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).
Relevant publications
Insurance Stress Test 2024
(05/04/2024) EIOPA - Insurance Stress Test 2024
The European Insurance and Occupational Authority (EIOPA) has launched its 2024 stress test for insurers, focusing on the economic consequences of a re-intensification or prolongation of geopolitical tensions. This test assesses the impact of such a scenario on the capital and liquidity position of European insurance companies. The stress test serves a primary goal of microprudential assessment, focusing on individual insurers' resilience in the face of severe adverse scenarios, particularly escalating geopolitical tensions. Secondary objectives include the identification of sector-wide vulnerabilities within the european insurance industry. Through this assessment, EIOPA aims to provide recommendations to enhance the overall resilience of the insurance sector, both at the european and national levels.
MICA Framework
(25/03/2024) ESMA - Third consultation under MiCA and final report on the first package of draft technical standards of MiCA
The European Securities and Markets Authority (ESMA) has published a third consultation paper on the Market for Crypto Assets (MiCA), following the publication of the first consultation package in July 2023, and the second package in December 2023. Interested parties can submit comments to the consultation by 25 June 2024. ESMA will publish a final report based on the comments received and submit the draft technical standards to the European Commission (EC) for endorsement by 30 December 2024. In addition, ESMA has published the final report of the draft technical standards specifying certain MiCA requirements. The objective of the package of technical standards contained in the final report is to foster clarity and predictability, promote fair competition among cryptoasset service providers (CASPs) and create a safer environment for investors across the EU The draft technical standards are submitted to the EC for adoption and the EC will decide whether to adopt the technical standards within 3 months.
New Framework eID
(13/03/2024) Council - New framework for a European digital identity (eID)
The Council has adopted a new framework for an eID. The revised regulation aims to ensure that people and businesses across Europe have universal access to secure and trustworthy electronic identification and authentication. Under the new law, member states will offer citizens and businesses, digital wallets that will be able to link their national digital identities with proof of other personal attributes. The new European digital identity wallets (EDIWs) will enable all citizens to access online services with their national digital identification, which will be recognised throughout the EU, without having to use private identification methods or unnecessarily share personal data. The revised regulation will be published in the Official Journal of the EU in the coming weeks. It will enter into force 20 days after its publication.
Artificial Intelligence Act
(13/03/2024) EP - Artificial Intelligence Act
The European Parliament (EP) has approved the Artificial Intelligence Act (AI Act). The text is pending final approval by the Council and will enter into force 20 days after its publication in the Official Journal of the European Union (OJEU). The Regulation will be generally applicable 24 months after its entry into force, although some provisions will be applicable earlier.
Digital public services across the eu
(04/02/2024) EC/Council - Council adopts new law for more efficient digital public services across the EU
The European Council (EC) has adopted a new regulation aiming to set up a new cooperation framework for European Union (EU) public administrations to ensure the seamless delivery of public services across borders, and to provide for support measures promoting innovation and enhancing skills and knowledge exchange. The new law will establish an interoperability governance structure to create an ecosystem of shared interoperability solutions for the EU’s public sector, through the setting of regulatory sandboxes. This way, public administrations in the EU can contribute to and re-use such solutions, innovate together, and create added value. This regulation will enter into force 20 days after this publication in the Official Journal of the European Union (OJEU).
The NIST Cybersecurity Framework (CSF) 2.0
(26/02/2024) NIST - The NIST Cybersecurity Framework (CSF) 2.0
The National Institute of Standards and Technology (NIST) has published the final version of NIST CSF 2.0. This document is designed to help organizations of all sizes and sectors, including industry, government, academia and non-profit organizations, manage and reduce their cybersecurity risks, regardless of the level of maturity and technical sophistication of the organisations' cybersecurity programmes. CSF 2.0 also has a set of online resources that will be periodically updated to help organisations understand, adopt and use this framework.
2024 business plan
(27/02/2024) CNMV - 2024 Business Plan
The Comisión Nacional del Mercado de Valores (CNMV) has published its 2024 Business Plan, which includes 42 specific initiatives or actions to be developed this year, the main focus of 2024 being the protection of retail investors, centred on ensuring that the marketing of products clearly warns of the associated risks; the correct incorporation of sustainable finance into the financial sector and the new supervisory powers derived from the regulations on crypto-assets and cybersecurity.
Shared National Credit Program report
(16/02/2024) Fed - Shared National Credit Program report (SNC) 2023
The Federal Reserve (Fed) has released the 2023 Shared National Credit (SNC) report that assesses risk in the largest and most complex credit lines shared by regulated financial entities: domestic banks, foreign banks (FBOs), and nonbanks. The report highlights downward trends in credit quality resulting from high interest rates and tight margins in specific sectors. It also notes that risks persist in leveraged loans and certain industries, although the sectors affected by the pandemic are improving. The report shows an increase in loans requiring more management, with United States (US) banks maintaining a smaller share of commitments requiring special attention (which includes the special mention and classified category) compared to total SNC commitments.
Proposal for a regulation on instant payments.
