Management Solutions compiles new regulations published by regulators of the financial services industry on a global level (BCBS, FSB), a supranational one (with a focus on Europe), and on some local geographies (USA, UK and Spain).
ESG practices of Investment Advisers and Investment Companies
(25/05/2022) SEC – Proposed rules on the Enhanced Disclosures by Certain Investment Advisers and Investment Companies about ESG Practices
The Securities Exchange Commission (SEC) have proposed for public comments New rules on the enhanced disclosures by certain investment advisers and investment companies about ESG investment practices. The proposed rules and form amendments are designed to create a consistent, comparable, and decision-useful regulatory framework for ESG advisory services and investment companies to inform and protect investors while facilitating further innovation in this area of the asset management industry.
(24/05/2022) BoE – Results of the 2021 Climate Biennial Exploratory Scenario: Financial risks from climate change
The Bank of England (BoE) has published the Results of the 2021 CBES which is the first exploratory scenario exercise on climate risk, involving the largest UK banks and insurers aiming to assist in ensuring the financial system is resilient to climate-related financial risks. Regarding firms´climate risk management the inability to capture appropriate and robust data in certain areas is a common limitation, which means many climate risks are only being partially measured. One finding on firms´ exposures to climate risks is that across scenarios, projections show that if firms do not respond effectively, climate risks could cause a annual drag on profits of around 10-15% on average. Lastly, firms reported plans to reduce their exposure to carbon-intensive sectors. That means that many of them may struggle to access finance as the transition progresses, especially from banks.
(20/05/2022) EIOPA – Discussion paper on physical climate change risks
The European Insurance and Occupational Pensions Authority (EIOPA) has published the Discussion paper on physical climate change risks, which is a follow-up to the report published in 2020 on the sensitivity analysis of climate-change related transition risks. The Objective of the paper is to provide an assessment of the European insurance sector’s exposure to climate-related hazards and inform future work in this field.
(13/05/2022) ESMA – Declaración pública sobre la transparencia en la aplicación de la IRFS 17 Contratos de Seguros
The European Securities and Markets Authority (ESMA) has published the public statement on the transparency on implementation of IFRS 17 Insurance Contracts in order to promote its consistent application and implementation by issuers. In this statement, the ESMA highlights the need for issuers to provide relevant and comparable information in their financial statements that enables users to assess the possible impact that IFRS 17 will have in the period of initial application.
(04/05/2022) EP and the Council – Data Governance Act
The European Parliament (EP) and the Council have approved the Data Governance Act which will set up robust mechanisms to facilitate the reuse of certain categories of protected public-sector data, increase trust in data intermediation services and foster data altruism across the EU. The aim of this new regulation it is not to amend or remove the substantial rights on access and use of data, but to complement the Directive on open data and the re-use of public sector information.
(11/05/2022) PRA – Insurance Stress Test 2022
The Prudential Regulation Authority (PRA) has launched the 2022 Insurance Stress Test. For that purpose, the PRA has selected 17 large regulated life insurers and 17 large regulated general insurers to provide information about the impact of a range of stress scenarios on their business. Some novelties compared to the previous exercise that was conducted in 2019 have been introduced, such as the obligation to provide a results and basis of preparation (RBP) report in which each firm is required to set out in its governance process and quality assurance in completing this exercise.
(02/05/2022) ESAs – ESAs consult on sustainability disclosures for simple, transparent and standardised securitisations
European Supervisory Authorities (EBA, EIOPA and ESMA- ESAs) have published the Joint Consultation Paper on sustainability disclosures for simple, transparent and standardised securitisations (STS) securitizations, which provides the content, methodologies, and presentation of information about the principal adverse impacts on sustainability factors of the assets financed by the underlying exposures of securitisations.
Climate stress test
(04/04/2022) EIOPA – Stress test climático de 2022 para IORPs.
The European Insurance and Occupational Pensions Authority (EIOPA) has published its first climate stress test to gain insights into the effects of environmental risks on the European occupational pension sector. The stress test focuses on the impact on IORPs’ investments, yet also addresses the effects on IORPs’ financial situation, including the financing by sponsoring undertakings. Among the documents published are the reporting templates for the exercise and a support tool.
Other publications of interest
(02/06/2022) ESAs – ESAs provide clarifications on key areas of the RTS under SFDR
The European Supervisory Authorities (EBA, EIOPA and ESMA, ESAs) have published a statement providing clarifications on the draft regulatory technical standards (RTS) issued under the Sustainable Finance Disclosure Regulation (SFDR), which include the financial product disclosures under the Taxonomy Regulation. The statement is part of the ESAs’ on-going efforts to promote a better understanding of the disclosures required under the technical standards of the SFDR.
