading venues (TVs) and central counterparties (CCPs) in light of the recent adverse developments related to COVID-19. It also aims to coordinate the supervisory actions of national competent authorities (NCAs) by setting out the issues they should consider when assessing OAP requests. NCAs are expected to take into consideration, to the extent relevant, the relevant adverse developments when taking decisions on open access requests.

(11/06/2020) ECA –  EU action against money laundering in the banking sector to go under auditor scrutiny
The European Court of Auditors has released a note where it points out that despite extensive international cooperation and increasingly sophisticated EU legislation, money laundering remains a huge policy challenge. The auditors will focus on the transfer of EU legislation into Member State law, how risks to the internal market are managed, co-ordination between national supervisors and EU bodies, and the EU’s action to remedy breaches of its AML law at national level. The fieldwork for this audit will address the European Commission’s DirectorateGeneral for Financial Stability, Financial Services and Capital Markets Union, the EBA and the European Central Bank (ECB).

(08/06/2020) ESMA – MiFID II: ESMA issues latest Double Volume Cap data
The ESMA has updated its public register with the latest set of double volume cap (DVC) data under MiFID II. This publication include DVC data and calculations for the period 1 May 2019 to 30 April 2020 as well as updates to already published DVC periods. The number of new breaches is 64: 52 equities for the 8% cap, applicable to all trading venues, and 12 equities for the 4% cap, that applies to individual trading venues. As of 8 June 2020, there is a total of 337 instruments suspended. In addition, ESMA highlights that none of the previously identified breaches of the caps proved to be incorrect thus no previously identified suspensions of trading under the waivers had to be lifted.

(03/06/2020) ESMA – Opinion on Determining third-country trading venues for the purpose of transparency under MiFID II/MiFIR / Opinion on Determining third-country trading venues for the purpose of position limits under MiFID II
The European Securities and Markets Authority (ESMA) has published updated opinions on post-trade transparency and position limits under MiFID II and MiFIR following its assessment of over 200 third-country trading venues (TCTV) against criteria published in opinions in 2017. Although ESMA considers that this exercise has now been finalised, it remains open to future submissions from TCTVs, should they have EU market participants which consider that such assessment would be relevant.

(18/06/2020) Fed – Federal Reserve announces FraudClassifier Model to help organizations classify fraud involving payments
The Federal Reserve (Fed) has published the FraudClassifier model, which is a set of tools and materials to help provide a consistent way to classify and better understand the magnitude of fraudulent activity and how it occurs across the payments industry. The key advantage of the FraudClassifier model is the ability for organizations to use it to classify fraud independently of payment type, payment channel or other payment characteristics. The model presents a series of questions, beginning with who initiated the payment to differentiate payments initiated by authorized or unauthorized parties. Each of the classifications is supported by definitions that allow for consistent application of the FraudClassifier model across the industry.

(15/06/2020) EBA –  EBA calls for input to understand impact of de-risking on financial institutions and customers
The EBA issued today a call for input to understand the scale and drivers of ‘de-risking‘ at EU level and its impact on customers. This call, which forms part of the EBA’s work to lead, coordinate and monitor the EU financial sector’s Anti-Money Laundering / Combating the Financing of Terrorism (AML/CFT) efforts, aims primarily to understand why financial institutions choose to de-risk instead of managing the risks associated with certain sectors or customers. The call for input runs until 11 September 2020.

(04/06/2020) ESMA – Updated reporting instructions for Money Market Fund (MMF) reporting
The European Securities and Markets Authority (ESMA) has published the updated reporting instructions (v1.1) to be used for reporting under the Money Market Fund Regulation (MMFR). This update follows feedback received by market participants after the publication of the first version of the XML schema and an assessment of the technical committee. Reporting entities should use the version v1.1 to submit reports required under Article 37 of MMF regulation by September 2020. The reference period for the first reporting is Q1 2020, meaning that MMF Managers shall report in September 2020 quarterly reports for both the Q1 and Q2 reporting periods.