(14/02/2024) Council - Proposal for a Regulation on instant payments
The Council has adopted the Regulation on more accessible instant euro payments, following its first reading approval by the European Parliament (EP). This Regulation will ensure that retail customers and businesses, especially small and medium-sized enterprises (SMEs), do not have to wait for their money, as well as to offer secure transfers. The agreement updates the Single Euro Payments Area (SEPA) legislation; Regulation (EU) 260/2012 on technical and business requirements for credit transfers and direct debits; Regulation (EU) 2021/1230 on cross-border payments; Directive 98/26/EC on settlement finality in payment and securities settlement systems; Directive (EU) 2015/2366 on payment services in the internal market. According to the future Regulation, Payment Service roviders (PSPs), such as banks, providing euro transfer services, will be obliged to offer the instant transfer service.
Digital infrastructure
(21/02/2024) EC – White Paper: How to master Europe’s digital infrastructure needs?
The European Commission (EC) has published a White Paper on How to master Europe’s digital infrastructure needs? Which analyses the challenges Europe currently faces in the rollout of future connectivity networks, and presents possible scenarios to attract investments, foster innovation, increase security, and achieve a true Digital Single Market.
Operational risk reporting
(20/02/2024) EBA – CP of the draft ITS amending public disclosures by institutions of the information on operational risk, CP of the draft ITS on supervisory reporting concerning operational risk, CP of the RTS on the components of the Business Indicator (BI) under CRR and the adjustments to the BI and ITS on the mapping of the BI components [doc1], [doc2] y [doc3]
The European Banking Authority (EBA) has launched a public consultation on two draft Implementing Technical Standards (ITS) amending Pillar 3 disclosures and supervisory reporting requirements for operational risk. In addition, EBA has launched a consultation on two set of draft Regulatory Technical Standards (RTS) and one ITS aiming to clarify the composition of the new business indicator (BI) at the heart of the operational risk capital requirements calculation, mapping the BI items to financial reporting (FINREP) items and highlighting possible adjustments to the BI in case of specific operations.
Cybersecurity resilience evaluation
(15/02/2024) ITU - Technical report on the Cybersecurity Resilience Assessment Toolkit for DFS Critical Infrastructure.
The International Telecommunication Union (ITU) has released a technical report on the Cybersecurity Resilience Assessment Toolkit for Digital Financial Services (DFS) Critical Infrastructure. The aim of this report is to support DFS regulators and stakeholders in emerging economies in assessing the level of cybersecurity resilience of their critical infrastructure.
2024 Stress Test Scenarios
(16/02/2024) Fed – 2024 Stress Test Scenarios
The Board of Governors of the Federal Reserve System (Fed) has published its 2024 Stress Test Scenarios, in order to use the results of the stress test to set large bank capital requirements. Additionally, for the first time, the Board released four hypothetical elements designed to probe different risks through its exploratory analysis of the banking system.
Final version of the guide to internal models
(19/02/2024) ECB – Final version of the guide to internal models
The European Central Bank (ECB) has published the final version of the guide to internal models. In line with the revised version submitted for consultation, the revised Guidance clarifies how banks should include material climate and environmental risks in their models and provides clarifications for banks wishing to revert to the standardised approach for calculating their risk-weighted assets. The final version does not incorporate major changes with respect to the draft version.
Instant payments
(07/02/2024) EP - Agreement on more accessible instant payments in euros
The European Parliament ( EP) has reached an agreement on more accessible instant payments in euros in order to make sure that retail clients and businesses, especially small and medium enterprises (SMEs), will not have to wait for their money as well as to provide safe transfers. The agreement updates the Single Euro Payments Area (SEPA) legislation: Regulation (EU) 260/2012, on technical and business requirements for credit transfers and direct debits; Regulation (EU) 2021/1230, on cross-border payments; Directive 98/26/EC, on settlement finality in payment and securities settlement systems; Directive (EU) 2015/2366, on payment services in the internal market. According to the future Regulation, payment service providers (PSPs), such as banks, which provide credit transfer services in euro, will be obliged to offer the instant transfer service.
Financial services of BigTech
(01/02/2024) ESAs - Report on 2023 stocktaking of BigTech direct financial services provision in the EU
The European Supervisory Authorities (ESAs) have published the Report on 2023 stocktaking of BigTech direct financial services provision in the EU. As a result of the stocktake, the ESAs have identified that BigTechs have subsidiary companies carrying out financial services in the EU payments, e-money and insurances sectors and, in limited cases, the banking sector. No BigTech subsidiaries were reported as carrying out financial services in the securities and markets sector.
Guidelines under MiCA
(29/01/2024) ESMA - Consultations Papers on guidelines under MiCA
The European Securities and Markets Authority (ESMA) has published for consultation a set of guidelines: i) draft guidelines on reverse solicitation under the MiCA; ii) guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments. The aim of these consultation papers is to collect opinion from market participants on the appropriate implementation of MiCA and in particular in relation to certain mandates that have to be developed by December 2024.