(02/06/2022) ESMA – ESMA publishes technical standards to suspend the CSDR buy-in regime
The European Securities and Markets Authority (ESMA), has published a Final Report on amending the regulatory technical standards (RTS) on settlement discipline to postpone the application of the Central Securities Depositories Regulation (CSDR) mandatory buy-in regime for three years. The proposed amendment is based on the expected changes to the mentioned regime presented in the Commission’s legislative proposal for the CSDR Review and on the amendment made to CSDR through the Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT Pilot Regulation), which allows ESMA to propose a later start date for the CSDR buy-in regime.
(01/06/2022) ESAs – ESAs publish the joint Report on the withdrawal of authorisation for serious breaches of AML/CFT rules
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a joint Report, which provides a comprehensive analysis on the completeness, adequacy and uniformity of the applicable laws and practices on the withdrawal of license for serious breaches of the rules on anti-money laundering and countering the financing of terrorism (AML/CFT). The joint Report highlights the importance of the appropriate integration of AML/CFT issues into prudential regulation and supervision, including in the proposal for the Markets in Crypto-Assets Regulation (MiCA), currently under negotiation.
(31/05/2022) IAIS – IAIS Year in Review 2021 highlights progress and key achievements of the past year
The International Association of Insurance Supervisors (IAIS) has published its Year in Review 2021. The report provides an overview of the IAIS role, mission and strategy, then delves into the progress and key achievements of the IAIS in 2021. This year’s edition has a special focus on IAIS work on climate with an overview of the IAIS’ pioneering work and reporting on achievements against the IAIS’ own Environmental Policy. Also included is the new graphical representation of the 2022-2023 Roadmap, to see what is coming up next for the IAIS.
Climate - related financial risks/ Cryptoassets/ G-SIBs
(31/05/2022) BIS – Basel Committee finalises principles on climate-related financial risks, progresses work on specifying cryptoassets' prudential treatment and agrees on way forward for the G-SIB assessment methodology review
The Basel Committee (BIS) met on 27 May and approved a finalised set of principles for the effective management and supervision of climate-related financial risks. It also progressed its work on specifying a prudential treatment of cryptoassets and issuing a second consultation paper, and agreed on a way forward to reflect developments in the European banking union (EBU) on the assessment methodology for global systemically important banks (G-SIBs). In addition, the Committee is continuing to assess risks to and vulnerabilities of the global banking system, including those ensuing from the conflict in Ukraine. The Committee has not yet published revised versions of these documents, but we will send a notification when they are available.
Supervision of investment funds
(31/05/2022) ESMA – ESMA provides supervisors with guidance on the integration of sustainability risks and disclosures in the area of asset management
The European Securities and Markets Authority (ESMA) has published a supervisory report to ensure convergence across the European Union (EU) in the supervision of investment funds with sustainability features, and in combating greenwashing of investment funds by establishing common supervisory criteria for national competent authorities (NCAs) to effectively supervise funds with sustainability features. This document sets out some guidance for the supervision of fund documentation and marketing material, as well as guiding principles on the use of sustainability-related terms in fund names and convergent supervision of the integration of sustainability risks by Alternative Investment Fund Managers (AIFMs) and Undertakings for Collective Investment in Transferable Securities (UCITS) managers.
(30/05/2022) SEC – Proposed rules on investment company name
The Securities and Exchange Commission (SEC) has proposed to amend the rule under the Investment Company Act of 1940 hat addresses certain broad categories of investment company names that are likely to mislead investors about an investment company’s investments and risks. The proposed amendments to this rule are designed to increase investor protection by clarifying the requirement for certain funds to adopt a policy to invest at least 80% of their assets in accordance with the investment focus that the fund’s name suggests. The SEC also is proposing enhanced prospectus disclosure requirements for terminology used in fund names.
(25/05/2022) ECB – Russia-Ukraine war increases financial stability risks, ECB Financial Stability Review finds
The European Central Bank (ECB) has released Its May 2022 Financial Stability Review which argues about the worsening of the financial stability conditions in the euro area as the Russian invasion of Ukraine leads to higher energy and commodity prices and increases risks to euro area inflation and growth. The market reaction to invasion has been largely orderly. Furthermore, profitability prospects for European banks have weakened again, following a strong recovery in 2021.
(25/05/2022) IFRS – Request for Feedback and comment letters: Staff Request for Feedback on the staff draft of the IFRS Sustainability Disclosure Taxonomy
The IFRS foundation, has prepared the staff request for feedback on the IFRS Sustainability Disclosure Taxonomy. The purpose of this request is to support initial research by the IFRS Foundation staff to inform to the International Sustainability Standards Board (ISSB) on the development of proposals for the IFRS Sustainability Disclosure Taxonomy. This request is not an exposure draft or proposed taxonomy.
