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).
Climate risk scenario
The European Banking Authority (EBA) has published a Public consultation on draft templates for collecting climate related data from EU banks. This effort is part of the one-off Fit-for-55 climate risk scenario analysis, which the EBA will carry out together with the other ESAs and with the support of the European Central Bank (ECB) and the European Systemic Risk Board (ESRB). The draft templates are accompanied by a template guidance, which includes definitions and rules for compiling the templates.
(19/07/2023) EBA – Final report on the overall recovery capacity in recovery planning
The European Banking Authority (EBA) has published now the final report on guidelines on Overall Recovery Capacity (ORC) in recovery planning, submitted for consultation in December 2022. The objective of these guidelines is to set up a consistent framework for the determination of the ORC by institutions in their recovery plans and the respective assessment by competent authorities. The final document has not undergone significant changes compared to the consultation document.
(12/07/2023) BoE – Stress testing the UK banking system: 2022/23 results
The Bank of England (BoE) has published the Results of the 2022/23 annual cyclical scenario stress test of the UK banking system. It was also intended to improve firms climate risk management, size the risks that participants in the exercise face and better understand the potential responses to climate-related risks and their broader implications. In general, all participating firms have more work to do to improve their climate risk management capabilities.
(04/07/2023) EC - Proposal for a Directive on payment services and electronic money services in the internal market (PSD3) / Proposal for a Regulation on payment services in the internal market (PSR) / Proposal for a Regulation on a framework for financial data access
The European Commission (EC) has published the revision of the Payments Service Directive (PSD3), a proposal for a Regulation on payment services in the internal market (PSR), and a proposal for a Regulation on a framework for financial data access. The package aims to ensure that consumers can continue to safely and securely make electronic payments and transactions in the European Union (EU), domestically or cross-border, in euro and non-euro. Whilst safeguarding the rights of customers, it also aims to provide greater choice of payment service providers on the market.
Other publications of interest
Product oversight and governance
(20/07/2023) EIOPA – Supervisors across Europe continue to strengthen POG supervision
The European Insurance and Occupational Pensions Authority (EIOPA) has published a peer review report on product oversight and governance (POG). This is the first peer review in the area of conduct of business supervision to assess how national supervisors in the European Economic Area (EEA) are supervising the application of POG requirements by insurance manufacturers. Most national competent authorities (NCAs) have adapted their supervisory approaches and processes to the supervision of POG requirements in line with the provisions introduced by the Insurance Distribution Directive (IDD).
Council and European Parliament (EP) negotiators have reached a tentative agreement on new rules to improve the functioning of European capital markets and strengthen investor protection in the European Union (EU). The provisional agreement reviews the alternative investment fund managers directive, which governs managers of hedge funds, private equity funds, private debt funds, real estate funds and other alternative investment funds in the EU.
Anti-procyclicality margin measures
(19/07/2023) ESMA – Revised technical standards on anti-procyclicality margin measures
The European Securities and Markets Authority (ESMA) has published a Final Report reviewing the regulatory technical standards RTS to further harmonize Central Counterparty (CCP) policies and procedures for selecting, assessing and reviewing anti-procyclicality (APC) margin measures.
(19/07/2023) ESMA – Analysis of the cross-border investment activity of firms
The European Securities and Markets Authority (ESMA), and national competent authorities (NCAs) have completed an analysis of the cross-border provision of investment services during 2022. The data collected and analysed across 29 jurisdictions allows ESMA and NCAs to shed light on various aspects of the market for retail investors that receive investment services by credit institutions and investment firms established in other Member States. Key findings of the analysis include that: i) a total of around 380 firms provided services to retail clients on a cross-border basis in 2022. The majority of them (59%) are investment firms, while 41% are credit institutions; ii) approximately 7.6 million clients in the European Union (EU)/ European Economic Area (EEA) received investment services from firms located in other EU/EEA Member States in 2022.