Heatmap on the IRRBB standards
(24/01/2024) EBA - Heatmap following the EBA scrutiny on the Interest Rate Risk in the Banking Book (IRRBB) Standards implementation in the EU
The European Banking Authority (EBA) has published the Heatmap following the EBA scrutiny on the IRRBB standards implementation in the European Union (EU), which discloses policy aspects that will be subject to further scrutiny and corresponding actions in the short to medium and long term.
Heatmap following IRRBB implementation in the EU
(24/01/2024) EBA - Heatmap following the EBA scrutiny on the IRRBB Standards implementation in the EU
The European Banking Authority (EBA) has published the Heatmap following the EBA scrutiny on the Interest Rate Risk in the Banking Book (IRRBB) standards implementation in the European Union (EU), which discloses policy aspects that will be subject to further scrutiny and corresponding actions in the short to medium and long term. As a short and medium-term objective, more effective supervisory and risk management tools are proposed. In the medium and long term, the EBA's objectives are regulatory issues under review, such as further analysis of the key impacts of IRRBB regulatory products.
Management of ESG risks
(18/01/2024) EBA - Consultation Paper of Draft Guidelines on the management of ESG risks
The European Banking Authority (EBA) has published a Consultation Paper of Draft Guidelines on the management of environmental, social and governance (ESG) risks. The guidelines set requirements for the internal processes and ESG risks management arrangements that institutions should have in place, to ensure the resilience of the business model and risk profile of institutions in the short (3 years), medium (3-5 years) and long term (at least 10 years). The consultation runs until 18th April 2024. It is planned that the guidelines will be finalised by end 2024, and the application date will be aligned with the CRD6 application date.
Data collection for the benchmarking exercise in 2025
(18/01/2024) EBA - Consultation paper on amendments to the data collection for the benchmarking exercise in 2025
The European Banking Authority (EBA) has published a consultation paper amending the Implementing Regulation on the benchmarking of credit risk and market risk for the 2025 exercise. The most significant change is in the market risk framework, where the EBA is proposing brand new templates for the collection of the internal model approach (IMA) risk measures under the fundamental review of the trading book (FRTB). For credit risk only minor changes are being proposed. The consultation runs until the 27 March 2024.
Set of rules under DORA
(17/01/2024) ESAs - First set of rules under DORA for ICT and third-party risk management and incident classification
The European Supervisory Authorities (ESAs) have published the first set of first set of rules under the Digital Operational Resilience Act (DORA) for Information Communication Technologies (ICT) and third-party risk management and incident classification. This final draft technical standards aimed at enhancing the digital operational resilience of the European Union (EU) financial sector by strengthening financial entities’ ICT and third-party risk management and incident reporting frameworks. The expected date of implementation of the RTS document on ICT risk management framework is 17 January 2025.
Prudent valuation framework
(16/01/2024) EBA - CP on the amendments draft RTS on the prudent valuation framework
The European Banking Authority (EBA) has published a consultation paper where it proposes amendments to the draft Regulatory Technical Standards (RTS) on prudent valuation framework, to address targeted implementation issues. In addition, this document includes a proposal for how to address the mandate introduced by the legislative proposal amending the Capital Requirements Regulation (CRR3). The consultation runs until 16th April 2024.
ML/TF risk factors
(16/01/2024) EBA - Final report on amending GL on ML FT risk factors extending the scope to crypto-asset service providers
The European Banking Authority (EBA) has issued the final report on amending Guidelines on money laundering or terrorist financing (ML/TF) risk factors. The new Guidelines highlight ML/TF risk factors and mitigating measures that crypto-asset service providers (CASPs) need to consider, representing an important step forward in the European Union’s fight against financial crime. The Guidelines will apply from 30 December 2024.
Reporting requirement for market risk
(11/01/2024) EBA - Amendments to the reporting requirements for market risk
The European Banking Authority (EBA) has published amendments to the reporting requirements for market risk. As the implementation of the Fundamental Review of the Trading Book (FRTB) in the EU approaches, the EBA revised the information to be reported on the own funds requirements under the alternative approaches and adds reporting on reclassifications of instrument between the regulatory books. The draft amending implementing technical standards will be submitted to the Commission for endorsement before being published in the Official Journal of the European Union. The technical standards are expected to apply for the first time for the reporting as of 31 March 2025.
Enhancing special resolution regime
(11/01/2024) Gov UK - Enhancing the Special Resolution Regime
The UK Government has published a consultation outlining the UK government's intention to enhance and update the Special Resolution to effectively manage the failure of small banks and minimize risks to public funds. In light of the collapse of Silicon Valley Bank UK in 2023, the Government considers the existing regime to be robust but warns of the need for greater flexibility. The proposal suggests introducing a new mechanism that could transfer a failing small bank to a Bridge Bank or a willing buyer, reducing the reliance on insolvency. The mechanism aims to utilize funds from the banking sector, administered by the Financial Services Compensation Scheme (FSCS), to cover resolution costs, thereby safeguarding taxpayers. The government emphasizes that this enhancement would complement existing resolution powers and depositor protection measures, without imposing upfront financial burdens on banks. The consultation period concludes on March 7, 2024.