(24/05/2022) FCA – FS22/2: Driving Value for Money in Defined Contribution Pensions
The Financial Condict Authority (FCA) has set out the feedback received on the proposed framework to assess and promote Value for Money (VFM) in all FCA and TPR-regulated Defined Contribution pension schemes (workplace and non-workplace). The FCA states that it is necessary to have a consistent framework for assessing VFM across Defined Contribution pension schemes to help deliver good outcomes for savers.
Reporting and disclosure
(24/05/2022) EBA – EBA updates mapping between technical standards on Pillar 3 disclosures and technical standards on supervisory reporting (v3.0)
The European Banking Authority (EBA) has published an updated mapping tool between quantitative disclosure data points and relevant supervisory reporting data points. The tool is part of the EBA’s overall objective to make the reporting and disclosure process more efficient and less costly for banks. It aims at facilitating institutions’ compliance with disclosure requirements and improving the consistency and quality of the information disclosed. However, it does not yet include the ESG Pillar 3 templates.
Money Market Funds
(23/05/2022) FCA – DP22/1: Resilience of Money Market Funds
The Financial Conduct Authority (FCA) has launched a joint Discussion Paper (DP) with the Bank of England, and with the endorsement of the Treasury, on reforming Money Market Funds (MMFs). The main aim of the DP is to contribute to the debate about how to reduce UK financial stability risks while also ensuring that the structure of the financial system and UK market support the needs of the real economy in a sustainable and robust way.
(23/05/2022) ESMA – ESMA study looks at funds for lower costs in ESG funds
The European Securities and Markets Authority (ESMA) has published a study looking at the potential reasons behind the relatively lower ongoing costs, and better performance, of environmental, social and governance (ESG) funds compared to other funds, between April 2019 and September 2021. Some of the potential drivers of this outperformance could be that ESG funds are more oriented towards large cap stocks and towards developed economies.
(23/05/2022) EBA – EBA publishes final technical standards to identify shadow banking entities
The European Banking Authority (EBA) has published its final draft Regulatory Technical Standards (RTS) specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures. The final draft RTS clarify that entities carrying out banking activities or services and which have been authorised and supervised in accordance with the EU prudential framework, shall not be considered as shadow banking entities.
(19/05/2022) ESMA – ESMA encourages crowdfunding service providers to accelerate their transition to the new regime
The European Securities and Markets Authority (ESMA) has published its final report on the relevance of extending the transitional period set out in the Crowdfunding Regulation (CR), which applies to Crowdfunding service providers (CSPs) that provide their services only on a national basis. This transitional period is set to expire on 10 November 2022. In the report, ESMA discusses the application of the CR to these CSPs as well as the relevance of extending the transitional period.
(19/05/2022) ESMA – Final Report (FR) on highly liquid financial instruments for CCP investment policies
The European Securities and Markets Authority (ESMA) has published its Final Report on highly liquid financial instruments for central counterparty (CCP) investment policies. The Report, which has been sent to the European Commission (EC) concludes that further work is to be done regarding the extension of the list of eligible financial instruments to certain public entities and potentially to covered bonds pending further research.
(19/05/2022) ESMA - ESMA publishes report on highly liquid instruments
The European Securities and Markets Authority (ESMA) has published its Final Report on highly liquid financial instruments for central counterparty (CCP) investment policies under European Market Infrastructures Regulation (EMIR). The Report concludes that further work is to be done regarding the extension of the list of eligible financial instruments to certain public entities and potentially to covered bonds pending further research. ESMA will also pursue further work within the CCP Supervisory Committee to ensure a common supervisory approach regarding CCP investment practices.
(18/05/2022) EBA – EBA adopts decision on supervisory reporting for intermediate EU parent undertaking threshold monitoring
The European Banking Authority (EBA) has adopted a decision on supervisory reporting for EU parent undertaking (IPU) threshold monitoring for those entities belonging to third country groups, including third-country branches. Competent authorities shall report to the EBA information on the total value assets held by these entities within the scope of their jurisdiction in the format specified in the Annexes to the Decision. The EBA will provide feedback to the relevant competent authorities for each third country group in order to facilitate cooperation between them and support their IPU decision process.
Cross-border marketing and management
(17/05/2022) ESMA – ESMA consults on notifications for cross-border marketing and management of funds
The European Securities and Markets Authority (ESMA) is consulting stakeholders on the information and templates to be provided, and used by firms, when they inform regulators of their cross-border marketing and management activities under the undertakings for collective investment in transferable securities (UCITS) Directive and the Alternative Investment Fund Managers (AIFMD). The purpose is to facilitate this process and it will be achieved by defining harmonised information to be notified to competent authorities, and developing common templates to be used by management companies, UCITS and AIFMs.