FASB standards

(10/06/2020) FASB –  FASB approves new standards and a proposed effective date delay at final meeting of chairman Russell G. Golden
The Financial Accounting Standards Board (FASB) has approved the issuance of two upcoming Accounting Standards Updates (ASUs): one that improves financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity, and one that improves how not-for-profit organizations present and disclose contributed nonfinancial assets, also known as gifts-in-kind. The FASB also voted to issue a proposed ASU that would delay the effective date for its standard that improves financial reporting for insurance companies that issue long-duration contracts, such as life insurance, disability income, long-term care, and annuities.

(03/06/2020) FASB – Accounting Standards Update June 2020
The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) that grants a one-year effective date delay for certain companies and organizations applying the revenue recognition and leases guidance. However, early application continues to be permitted. The ASU permits private companies and not-for-profit organizations that have not yet applied the revenue recognition standard to do so for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020.


IFRS 17

(25/06/2020) IASB – Amendments to IFRS 17 Insurance Contracts to help companies with implementation
The International Accounting Standards Board (IASB) has issued amendments to IFRS 17 Insurance Contracts aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The fundamental principles introduced when the Board first issued IFRS 17 in May 2017 remain unaffected. The amendments, which respond to feedback from stakeholders, are designed to: i) reduce costs by simplifying some requirements in the Standard; ii) make financial performance easier to explain; and iii) ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time. The deferral of the effective date by two years, to annual reporting periods beginning on or after 1 January 2023.


Supervisory activities

(24/06/2020) EIOPA – Second Discussion Paper on Methodological Principles of Insurance Stress Testing / First Discussion Paper
The European Insurance and Occupational Pensions Authority (EIOPA) has published its second Discussion Paper on Methodological Principles of Insurance Stress Testing. In 2019 EIOPA initiated a process of enhancing its methodology for bottom-up stress testing which resulted in the first Methodological Paper setting out the methodological principles of insurance stress testing. The second Discussion Paper is structured in three sections addressing the following topics: i) stress test framework on climate change; ii) approach to liquidity stress testing; and iii) multi-period framework for the bottom-up insurance stress testing. The Discussion Paper is open for comments until Friday, 2 October 2020.

(17/06/2020) PRA – Insurance Stress Test 2019: Feedback for general and life insurers
The PRA has issued a letter sent to participating firms on insurance Stress Test 2019 and Covid-19 stress testing, on feedback for general and life insurers. This letter is divided in four main parts: i) stress testing the industry in relation to Covid-19; ii) insurance stress test 2019 for general insurers; iii) insurance stress test 2019 for life insurers; and iv) insurance stress test 2019 on climate scenarios.

(15/06/2020) Fed – Federal Reserve Board announces it will resume examination activities for all banks, after previously announcing a reduced focus on exam activity in light of the coronavirus response
The Fed announced that it will resume examination activities for all banks, after previously announcing a reduced focus on exam activity in light of the coronavirus response. In March, the Board announced that it would focus on outreach and monitoring in light of the coronavirus response measures and temporarily reduce its exam activity, with the greatest reduction for smaller banks. Since that time, banks have had time to implement contingency operating plans and adapt their operations, so exam activity will resume. The Fed anticipates that exams will continue to be conducted offsite until conditions improve and will continue to work with banks to understand any specific issues they may be facing.

(02/06/2020) OCC – CRA performance evaluations: May 2020
The Office of the Comptroller of the Currency (OCC) has published a list of Community Reinvestment Act (CRA) performance evaluations for May 2020. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings. Of the 17 evaluations made public this month, 14 are rated satisfactory, and 3 are rated outstanding.

 

Reporting

(22/06/2020) MINECO – Orden ETD/554/2020, de 15 de junio, por la que se aprueban los modelos de información estadística, contable y a efectos de supervisión de los fondos de pensiones y sus entidades gestoras
The Ministerio de Asuntos Económicos y Transformación Digital has approved the order ETD/554/2020 which aims to approve the statistical, accounting and supervisory information models that the managing entities must submit to the General Directorate of Insurance and Pension Funds (DGSFP). All models will be published on the website of the DGSFP to facilitate access to them from a single point and in the interests of supervisory transparency.


Validation rules

(10/06/2020) EBA –  EBA issues revised list of validation rules
The EBA 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. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.