Supervisory activities on MiFID II
(11/01/2024) ESMA - ESMA and NCAs to coordinate supervisory activities on MiFID II pre-trade controls
The European Securities and Markets Authority (ESMA) has launched a Common Supervisory Action (CSA) with National Competent Authorities (NCAs), with the objective of assessing the implementation of pre-trade controls (PTCs) by European Union (EU) investment firms using algorithmic trading techniques. PTCs are used by investment firms to carry out checks at order entry to limit and prevent sending erroneous orders for execution to trading venues. Following the May 2022 flash crash, ESMA and NCAs have focused their attention on the implementation of PTCs in the EU, gathering evidence through questionnaires submitted to a sample of EU investment firms.
Risk exposures in real estate
(10/01/2024) ESMA - ESMA explores risk exposures to real estate in EU securities markets and investment funds
The European Securities and Markets Authority (ESMA) has published its first analysis of the exposures the European Union (EU) securities and markets and asset management sector have to real estate. The analysis suggests that i) debt levels in the real estate sector are elevated with wider risk implications from non-bank financial market players and that ii) interlinkages with the banking system are important and arise through entity exposures and activities, the impacts of which on the sector can be transmitted throughout the EU financial system.
Draft documents on the implementation of ESRS
(09/01/2024) EFRAG - Publication of the 3 draft EFRAG ESRS IG documents (EGRAF IG 1 to 3)
The European Financial Reporting Advisory Group (EFRAG) has published for consultation three documents with guidelines for the implementation of the European Sustainability Reporting Standards (ESRS) relating to the following aspects: 1) dual materiality; 2) value chain; 3) detailed reporting requirements (datapoints). Stakeholders can provide feedback by accessing the relevant surveys by 2 February 2024.
Consultation on draft implementing standards
(09/01/2024) ESAs - ESAs consult on draft implementing technical standards specifying certain tasks of collection bodies and certain functionalities of the European Single Access Point
The European Supervisory Authorities (ESAs) have published a Consultation Paper on the draft Implementing Technical Standards (ITS) regarding the tasks of the collection bodies and the functionalities of the European Single Access Point (ESAP). These ITS and the requirements they set out are designed to enable future users to be able to effectively harness the comprehensive financial and sustainability information centralized on the ESAP. Interested parties can submit comments until 8 March 2024 and ESAs should publish a Final Report and submit the draft ITS by 10 September 2024.
Cyber resilience Stress Test
(03/01/2024) ECB - ECB to stress test banks’ ability to recover from cyberattack
The European Central Bank (ECB) is set to conduct a cyber resilience stress test on 109 banks under its supervision in 2024. The scenario assumes a cyberattack that disrupts daily operations, testing banks' emergency procedures, contingency plans, and their capability to restore normal operations. A subset of 28 banks will undergo an enhanced assessment, submitting additional information on their response to the cyberattack. The insights gained will inform the wider supervisory assessment in 2024, with findings discussed during the Supervisory Review and Evaluation Process. The results are expected to be communicated in the summer of 2024.
National Security Framework for 5G Networks and Services
(03/01/2024) MINECO - Public hearing on the draft royal decree approving the national security framework for 5G networks and services
The Ministry of Digital Transformation (MINECO) has released the draft Royal Decree approving the National Security Framework for 5G Networks and Services. This Royal Decree aims to ensure a trustworthy environment for the development and adoption of 5G networks and services, as well as to guarantee the continuous and secure operation of the network and services. Through this publication, specific requirements are established for network and service operators, a diversified market of suppliers is promoted, and the protection of national security is strengthened. Additionally, measures are put in place for the comprehensive and global treatment of network and service security.
Other publications of interest
Clarification on the implementation of MiFIR
(27/03/2024) ESMA - Statement on the application of certain provisions of MIFIR, including the volume limit.
The European Securities and Markets Authority (ESMA) has published a statement providing practical guidance to support the transition and consistent application of the Markets in Financial Instruments Regulation (MiFIR). The guidance covers areas such as transparency on equity and other financial instruments covered by the regulation, the systematic internalizers regime, designated entities for publication and reporting. ESMA also confirms that it will continue to publish Double Volume Cap (DVC) data as required by the European Commission (EC), with the next publication scheduled for early April. Subsequently, ESMA will develop draft technical standards and provide more detailed guidance, complementing the draft interpretative communication issued by the EC on March 27, 2024 and responding to market consultations on the revision of MiFIR that came into force on March 28, 2024.
Ultimate Forward Rate 2025
(27/03/2024) EIOPA - Ultimate Forward Rate (UFR) for 2025
The European Insurance and Occupational Pensions Authority (EIOPA) has published the calculation of the Ultimate Forward Rate (UFR) applicable as of 1 January 2025, which remains unchanged at 3.30% for the euro. For other currencies, the UFR also remains unchanged for 19 other currencies, decreases by 15 basis points for nine currencies and increases by 15 basis points for one currency.