Non - performing exposures
(17/05/2022) EBA – EBA publishes peer review on management of non-performing exposures
The European Banking Authority (EBA) has published the conclusion of its peer review of how prudential and consumer protection authorities supervise the management of non-performing exposures (NPE) by institutions and have implemented the EBA Guidelines on the management of NPE. The analysis suggests that the competent authorities across the EU have applied a risk-based approach to the supervision of NPE management. The EBA has not identified any significant concerns regarding the supervision practices but makes some general recommendations for further improvements.
Non - performing Loans
(16/05/2022) EBA – EBA consults on standardised information requirements to support sales of non-performing loans
The European Banking Authority (EBA) today launched a public consultation on the draft Implementing Technical Standards (ITS) specifying the requirements for the information that sellers of non-performing loans (NPL) shall provide to prospective buyers, seeking to improve the functioning of NPL secondary markets. The objective of the draft ITS is to provide a common standard for the NPL transactions across the EU enabling cross-country comparison and thus reducing information asymmetries between the sellers and buyers.
War in Ukraine
(13/05/2022) ESMA – ESMA reminds issuers of the main IFRS requirements amid the war in Ukraine
The European Securities and Markets Authority (ESMA), has released a Public Statement on the implications of Russia’s invasion of Ukraine on half-yearly financial reports. The statement, with the aim of promoting investor protection, provides overarching messages to issuers and auditors including: i) a reminder of the main IFRS requirements and obligations related to the Market Abuse Regulation and ii) the ESMA expectations regarding disclosures in financial statements and interim management reports.
(13/05/2022) ESMA - ESMA reminds fund managers of their obligations to investors amid the war in Ukraine
The European Securities and Markets Authority (ESMA) has released a Public Statement on the implications of Russia’s invasion of Ukraine on investment fund portfolios. The statement, with the aim of promoting investor protection and convergence, provides overarching messages to fund managers including high level guidance: i) on the appropriate action in case of exposures to Russian, Belarusian and Ukrainian assets, given valuation and liquidity uncertainties; ii) the process fund managers should follow when evaluating these assets; and iii) whether it may be considered to use side pockets or similar arrangements to segregate these assets.
Non - performing and forborne exposures
(06/05/2022) PRA – Statement on EBA Guidelines relating to the management of non-performing and forborne exposures
The Prudential Regulation Authority (PRA) has set out a statement on the European Banking Authority (EBA) Guidelines relating to the management of non-performing exposures (NPEs) and forborne exposures (FBEs). The PRA notes that these Guidelines are not applicable to or in the UK. In particular because the GLs apply detailed requirements for firms with a gross NPE ratio of at least 5% and they require competent authorities to define a common threshold for the individual valuation and revaluation of the collaterals used for NPEs.
(06/05/2022) EC – Mandate to the ESAs to develop SFDR regulatory technical standards on product exposures to gas and nuclear activities
The European Commission (EC) has invited the European Supervisory Authorities (ESAs) to propose amendments to regulatory technical standards in relation to the information that should be provided in pre-contractual documents, on websites, and in periodic reports about the exposure of financial products to investments in fossil gas and nuclear energy activities. The reason for this appeal is the need to modify the Delegated Regulation to ensure that investors receive information reflecting the provisions set out in the Complementary Climate Delegated Regulation. If such amendments are not adopted, several areas in the SFDR Regulation might not appropriately reflect the new factual and regulatory situation.
(05/05/2022) ECB – ECB amends monetary policy implementation guidelines
The European Central Bank (ECB) has published amendments to its guidelines on the implementation of monetary policy in the Eurosystem. The amended guidelines make the following changes: i) the first step in gradually phasing out the pandemic collateral easing measures; ii) clarification of the eligibility criteria for sustainability-linked bonds and asset-backed securities (ABSs); iii) provisions that apply in the event of the activation of the Enhanced Contingency Solution (ECONS) under the TARGET2 system; iv) alignment of the Eurosystem’s collateral framework with the requirements set out in the Covered Bond Directive and v) phasing out the option to accept certain marketable assets issued by non-euro area G10 central governments in their national currency as collateral, as this option was never used.
(05/05/2022) EBA – EBA updates technical standards in view of its 2023 benchmarking of internal approaches
The European Banking Authority (EBA) has published an update to its Implementing Technical Standards (ITS) which specify the data collection for the supervisory benchmarking exercise of 2023 in relation to the internal approaches used in market and credit risk and IFRS9 accounting. The updated ITS include all benchmarking portfolios and metrics that will be used for the 2023 exercise. For market risk the collection of new instruments and portfolios have been included, in particular those recently applied by the industry. For credit risk minor changes were made to the benchmark portfolios and no changes to the data fields for reporting purposes. No changes have been made to the IFRS 9 templates.