UCITS / AIFs

(04/06/2020) ESMA – Supervisory briefing on the supervision of costs in Undertakings for the Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs)
The ESMA has published a supervisory briefing on the supervision by National Competent Authorities (NCAs) of costs applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs). This briefing comes in response to the need to improve convergence across NCAs in the approach to undue costs. ESMA will closely cooperate with NCAs to promote the application of the supervisory briefing and will take stock of the level of convergence reached across the EU in 2021.


Capital Market Union

(17/06/2020) EP – Draft Report on further development of the Capital Market Union (CMU): improving access to capital market finance, in particular by SMEs, and further enabling retail investor participation
The Committee on Economic and Monetary Affairs of the European Parliament (EP) has published the Draft Report on further development of the Capital Market Union (CMU): improving access to capital market finance, in particular by SMEs, and further enabling retail investor participation. This report focuses on: i) financing business; ii) promoting long-term and cross-border investments and financial products; iii) market architecture; iv) retail investors; v) financial education; vi) digitalization; and vii) the EU’s role in global markets.


Central counterparties

(25/06/2020) CPMI/IOSCO – CPMI-IOSCO publish a report on CCP auctions
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a report entitled “Central counterparty default management auctions – Issues for consideration”. The report outlines certain issues that central counterparties (CCPs) should consider regarding default management auctions processes. The report includes this parts: i) CCP default management auctions: roles and responsibilities; ii) considerations for a successful default management auction; iii) operational considerations; iv) client participation; and v) default of a common participant across multiple CCPs.

(23/06/2020) EU Council – Clearing houses: Presidency and Parliament reach political agreement on recovery and resolution
The European Parliament and Council have reached a deal on a common set of rules for central counterparties (CCPs) and their authorities to prepare for and deal with financial difficulties. The proposed rules aim at providing national authorities with adequate tools to manage crises and to handle situations involving failures of key financial market infrastructures. They build on the same principles as the recovery and resolution framework applying to banks. The main objectives of the reform are: i) to reduce the probability of CCP failure by introducing effective incentives for proper risk management; and ii) in case a financial difficulty would effectively arise, to preserve CCPs' critical functions, to maintain financial stability, and to prevent taxpayers from bearing the costs associated with their restructuring or resolution.

(02/06/2020) ESMA – Final Report: Technical advice on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services
The ESMA has published a final report with technical advice to the EC on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services. In particular, the requirements covered in this technical advice have been carefully designed to address clearing clients and clearing service providers’ concerns and aims to: i) facilitate comparability of the information disclosed; ii) address the process of onboarding clearing clients; iii) standardise the information disclosed to clients bilaterally; and iv) encourage further standardisation of contractual terms.


Net short positions

(11/06/2020) ESMA –  ESMA renews its Decision requiring net short position holders to report positions of 0.1% and above
The ESMA has renewed its decision to temporarily require the holders of net short positions in shares traded on a EU regulated market to notify the relevant NCA if the position exceeds 0.1% of the issued share capital. The measure applies from 17 June 2020 for a period of three months. The temporary transparency obligations apply to any natural or legal person, irrespective of their country of residence. They do not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.


High-risk investments

(18/06/2020) FCA – High-risk investments: Marketing speculative illiquid securities (including speculative mini-bonds) to retail investors
The FCA has published Consultation Paper (CP) on high-risk investments: Marketing speculative illiquid securities (including speculative mini-bonds) to retail investors. The FCA wants to prevent harm to consumers from investing in complex, higher-risk products that they do not understand and are not suitable for them. Investing in these securities can cause unexpected and significant losses for retail investors. The temporary product intervention (TPI) for speculative illiquid securities (SISs) came into effect on 1 January 2020 and lasts for 12 months. It restricts speculative mini-bonds and preference shares from being mass-marketed to retail investors. It also improves disclosure of key risks and costs to the limited number of retail investors who are still eligible to receive promotions for them. This CP proposes making the TPI permanent, with a small number of changes.