Financial Services and Markets Act 2023
(28/03/2024) BoE - Consultation paper on amendments to policy and procedure statements following the Financial Services and Markets Act 2023.
The Bank of England (BoE) has launched a consultation paper, presenting proposed changes to policies and procedures following the Financial Services and Markets Act 2023 (FSMA 2023). These updates introduce new or extend existing enforcement powers, including the Prudential Regulation Authority (PRA). The BoE proposes adjustments to its enforcement approach to reflect these new powers, addressing the imposition of sanctions and temporary prohibitions, and applying existing policies to recognised payment system operators using digital settlement assets. In addition, new policies on financial penalties related to the wholesale distribution of cash and critical third parties are included. The deadline for comments is 28 June 2024, and the changes are proposed to be implemented in the fourth quarter of 2024.
Requirements MREL 2024
(28/03/2024) BoE – Resolution on external minimum requirements for own funds and eligible liabilities (MRELs) – 2024
The Bank of England (BoE) has published the 2024 external minimum requirements for own funds and eligible liabilities (MREL) for companies in the UK that exceed the minimum capital requirements. The disclosure approach is detailed, including capital buffers and specific requirements for firms with internal recapitalisation and partial transfer strategies. The adjustments are based on the resolution strategy and current balance sheets to ensure viability during resolution processes and to meet the targets set by banking legislation.
Credit Rating Agencies
(02/04/2024) ESMA - ESMA consults on possible amendments to the Credit Rating Agencies Regulatory Framework
The European Securities and Markets Authority (ESMA) has launched a consultation on possible amendments to Commission Delegated Regulation supplementing Regulation (EC) No 1060/2009 of the European Parliament and of the Council on credit rating agencies by laying down regulatory technical standards for the assessment of compliance of credit rating methodologies and Annex I to the Regulation on Credit Rating Agencies (CRAR) with the aim of improving the integration of environmental, social and governance factors (ESG) in credit rating methodologies and their disclosure, as well as enhancing the transparency and credibility of the credit rating process. ESMA will consider the comments received in the consultation and submit its technical advice to the European Commission by December 2024.
Safe and trusted AI use
(02/04/2024) GOV.UK - Collaboration on the safety of AI: UK-US memorandum of understanding
The UK and US governments have published a Memorandum of Understanding (MoU) detailing their collaboration to ensure the safe and trusted development and use of advanced Artificial Intelligence (AI). This agreement establishes a partnership between the two countries' AI Safety Institutes, established in November 2023, with the aim of developing joint work programmes, conducting shared model assessments, conducting joint testing exercises, collaborating on technical research on AI safety, facilitating socio-technical policy harmonisation, and working on international standards for AI safety testing and other standards applicable to the development, deployment and use of advanced AI models.
NAIC 2022 Profitability Report
(03/04/2024) NAIC - NAIC Releases 2022 Profitability Report
The U.S. National Association of Insurance Commissioners (NAIC) has released the 2022 National and State Profitability Report, which estimates and allocates profitability in property and casualty insurance. The report is based on annual statements and provides estimates of earnings on earned premiums and return on equity by line of business and by state. Beginning in 2022, the report data is broken down by mutual and reciprocal insurers and by stock insurers. Highlights of the report include a 13th consecutive year of growth in total earned premiums, a decline in the nationwide direct return on equity for the total Property & Casualty market, and the significant contribution of Private Passenger Automobile (PPA) to the Property & Casualty market. The report includes several estimated profit components and provides long-term historical averages to account for fluctuations in calendar year financial results.
Financial flows tracking
(04/04/2024) EC - Platform on Sustainable Finance intermediate report on monitoring capital flows to sustainable investments
The European Commission (EC) has entrusted the Sustainable Finance Platform, the task of developing a methodology to track financial flows to sustainable investments, presenting an interim report that proposes to measure the contribution of finance to the European Green Deal. This report is based on European Union (EU) regulatory data and market practices, detailing capital flows in the real economy and financial markets, with a focus on capital expenditures and flows to and from financial markets. In addition, it includes an analysis of the investment gap in the Green Deal and the final report, published at the end of the Platform's mandate, is expected to provide methodological improvements and proposals for continued follow-up.
Reinsurance
(04/04/2024) EIOPA - Supervisory expectations on reinsurance through third-country reinsurers
The European Insurance and Occupational Pensions Authority (EIOPA) has issued a supervisory communication on reinsurance with third-country reinsurers, emphasising the need to assess the effectiveness of risk mitigation, especially when dealing with reinsurers subject to regulatory frameworks not equivalent to Solvency II standards. The communication advocates a risk-based approach, outlining expectations to assess the business context, encourage early dialogue between supervisors and stakeholders, and evaluate reinsurance arrangements and related risk management systems with third country reinsurers.