Insurance stress test
(04/05/2022) PRA – Insurance Stress Test
The Prudential Regulation Authority (PRA) has launched its biennial insurance stress test (IST) which contains the scenario specifications, the technical instructions and the templates for recording the results. In addition, firms are requested to provide a supporting narrative in the Results and basis of preparation (RBP) report. The deadline for submission is Wednesday, September 28, 2022.
(04/05/2022) EBA – EBA provides its advice to the EU Commission on non-bank lending
The European Banking Authority (EBA) has published a Report on non-bank lending in response to the European Commission’s February 2021 Call for Advice on this topic. The EBA’s proposals aim at addressing risks arising from the provision of lending by non-bank entities in the areas of supervision, consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), macro and micro prudential risks. In this Report, the EBA has identified the risks related to provisions of credit by non-bank lenders and put forward some proposals to address them.
Stress test in Europe
(04/05/2022) ESMA – Guidelines on stress test scenarios under the Monetary Market Fund Regulation
The European Securities and Market Authority (ESMA) has updated their Guidelines on stress test scenarios under the Monetary Market Fund (MMF) Regulation. In this regard, the table on shocks to government bond credit spreads, which compile the absolute change in basis points for the Government Bonds of different countries has been modified with new data.
(03/05/2022) EBA - EBA publishes amended final draft technical standards on the mapping of ECAIs for securitisation positions
The European Banking Authority (EBA) has published its final draft Implementing Technical Standards (ITS) to amend the Implementing Regulation on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for securitisation positions. The changes reflect the relevant amendments introduced by the new Securitisation Framework, as well as the mappings for three ECAIs that extended their credit assessments to cover securitisations. The Implementing Regulation is part of the European Union Single Rulebook for banking aimed at creating a safe and sound regulatory framework consistently applicable across the EU.
(03/05/2022) EBA - EBA updates its Guidelines for assessing equivalence of professional secrecy regimes of third country authorities
The European Banking Authority (EBA) has published its updated Guidelines for assessing equivalence of professional secrecy and confidentiality regimes of third country authorities, to widen the scope and the purpose of the assessment. The aim of the update is to include all relevant provisions in the Capital Requirements Directive (CRD), the revised Payment Services Directive (PSD2), the Bank Recovery and Resolution Directive (BRRD) and the Anti-Money Laundering Directive (AMLD), all provide for the possibility for EU authorities to sign cooperation arrangements with authorities from third countries.
Retail Investment Strategy
(02/05/2022) ESAs – ESAs recommend changes to make the PRIIPs key information document more consumer-friendly
The European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) have published a document which sets their technical advice to the European Commission (EC) on the review of the PRIIPs Regulation. The advice will serve as input for developing the Commission’s Retail Investment Strategy. The document addresses all the issues requested by the Commission, including how to better adapt the key information document (KID) to the digital age and whether to extend the scope of the Regulation to other financial products. Additionally, it presents recommendations on a range of other issues where analysis has shown that changes are needed to achieve optimal outcomes for retail investors.
(02/05/2022) EIOPA – EIOPA publishes advice on Retail Investor Protection
The European Insurance and Occupational Pensions Authority (EIOPA) has published its Final Report with its advice to the European Commission (EC) on retail investor protection in relation to the sale of Insurance-Based Investment Products (IBIPs). EIOPA’s main findings in the areas which the Commission asked EIOPA to address in its Call for Advice, are as follows: i) enhancing consumer engagement with disclosures, including digital disclosures; ii) assessing the risks and opportunities presented by new digital tools and channels; iii) tackling damaging conflicts of interest in the sales process; iv) promotion of an affordable and efficient sales process and v) assessing the impact of complexity in the retail investment product market.
Pillar 1 framework
(02/05/2022) EBA – EBA launches discussion on the role of environmental risks in the prudential framework
The European Banking Authority (EBA) has published a Discussion Paper (DP) on the role of environmental risks in the prudential framework for credit institutions and investment firms. The DP explores whether and how environmental risks are to be incorporated into the Pillar 1 prudential framework. It launches the discussion on the potential incorporation of a forward-looking perspective in the prudential framework. It also stresses the importance of collecting relevant and reliable information on environmental risks and their impact on institutions’ financial losses. The consultation runs until 2 August 2022.
Prudential framework simplification
(29/04/2022) PRA – CP5/22 - The Strong and Simple Framework: a definition of a Simpler-regime Firm
The Prudential Regulation Authority (PRA) has set out its proposals for introducing a definition of a Simpler-regime Firm in the PRA Rulebook that would seek to simplify the prudential framework for non-systemic domestic banks and building societies, while maintaining their resilience. The PRA’s implementation of this proposed definition would be the first step in designing a strong and simple framework. On the other hand, this definition should not create significant additional costs because the criteria in the definition should be based on information that firms are already having to calculate or required to report. This consultation closes on Friday 22 July 2022.