Swap margin rule

(25/06/2020) Fed – Agencies finalize amendments to swap margin rule
The Fed, FDIC, OCC along with the Farm Credit Administration and Federal Housing Finance Agency have finalized changes to their swap margin rule to facilitate the implementation of prudent risk management strategies at banks and other entities with significant swap activities. Under the final rule, entities that are part of the same banking organization generally will no longer be required to hold a specific amount of initial margin for uncleared swaps with each other, known as inter-affiliate swaps. The final rule will give firms additional flexibility to allocate collateral internally and support prudent risk management and safety and soundness. To help transition from LIBOR to alternative reference rates, the final rule allows swap entities to amend legacy swaps to replace the reference to LIBOR or other reference rates that are expected to end without triggering margin exchange requirements.


Transferred loans

(25/06/2020) FDIC – Rule to Codify Permissible Interest on Transferred Loans
The FDIC has issued a final regulation to codify the agency’s longstanding guidance that the valid interest rate for a loan is determined when the loan is made, and will not be affected by a subsequent sale, assignment, or other transfer of the loan. The rule reaffirms the longstanding ‘valid when made’ doctrine, a nearly 200-year-old principle in contract law. In codifying the longstanding FDIC guidance, the final rule addresses marketplace uncertainty regarding the enforceability of the interest rate terms of a loan agreement following a bank’s assignment of a loan to a non-bank. It also promotes safety and soundness in the banking system by giving certainty around loans into the secondary market.

(29/05/2020) OCC – Final Rule to Clarify Permissible Interest on Transferred Loans
The OCC has published a final rule to clarify that when a national bank or savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer continues to be permissible after the transfer. This permissible interest term is basically, the maximum interest rate permitted by federal law to any any state-chartered or licensed lending institution in the state where the bank is located.


Loan-to-deposit ratios

(02/06/2020) Fed/FDIC/OCC – Host state loan-to-deposit ratios
The Board of Governors of the Fed, Federal Deposit Insurance Corporation (FDIC) and OCC have published a document with all the host state loan-to-deposit ratios that they will use to determine compliance with the Riegle-Neal Interstate Banking and Branching Efficiency Act. In order to comply with this act, the bank should have a statewide loan-to-deposit ratio of a least one-half of the published host state loan-to-deposit ratio. In particular, in this document a set of different host state loan-to-deposit ratios are stablished for all the different States in the US.


Credit line

(29/05/2020) IMF – Approval of a two-year US $23.93 Billion Flexible Credit Line Arrangement for Chile
The International Monetary Fund (IMF) Executive Board has approved a two-year US $23.93 billion Flexible Credit Line arrangement for Chile, designed for crisis prevention. In particular, this arrangement should boost confidence, and combined with the comfortable level of international reserves, provide insurance against downside risks. Furthermore, the authorities intend to treat the arrangement as precautionary financing.


Reserve balances

(29/05/2020) Fed – February 2020 Senior Financial Officer Survey
The Fed has published the results of the Senior Financial Officer Survey of February 2020 to gather banks’ views about their strategies and practices for managing reserve balances. In particular, this survey is used by the Fed Board to obtain information about deposit pricing and behavior, bank liability management, the provision of financial services, and reserve management strategies and practices. It includes responses from banks that held approximately three quarters of total banking system reserve balances at the time of the survey.


Liabilities

(29/05/2020) Fed – Announcement of Financial Sector Liabilities
The Fed has published the annual determination of aggregate consolidated liabilities of financial companies, as required by the Dodd-Frank Act. This act prohibits a financial company from combining with another company if the resulting company's liabilities would exceed 10 percent of the aggregate consolidated liabilities of all financial companies. In particular, this annual determination shows that the aggregate consolidated liabilities equal $21,229,884,414,000, and this measure is in effect from July 1, 2020 through June 30, 2021.


Financial markets

(08/06/2020) ECB – EU structural financial indicators: end of 2019
The ECB has updated its dataset of structural financial indicators for the banking sector in the EU for the end of 2019. This annual dataset comprises statistics on the number of branches and employees of EU credit institutions, data on the degree of concentration of the banking sector in each EU Member State, and data on foreign-controlled institutions in EU national banking markets. As for the number of branches, the structural financial indicators show a further decline in the EU, on average by 6.3%. The share of total assets of the five largest credit institutions, at national level, ranged from 28% to 97%, while the EU average was 65% at the end of 2019. The changes in the share of total assets of the five largest credit institutions varied across countries from -3.1% to 7.8%. In the EU, the average variation was 1.5%.