Climate Resilience Strategy for Insurance
(05/04/2024) NAIC - NAIC Adopts First National Climate Resilience Strategy for Insurance to Close Coverage Gaps and Improve Recovery from Natural Disasters
The National Association of Insurance Commissioners (NAIC) adopted the National Insurance Climate Resilience Strategy to protect the property insurance market. Coordinated by state regulators, the strategy focuses on reducing risk through homeowner reinforcement, data collection, public awareness and solvency tools. Initiatives such as the Property and Casualty Market Intelligence Data Call aim to improve community resilience. The strategy includes plans to collect data, create a flood insurance scheme, leverage in catastrophe modelling, develop new tools, advocate for mitigation funding and improve solvency analysis. Adopted in 2024, this strategy aims to strengthen the availability and reliability of insurance against climate risks.
Treatment of internal MREL
(26/03/2024) Council - Daisy Chains: Council adopts directive on indirect subscription chains
The Council has adopted a directive that amends the Bank Recovery and Resolution Directive or (BRRD) and the Single Resolution Mechanism Regulation or (SRMR) to include targeted proportionality requirements to the treatment of internal minimum requirement for own funds and eligible liabilities (MREL) in bank resolution groups. The Daisy Chains directive sets out the concept and scope of liquidation entities and provides the conditions for the application of the consolidated treatment of internal MREL. The new rules aim to give the resolution authorities the power of setting internal MREL on a consolidated basis subject to certain conditions as well as they introduce a specific MREL treatment for liquidation entities. This is the last step of the adoption procedure. The text enter into force 20 days after its publication in the Official Journal.
External Reviewers of EU Green Bonds
(26/03/2024) ESMA - ESMA consults on rules for External Reviewers of EU Green Bonds
The European Securities and Markets Authority (ESMA) has launched a consultation on Draft Regulatory Technical Standards (RTS) related to the registration and supervision of external reviewers under the EU Green Bond Regulation (EuGB). ESMA’s proposals relate to the registration and supervision of entities interested in becoming external reviewers of EU Green Bonds and aim to clarify the criteria used for assessing an application for registration by an external reviewer. In its proposals, ESMA aims to standardise registration requirements and contribute to developing a level playing field through lower entry costs for applicants. ESMA will consider the feedback received to this consultation and expects to publish a final report in Q4.
ITS on supervisory reporting
(22/03/2024) EBA - Revised list of validation rules in ITS on supervisory reporting
The European Banking Authority (EBA) has 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 technological problems.
Shortening the settlement cycle
(21/03/2024) ESMA - Feedback statement of the Call for evidence on shortening the settlement cycle
The European Securities and Markets Authority (ESMA) has published feedback received to its Call for Evidence on shortening the settlement cycle. In the report ESMA summarises the feedback from market participants during the consultation, focused on four areas: i) many operational impacts beyond adaptations of post-trade processes are identified as resulting from a reduction of the securities settlement cycle in the EU; ii) identification of both potential costs and benefits of a shortened cycle; iii) suggestions on how and when a shorter settlement cycle could be achieved, with a strong demand for a clear signal from the regulatory front at the start of the work and clear coordination between regulators and the industry; and iv) need for a proactive approach to adapt their own processes to the transition to T+1 in other jurisdictions. ESMA intends to deliver its final assessment to the European Parliament and to the Council before 17 January 2025.
Community Reinvestment Act final rule
(21/03/2024) FED - Agencies extend applicability date of certain provisions of their Community Reinvestment Act final rule
Federal bank regulatory agencies have jointly issued an interim final rule that extends the applicability date of certain provisions in their Community Reinvestment Act (CRA) final rule issued in October 2023. To promote clarity and consistency, the agencies extended the applicability date of the facility-based assessment areas and public file provisions from April 1, 2024, to January 1, 2026. Therefore, banks will not have to make changes to their assessment areas or their public files as a result of the 2023 CRA final rule until January 1, 2026. In addition, the agencies also issued technical, non-substantive amendments to the CRA final rule and related agency regulations that reference it.
Bank Merger Transactions
(21/03/2024) FDIC - FDIC Seeks Public Comment on Proposed Revisions to its Statement of Policy on Bank Merger Transactions
The Federal Deposit Insurance Corporation (FDIC) Board of Directors has approved a Federal Register notice seeking public comment on proposed revisions to the agency’s Statement of Policy (SOP) on Bank Merger Transactions. The revised SOP reflects legislative and other developments that have occurred since it was last amended in 2008, including the establishment of the statutory factor regarding the risk to the stability of the United States (US) banking or financial system. The revised SOP is principles based; i) describes the types of applications subject to FDIC approval; ii) addresses each statutory factor separately; and iii) highlights other relevant matters and considerations, such as related statutes pertaining to interstate mergers, and applications from non-banks or banks that are not traditional community banks.
Countercyclical capital buffer
(21/03/2024) BdE - The Bank of Spain maintains the countercyclical capital buffer at 0%
The Bank of Spain (BdE) has communicated the maintenance of the countercyclical capital buffer at 0%. The evolution of the relevant indicators continues to show an absence of accumulation of new systemic vulnerabilities in the Spanish financial system, so the BdE has decided to leave unchanged at 0% the regulatory percentage of the countercyclical capital buffer (CCB) required in the second quarter of 2024 to banks for their credit exposures in Spain.