Climate risks management
(29/04/2022) FSB – FSB launches consultation on supervisory and regulatory approaches to climate-related risks
The Financial Stability Board (FSB) has published a report that aims to assist supervisory and regulatory authorities in developing their approaches to monitor, manage and mitigate cross-sectoral and system-wide risks arising from climate change and to promote consistent approaches across sectors and jurisdictions. Its recommendations focus on three areas: i) supervisory and regulatory reporting and collection of climate-related data from financial institutions; ii) system-wide supervisory and regulatory approaches to assessing climate-related risks; and iii) early consideration of other potential macroprudential policies and tools to address systemic risks. The public consultation period ends on Thursday 30 June 2022.
(28/04/2022) SRB – Single Resolution Board publishes MREL dashboard Q4.2021
The Single Resolution Board (SRB) has published its minimum requirement for own funds and eligible liabilities (MREL) dashboard covering the fourth quarter of 2021. The key findings show that the average MREL shortfall to the final 2024 targets including the combined buffer requirement reached 0.45% total risk exposure amount. Furthermore, Banks’ issuance increased by 42.1% over the quarter and amounted to EUR 60.9 bn.
(22/04/2022) EBA – EBA sees progress in MREL shortfall reduction by largest institutions while smaller institutions are lagging behind
The European Banking Authority (EBA) published its annual Report on minimum requirements for own funds and eligible liabilities (MREL) showing progress in this area as of December 2020. The Report highlights that 110 resolution groups presented a shortfall of EUR 67.6bn against their end-state MREL targets, set for January 2024 for most of them. The shortfall for other banks and other systemically important institutions (OSIIs) below EUR50bn is, however, largely stable at EUR30bn.
(28/04/2022) IOSCO – IOSCO releases report on issues and considerations of market data in secondary equity markets
The Board of the International Organization of Securities Commissions (IOSCO) published a report that sets out some issues and considerations for regulators when reviewing the regulation of market data provided by trading venues or OTC markets . The Report highlights that market data is an essential element of efficient price discovery and for maintaining fair and efficient markets.
(27/04/2022) ECB – Opinion on a proposal for a Directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, environmental, social and governance risks (CON/2022/16)
The European Central Bank (ECB) published its opinion on a proposal for a Directive of the European Parliament and of the Council amending a Directive on supervisory powers, sanctions, third-country branches, environmental, social and governance risks. The ECB strongly supports the Commission’s banking reform package, which implements important elements of the global regulatory reform agenda into Union legislation. This will reinforce the EU Single Rulebook and substantially strengthen the regulatory framework in areas where supervisory authorities have identified gaps that could potentially lead to risks being insufficiently monitored and covered.
(25/04/2022) EIOPA – EIOPA consults on IORPs reporting rules
The European Insurance and Occupational Pensions Authority (EIOPA) has launched a public consultation regarding EIOPA’s regular information requests to national competent authorities (NCAs) for occupational pension information. The aim of the public consultation is to improve institutions for occupational retirement provision (IORPs) reporting, focusing on emerging risks and new challenges and issues observed by NCAs and pensions industry since 2018.
Diversity and inclusion
(25/04/2022) FCA – Policy Statement (PS) 22/3 on Diversity and inclusion on company boards and executive management
The Financial Conduct Authority (FCA) has published the Policy Statement (PS) 22/3 on Diversity and inclusion on company boards and executive management, which sets out the final policy decision for proposals set out in the Consultation Paper (CP) published in July. In-scope companies are required to make these disclosures in their annual reports for financial years starting on or after 1 April 2022.
(22/04/2022) BoE – DP2/22 – Potential Reforms to Risk Margin and Matching Adjustment within Solvency II
The Bank of England has published a Discussion Paper (DP) on potential reforms to risk margin, matching adjustments within Solvency II. The DP sets out the Prudential Regulation Authority’s (PRA) current views on some key aspects of the potential reform package and the current assessment of overall reform outcomes arising from key aspects of HM Tresaury’s review of Solvency II, particularly reforms to the fundamental spread and risk margin. The content of this DP is primarily of relevance to the annuity sector, but it will also be of interest to other insurance and reinsurance undertakings and industry stakeholders.
Contract Boundaries and Technical Provisions
(21/04/2022) EIOPA – EIOPA finalises the revision of EIOPA’s Guidelines on Contract Boundaries and Guidelines on the Valuation of Technical Provisions
The European Insurance and Occupational Pension Authority (EIOPA) has published two Final Reports on the revision of its Guidelines on Contract Boundaries and Guidelines on the Valuation of Technical Provisions, in order to provide additional guidance and amending certain aspects in relation to: Modelling Biometric Factors, the Apportionment of Expenses, Changes in Expenses, Assumptions used to calculate Expected Profits in Future Premiums and the Unbundling of contracts.