(29/05/2020) BoE – Consultation Paper Fees regime for financial market infrastructure supervision 2020/21
El Bank of England (BoE) ha publicado un documento consultivo en el que se establecen las comisiones de las infraestructuras del mercado financiero (FMI) previstas para 2020/21 para las FMI que son reconocidas por el BoE y están sujetas al régimen de comisiones de las FMI. En concreto, las propuestas incluyen: i) las tasas de comisión establecidas como parte del requisito de financiación del BoE para 2020/21 para su actividad de supervisión de las FMI y la política que las respalda, tal y como lo permiten las competencias del BoE en materia de comisiones; ii) la forma en que el BoE pretende repartir los excedentes de las comisiones de las FMI de 2019/20; y iii) las enmiendas al proceso de facturación de las comisiones de proyectos especiales (SPF) y las tarifas por hora de las SPF para reflejar los costes actuales del BoE.


Rates

(16/06/2020) ECB – Working group on euro risk-free rates recommends voluntary compensation for legacy swaption contracts affected by the discounting transition to the €STR
The private sector working group on euro risk-free rates has endorsed a recommendation that counterparties voluntarily exchange compensation for legacy swaption contracts affected by the transition of central counterparty discounting from the euro overnight index average (EONIA) to the euro short-term rate (€STR), which is planned for around 27 July 2020. The working group acknowledges that the modalities for implementing voluntary compensation may vary. It decided not to recommend one approach above others, as market feedback did not single out a preferred option.

(11/06/2020) BoE –  Supporting Risk-Free Rate transition through the provision of compounded SONIA
The Bank of England (BoE) published in February a discussion paper with the aim to accelerate the adoption of SONIA as a reference rate in sterling markets. After reviewing market participants’ comments on the proposal, the BoE has confirmed that it will publish a daily SONIA Compounded Index.  It anticipates that publication of the SONIA Compounded Index will commence in early August, although the precise date will be confirmed in due course. Furthermore, given a lack of consensus on both the usefulness of SONIA “period averages” and the conventions underpinning such rates, the BoE will not be producing them at this time.


Market integrity

(02/06/2020) FCA – Policy Statement 20/5: Extending the Senior Managers Regime to benchmark administrators: final rules
The Financial Conduct Authority (FCA) has published a Policy Statement (PS) that sets out the FCA’s response to the feedback received to the Consultation Paper (CP) 19/31 on extending the Senior Managers Regime to Benchmark Administrators. In particular, the extension of the Senior Manager Regime is made for reducing harm to consumers and strengthen market integrity by making employees at benchmark administrators more accountable for their conduct and competence.


Peer review

(18/06/2020) EIOPA – Results of the Peer Review on the Regular Supervisory Report (RSR)
The EIOPA has published the findings of its peer review of the Regular Supervisory Report (RSR). The peer review examined how and to what extent the proportionate approach set out under the Delegated Regulation has been implemented among national competent authorities (NCAs). It also aims to determine if further convergence is needed on the frequency of submission of RSRs. In the peer review, EIOPA analysed legal and regulatory frameworks and national supervisory practices across 31 NCAs in relation to decisions on the frequency of submission of the RSR, and the communication of those decisions to undertakings.

(05/06/2020) ESMA – Peer review methodology
The ESMA has published the Peer review methodology which sets out the methods and tools to conduct peer reviews of NCAs. The new methodology provides for the set-up of ad hoc Peer Review Committees chaired by ESMA staff and the introduction of fast-track peer reviews to be launched in case of an urgent convergence issue. The Methodology is divided in 5 titles: i) the first title provides an overview of the peer review framework and process; ii) the second title relates to the determination of topics for peer reviews; iii) the third describes the peer review process; iv) the fourth title relates to the framework for the follow-up to peer reviews; and v) the fifth title describes the fast track peer reviews.