2024 Supervisory benchmarking exercise
(20/03/2024) EBA - EBA updates list of institutions involved in the 2024 supervisory benchmarking exercise
The European Banking Authority (EBA) has published an updated list of institutions, which have a reporting obligation for the purpose of the 2024 European Union (EU) supervisory benchmarking exercise. The EBA will be conducting the 2024 benchmarking exercise on a sample of 110 institutions from 16 countries across the EU and the European Economic Area. The EBA runs this exercise leveraging on established data collection procedures and formats of regular supervisory reporting and assists Competent Authorities in assessing the quality of internal approaches used to calculate risk weighted exposure amounts.
Retirement income advice
(20/03/2024) FCA - Thematic Review TR24/1 Retirement income advice thematic review
The Financial Conduct Authority (FCA) has issued a thematic review on the retirement income advice in order to: i) gain detailed insights into how the retirement income advice market is functioning; ii) understand whether firms’ advice models consider the specific needs of consumers in decumulation; iii) consider whether consumers are being provided with suitable retirement income advice when accessing benefits built up through pension savings, and take appropriate action to tackle any harms identified; and iv) inform our future areas of focus. All firms that provide retirement income advice should consider and use this information to review and update how they work.
Share Repurchase Disclosure Modernization
(19/03/2024) SEC - Share Repurchase Disclosure Modernization
The Securities and Exchange Commission (SEC) has adopted amendments to modernize and improve disclosure about repurchases of an issuer’s equity securities that are registered under the Securities Exchange Act of 1934. The amendments require additional detail regarding the structure of an issuer’s repurchase program and its share repurchases, require the filing of daily quantitative repurchase data either quarterly or semi-annually, and eliminate the requirement to file monthly repurchase data in an issuer’s periodic reports. The amendments also revise and expand the existing periodic disclosure requirements about these repurchases. Finally, the amendments add new quarterly disclosure in certain periodic reports related to an issuer’s adoption and termination of certain trading arrangements.
Guidance for insolvency practitioners
(19/03/2024) FCA - Guidance for insolvency practitioners on how to approach regulated firms
The Financial Conduct Authority (FCA) has released a guidance for insolvency practitioners on how to approach regulated firms. Since the last Guidance, published in 2021 there have been changes in the legal framework affecting firm failure, changes in the regulatory framework and changes in the UK economic climate. The Guidance is mainly aimed at insolvency practitioners (IPs) appointed over firms solely authorized or registered by the FCA, although it may also be relevant for IPs appointed over firms that are dual regulated by the FCA and Prudential Regulation Authority (PRA). The deadline to submit any views on the consultation is April 30th 2024.
Corporate sustainability due diligence
(19/03/2024) MEP - Proposal for a Corporate Sustainability Due Diligence
Members of the European Parliament (MEPs) have approved the proposed Corporate Sustainability Due Diligence (CSDD) Directive, pending approval by the European Parliament (EP) for its entry into force. The Directive aims to establish a comprehensive framework for companies to respect human rights and environmental standards throughout their operations and supply chains and will apply to EU and non-EU companies and parent companies with more than 1,000 employees and a turnover of more than €450 million, as well as franchises with a turnover of more than €80 million if at least €22.5 million has been generated by royalties.
New EU Rules on Platform Work
(19/03/2024) EP - Platform Work: first green light to new EU rules on employment status
The Committee on Employment and Social Affairs has approved a political agreement to improve the working conditions of platform workers. The new rules aim to correctly classify employment status, address false self-employment, and regulate the use of algorithmic management and artificial intelligence. The law introduces a presumption of an employment relationship, prohibits dismissal based on algorithms, and safeguards workers' data. Additionally, transparency is enhanced by obliging platforms to disclose how their algorithms function. The agreed-upon text must be formally approved by Parliament during the plenary session from April 22nd to 25th and subsequently by the Council. After publication in the Official Journal of the EU, member states will have two years to incorporate the Directive's provisions into their national legislation.
EDGAR Filer Manual
(18/03/2024) SEC - Adoption of Updated EDGAR Filer Manual
The Securities and Exchange Commission (SEC) has implemented amendments to Volume II of the Electronic Data Gathering, Analysis, and Retrieval system Filer Manual (EDGAR Filer Manual) and associated rules and forms. The Filer Manual contains essential information for filers to make submissions on EDGAR, and compliance with its provisions is necessary to ensure the timely acceptance and processing of filings made in electronic format. Filers must consult the Filer Manual alongside SEC rules governing mandated electronic filings when preparing documents for electronic submission. These changes, known as EDGAR Release 24.1, will be integrated into the EDGAR system on March 18th.
Joint Bank Reporting Committee
(18/03/2024) ECB - ECB and EBA step up efforts to make banking industry data reporting more efficient
The European Central Bank (ECB) and the European Banking Authority (EBA) have established the Joint Bank Reporting Committee (JBRC), which is tasked with helping to develop common definitions and standards for the data that banks are required to report for statistical, supervisory and resolution purposes. One key tangible deliverable of the JBRC will be a common data dictionary for the reporting of statistical, supervisory and resolution data by banks. In this regard, the JBRC will work on establishing common concepts and definitions used in new and existing reporting.