(20/04/2022) SRB – 2022 Resolution Planning Cycle Booklet
The Single Resolution Board (SRB) has published the Resolution Planning Booklet, which informs stakeholders about the SRB’s resolution planning activities and describes the main processes and phases of the current Resolution Planning Cycle. The milestones in 2022 are, among others: i) to update the SRB policies and operational guidance documents; ii) conducting close monitoring of resolvability and preparation of the substantive impediments procedure for those banks which show insufficient progress towards achieving resolvability; iii) to further develop deep-dive assessments, paving the way for conducting future on-site inspections.
(20/04/2022) PRA – Prudential Regulation Authority Business Plan 2022/23
The Prudential Regulation Authority (PRA) has published its Business Plan for the 2022/23 period. The main objectives of the Plan are, among others: i) retain and build on the strength of the banking and insurance sectors delivered by the financial crisis reforms; ii) be at the forefront of identifying new and emerging risks, and developing international policy; iii) support competitive and dynamic markets in the sectors that it regulates; and iv) run an inclusive, efficient and modern regulator within the central bank.
(14/04/2022) BoE – Bank of England Consultation Papers: FMI outsourcing and third party risk management
The Bank of England (BoE) has published Consultation Papers (CPs) where its sets out and invites comments on its proposals around outsourcing and third party risk management in Financial Market Infrastructures (FMIs). Their aim of these CPs is to facilitate greater resilience and adoption of the cloud and other new technologies as set out in the Bank of England’s response to the Future of Finance report, set out the Bank’s requirements and expectations in relation to outsourcing and third party risk management in FMIs and complement the Bank’s Supervisory Statements on FMI operational resilience.
Environmental and cyber risks
(13/04/2022) ESAs – ESAs see recovery stalling amid existing and new risks
The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) issued their first joint risk assessment report for 2022. The report highlights the increasing vulnerabilities across the financial sector as well as the rise of environmental and cyber risks. Some of the risks emerging during 2021 and highlighted in the report were amplified by Russia’s invasion of Ukraine. In light of the risks and uncertainties, the ESAs advise national competent authorities, financial institutions and market participants to take certain actions to prevent impacts and threats.
Customer’s sustainability preferences
(13/04/2022) EIOPA – EIOPA consults on draft Guidelines on integrating the customer’s sustainability preferences in the suitability assessment under the IDD
The European Insurance and Occupational Pensions Authority (EIOPA) has launched a public consultation on draft Guidelines on integrating the customer’s sustainability preferences in the suitability assessment under the Insurance Distribution Directive (IDD). The aims of this consultation are: i) the promotion of a coherent application of the Delegated Regulation (EU) 2021/1257 on integration of sustainability factors, risks and preferences into the product oversight and governance, by insurance undertakings and intermediaries across Member States and National Competent Authorities (NCAs); ii) the restriction in the potential for the mis-selling of insurance products and iii) the promotion of a more convergent approach by NCAs in the supervision of insurance undertakings and insurance intermediaries.
(12/04/2022) EBA – EBA publishes final draft technical standards on the risk retention requirements for securitisations
The European Banking Authority (EBA) published its final draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors and original lenders related to risk retention as laid down in the Securitisation Regulation and as amended by the Capital Markets Recovery Package (CMRP). These RTS aim to provide clarity on the risk retention requirements ensuring a better alignment of interests and reducing the risk of moral hazard, thus contributing further to the development of a sound, safe and robust securitisation market in the EU.
(07/04/2022) EIOPA – EIOPA issues supervisory statement on supervision of run-off undertakings
The European Insurance and Occupational Pensions Authority (EIOPA) has published the supervisory statement on supervision of run-off undertakings. The aim of the statement is to ensure that a high-quality and convergent supervision is applied to run-off undertakings and portfolios while taking into account their specific nature and risks, the principle of proportionality and the prudent person principle. EIOPA had observed various issues and challenges in the supervision of run-off portfolios or undertakings related to the specific risk profile of these businesses, the difficulties of the process of authorisation of the change of ownership or portfolio transfer as well as the lack of specific provisions in the Solvency II framework.
Corporate bond market
(06/04/2022) IOSCO – IOSCO seeks feedback on market liquidity issues affecting corporate bond markets under stress and good practices concerning ETFs
The International Organization of Securities Commissions (IOSCO) has published its report on corporate bond markets: drivers of liquidity during COVID-19 induced market stresses, and invites stakeholder feedback on the analysis. Furthermore, IOSCO has opened a consultation on good practices for IOSCO members, asset managers, and trading venues to consider in the operation and trading of Exchange Traded Funds (ETFs) and to supplement IOSCO’s 2013 Principles for the Regulation of Exchange Traded Funds.