(19/07/2023) BoE – CP14/23: Pillar 3 remuneration disclosure
Bank of England (BoE) has published a consultation paper (CP) which sets out the Prudential Regulation Authority’s (PRA) proposals to enhance proportionality of Pillar 3 remuneration disclosure requirements, by reducing the number of remuneration disclosures required for many smaller banks and building societies.
Data collection on ESG risks
The European Banking Authority (EBA) has published the Decision on data collection of institutions’ environmental, social and governance (ESG) data. The Decision will provide competent authorities and the EBA with the necessary data and tools to fulfill monitoring functions and ESG-related mandates by collecting the information that is already available to institutions as part of their Pillar 3 disclosure obligations with respect to ESG risks.
The Bank of England (BoE) has published a consultation paper (CP) which sets out the Prudential Regulation Authority’s (PRA) and Financial Conduct Authority’s (FCA) proposal to extend the temporary exemptions for single-stock equity options and index options from the UK bilateral margining requirements from 4 January 2024 until 4 January 2026. This CP also sets out the PRA’s and the FCA’s proposed approach to model pre-approval in relation to bilateral initial margin models.
Compliance Carbon Markets
The Board of the International Organization of Securities Commissions has published a final report on Compliance Carbon Markets (CCMs), which aims to support IOSCO members seeking to establish new or to enhance their existing CCMs. The report looks at the specific characteristics of CCMs compared to traditional financial markets and outlines a set of recommendations aimed at making these markets efficient and ensuring they function with integrity.
(17/07/2023) EBA – Release of the technical package for phase 2 of its 3.3 reporting framework
The European Banking Authority (EBA) has published the technical package for phase 2 of version 3.3 of its reporting framework. The technical package provides standard specifications and includes the validation rules, the Data Point Model (DPM) and the XBRL taxonomies for this phase of version 3.3. Phase 2 of version 3.3 consists of the technical package supporting the supervisory benchmarking exercise 2024. The package includes the new market risk and IFRS9 templates, and other amendments to the Supervisory Benchmarking Portfolios framework.
Dissemination of sustainability information
The European Securities and Markets Authority (ESMA) has launched until the third quarter 2024, a Common Supervisory Action (CSA) jointly with National Competent Authorities (NCAs) on sustainability-related disclosures and the integration of sustainability risks. The goal is to assess the compliance of supervised asset managers with the relevant provisions in the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation and relevant implementing measures, including the relevant provision in the Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Fund Managers Directive (AIFMD) implementing acts on the integration of sustainability risks.
Initial margin models
(06/07/2023) EBA - EBA publishes validation requirements on initial margin models
The European Banking Authority (EBA) published its final draft Regulatory Technical Standards (RTS) on Initial Margin Model Validation (IMMV). These draft RTS set out the supervisory procedures to ensure the prudent use of initial margin models for Over The Counter (OTC) derivatives. In an accompanying Opinion, and as part of the ongoing negotiations on EMIR, the EBA calls on co-legislators to consider the establishment of a central validation function in the European Union (EU).
Core principles for supervision
(06/07/2023) BCBS - Core principles for effective banking supervision
The Basel Committee on Banking Supervision has issued a public consultation on revisions to the Core principles for effective banking supervision. The first version of the principles was published in 1997 and was updated on 1997 for the first time. The Core Principles are the de facto minimum standards for the sound prudential regulation and supervision of banks and banking systems. The Core Principles are used by supervisors to assess the effectiveness of their regulatory and supervisory frameworks. Comments to this consultation document can be submitted by 6 October 2023.
Guidance on trading venue
(05/07/2023) FCA - PS23/11: Guidance on the trading venue perimeter
The Financial Conduct Authority (FCA) has issued a new guidance on the regulatory perimeter for trading venues. The guidance provides greater clarity on when firms may be operating a multilateral system and so require authorisation as a trading venue. The guidance clarifies the interpretation of the different elements of the definition of a multilateral system and how it applies to specific types of arrangements in financial markets. This guidance will come into force on 9 October 2023.
Macroeconomic outlook reports