European Single Electronic Format

(18/06/2020) ESMA – ESMA integrates the 2020 IFRS taxonomy into ESEF RTS
The European Securities and Markets Authority (ESMA) has published a draft amendment to the Regulatory Technical Standards (RTS) on the European Single Electronic Format (ESEF). This update provides a purely technical amendment to the original RTS on the ESEF, incorporating the 2020 version of the IFRS taxonomy published by the IFRS Foundation in March 2020. The 2020 taxonomy will be mandatory for annual financial reports containing financial statements for financial years beginning on or after 1 January 2021. However, issuers will be allowed to adopt it already for 2020 reports on a voluntary basis.


Passport notifications

(18/06/2020) EBA – EBA publishes final revised technical standards to enhance quality and consistency of information for passport notifications
The EBA has published its Final draft amending RTS and Implementing Technical Standards (ITS) on passport notification. The two sets of amending technical standards increase the quality and consistency of information to be provided by a credit institution notifying its home competent authorities when it intends to open a branch or provide services in another Member State, as well as of the communication between home and host authorities. In particular, the amendments focus on: i) requesting the credit institution to indicate as accurate the intended start date of each activity for which the notification is submitted; ii) increasing the granularity of the information on the financial plan to be notified in case of establishment of a branch; and iii) providing additional information in case of termination of the branch.


Climate risks and sustainability

(18/06/2020) BoE – The Bank of England’s climate-related financial disclosure 2020
The BoE has published the first report setting out its approach to managing the risks from climate change across operations, including the steps BoE has taken to improve the understanding of these risks in future years. This report covers BoE’s approach to i) climate-related risk disclosure; ii) governance structures and processes used to manage climate-related financial risk; iii) setting climate strategy and managing its implementation; iv) climate-related financial risk management, including targets and the metrics tracked by the BoE.

(29/05/2020) EEA – EU greenhouse gas emissions kept decreasing in 2018
The European Environment Agency (EEA) has announced that in 2018 in the EU the emissions decreased by 2,1%, primarily by reducing these emissions in the heat and power sector, where emissions from coal burning decreased by almost 50 million tonnes and the use of renewables in electricity generation continued to grow. In particular, emissions have decreased in almost all economic sectors, especially in energy supply, industry and the residential sector; however in the transport sector, emissions have increased due to higher demand and despite climate policies and efforts to improve vehicles efficiency.


Operations and Digital activities

(04/06/2020) EBA – Opinion of the European Banking Authority on obstacles under Article 32(3) of the RTS on strong customer authentication (SCA) and common and secure communication (CSC)
The EBA has published an Opinion on obstacles to the provision of third party provider services (TPPs) under the Regulatory Technical Standards (RTS) on strong customer authentication (SCA) and common and secure communication (CSC). The Opinion aims to support the objectives of the revised Payment Services Directive (PSD2) of enabling customers to use new and innovative payment services offered by TPPs by addressing a number of issues regarding the interfaces provided by account servicing payment service providers (ASPSPs) to TPPs. With this Opinion, EBA expects that Competent Authorities (CAs) take the necessary actions to ensure compliance of the interfaces offered by ASPSPs with the PSD2 and the RTS and, where obstacles are identified, to ensure that ASPSPs remove them within the shortest possible time.

(04/06/2020) OCC – Notice of Proposed Rulemaking for public comment to update the rules for national bank and federal savings association activities and operations / Advance Notice of Proposed Rulemanking seeking comment on rules on national banks’ and federal savings associations’ digital activities
The OCC has published a Notice of Proposed Rulemaking (NPR) for public comment to update the OCC rules for national bank and federal savings association activities and operations. In addition, the OCC has also released an Advance Notice of Proposed Rulemaking (ANPR) seeking comment on rules on national banks’ and federal savings associations’ digital activities. In particular, the NPR is part of the OCC’s continual effort to modernize its rules and remove unnecessary requirements to relieve banks of unnecessary burden, encouraging economic opportunity and promoting the safe, sound, and fair operation of the federal banking system, and the ANPR is part of the OCC’s effort to support the evolution of the federal banking system and its ability to meet the needs of the consumers, businesses, and communities it serves.

 

© GMS Management Solutions, S.L., 2020. 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.