Supervisory practices for sustainability
(07/04/2022) BCBS – Supervisory practices for assessing the sustainability of banks' business models
The Basel Committee on Banking Supervision (BCBS) has published a paper on supervisory practices for assessing the sustainability of banks’ business models (BMAs). In particular, it aims to identify practices that might be relevant to authorities seeking to explicitly introduce BMA in their supervisory review process (SRP). In order to do so, the paper emphasises practical aspects of BMA, including procedures for developing and conducting a BMA as well as for integrating its outcomes into the overall SRP.
(07/04/2022) FCA – Business Plan 2022/2023
The Financial Conduct Authority (FCA) has published its Business Plan 2022/2023 which explains the key work that the FCA will do over the next 12 months. The focus is: i) on protecting consumers from the harm that firms can cause; ii) on the impact that firms’ actions have on consumers and markets; and iii) preparing financial services for the future by promoting competition and positive change.
(06/04/2022) EC – Regulation on sustainability-related disclosure in the financial services sector
The European Commission (EC) has published the Delegating Regulation supplementing Sustainable Finance Disclosure Regulation (SFDR). In this Delegated Act, the EC bundled the European Supervisory Authorities (ESAs) Draft Regulatory Technical Standards (RTS) in a single legal act that makes it easier to locate provisions on sustainability-related disclosures in the financial services sector. The EC has not change any substantive requirements.
Ultimate forward rate
(05/04/2022) EIOPA – EIOPA publishes the Ultimate forward rate (UFR) for 2023
The European Insurance and Occupational Pensions Authority (EIOPA) has published the Report on the calculation of the Ultimate Forward Rate (UFR) for 2023, where the calculation of the UFR for 2023 has been included. As of 1 January 2023, the applicable UFR for the euro will remain unchanged at 3.45%.
ESG credit ratings
(04/04/2022) EC – Targeted consultation on the functioning of the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings
The European Commission (EC) has launched its targeted consultation on the functioning of the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings. This consultation will help the Commission gain a better insight on the functioning of the market for ESG ratings, as well as better understand how credit rating agencies (CRAs) incorporate ESG risks in their creditworthiness assessment. Comments can be sent before 6 June 2022.
(04/04/2022) ESMA – Final Report on the review of the Short Selling Regulation
The European Securities and Markets Authority (ESMA) has published its Final Report on the review of the short selling Regulation (SSR). The Final Report proposes targeted amendments to improve its operation, focused on clarifying the procedures for the issuance of short and long-term bans, ESMA’s intervention powers, the prohibition of naked short selling and the calculation of net short positions (NSPs) and their publication.
EBA risk dashboard
(01/04/2022) EBA – EBA Risk Dashboard indicates limited direct impact on EU banks from the Russian invasion of Ukraine but also points to clear medium-term risks
The European Bank Authority (EBA) has published its Risk Dashboard for the fourth quarter of 2021 in which it is highlighted the potential impact of the Russian invasion of Ukraine on the European banking sector. The EBA’s initial assessment is that the first-round risks to the European Union (EU) banking system are not a fundamental threat to financial stability, but the second-round effects are more worrying due to the current high level of uncertainty about the outcome of the war.
Data quality EMIR and SFTR
(01/04/2022) ESMA – ESMA sees EMIR and SFTR data quality improve following coordinated actions
The European Securities and Markets Authority (ESMA) has published its second edition of its Data Quality Report based on data gathered under the European Markets Infrastructure Regulation (EMIR) and the Securitised Financing Transactions Regulation (SFTR) reporting regimes. The Report finds that the coordinated supervisory actions by ESMA and the National Competent Authorities (NCAs) have significantly enhanced data quality in 2021. Despite these very positive results, certain aspects related to data reconciliation will require more efforts by reporting entities. In particular, data quality could be enhanced if counterparties also used the same data set and the same identifiers for the reported data in their internal risk management processes.
(01/04/2022) ISSB – Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information / Exposure Draft IFRS S2 Climate-related Disclosures
The International Sustainability Standards Board (ISSB) has published a draft on the general requirements for disclosure of sustainability-related financial information, about all its significant sustainability-related risks and opportunities, to provide the market with a complete set of sustainability-related financial disclosures. It has also published a draft on climate-related disclosures, which sets out the requirements for identifying, measuring and disclosing climate-related risks and opportunities. Both Drafts are based on the prototypes published on the IFRS Foundation website in November 2021 and only introduce minor amendments. Comments to these projects can be sent before 29 July 2022.
Macroeconomic outlook reports