Consultation on the minimum bail-in data template
(13/03/2024) SRB - Consultation on the minimum bail-in data template | Single Resolution Board
The Single Resolution Board (SRB) has launched a public consultation on the minimum bail-in data template (MBDT). The template collects bail-in data in the event of a bank failure or for dry-runs and testing exercises while being flexible enough to accommodate aspects related to national law. The package provides an integrated approach for implementing the SRB Bail-in Data Set Instructions and Explanatory Note published in 2020 and updated in 2022, by enhancing definitions and providing a template to ensure structured and standardized data collection across banks under the SRB’s remit.
Standardized models of commissions and expenses attributable to pension plans
(13/03/2024) MINECO - Draft Circular on the use of standardized forms of fees and other expenses attributable to pension plans to comply with the reporting obligations of pension fund management entities
The Ministry of Economy, Trade and Enterprise (MINECO) has published a prior public consultation for the drafting of a circular that will regulate the use of standardized models of commissions and other expenses attributable to pension plans to comply with the reporting obligations of pension fund management companies. The purpose of this circular is to standardize the information provided to potential participants, members or beneficiaries, so as to allow adequate comparability of the totality of these costs between pension plans integrated in funds of the same investment category. The consultation period ends on March 21, 2024.
Non-systemic banks and building societies
(12/03/2024) BoE - PS5/24 – Solvent exit planning for non-systemic banks and building societies
The Bank of England (BoE) has submitted the Policy Statement (PS) on the solvent exit planning for non-systemic banks and building societies that provides feedback to responses to the prior consultation paper (CP). Respondents have generally supported the solvent exit policy to minimize the risks of a disorderly wind-down of PRA-regulated activities, as well as the distinction between the level of preparations to be made by firms in a normal situation versus firms with a reasonable prospect of solvent exit and the requirement for solvent exit planning commensurate with the nature, scale and complexity of the firms. This standard applies to UK banks and building societies that are not, and are not part of a group that is, a global systemically important entity (G-SII) or other systemically important entity (O-SII), nor subject to the Business Continuity Part of the PRA Regulations.
Risk management requirements for FMUs
(08/03/2024) Federal Reserve Board - Final rule that updates risk management requirements for certain systemically important financial market utilities (FMUs)
The Federal Reserve Board (Fed) has announced a final rule updating risk management requirements for certain systemically important marketplace financial services firms (FMUs) supervised by the Fed. The updates bring more clarity and specificity to existing requirements in four key areas of operational risk management: incident management and reporting; business continuity management and planning; third-party risk management; and review and testing of operational risk management measures. FMUs subject to the rule must comply with certain updates within 90 days and all updates within 180 days of publication in the Federal Register.
Order Execution Information
(06/03/2024) SEC - Disclosure of Order Execution Information
The Securities and Exchange Commission (SEC) has adopted amendments to a rule under the Securities Exchange Act that requires disclosures for order executions in national market system (NMS) stocks. First, the amendments expand the scope of reporting entities subject to the preexisting rule that requires market centers to make available to the public monthly execution quality reports to encompass broker-dealers with a larger number of customers. The amendments also modify the definition of covered order to include certain orders submitted outside of regular trading hours and certain orders submitted with stop prices. In addition, the amendments modify the information required to be reported under the rule, including changing how orders are categorized by order size as well as how they are categorized by order type. The final rules will become effective 60 days after the date of publication in the Federal Register.
Final guidelines on registers of credit servicers
(05/03/2024) EBA - The EBA publishes its final Guidelines on national lists or registers of credit servicers
The European Banking Authority (EBA) published its final Guidelines on national lists or registers of credit servicers. The Guidelines are addressed to Competent Authorities managing the lists or registers and specify the content of the lists or registers, how they should be made accessible, and the deadlines for updating them. Furthermore, the lists or registers should facilitate borrowers’ access to information on complaint-handling procedures offered by competent authorities. The Guidelines specify that the lists or registers should be accessible 24 hours a day, 7 days a week, on the website of the competent authority or another electronic tool; that they should not require the user’s prior registration as a precondition for access; and that they should be free of charge.
Basel III Monitoring Report
(05/03/2024) BIS - Basel III Monitoring Report
The Quantitative Impact Study Group of the Basel Committee on Banking Supervision (BCBS) has released the semi-annual report on the impact of the Basel III framework using data as of 30 June 2023, including the December 2017 finalization of the Basel III reforms and the January 2019 finalization of the market risk framework. This monitoring report captures the evolution of the estimated impacts on the risk-based capital ratio, the leverage ratio and liquidity metrics, using data collected by national supervisors on a representative sample of institutions in each country.
RTS under CRR3
(04/03/2024) EBA - RTS under the CRR3 regarding off-balance sheet items under the standardized approach of credit risk
The European Banking Authority (EBA) has released a public consultation on its draft Regulatory Technical Standards (RTS) under the Capital Requirements Regulation (CRR3), focusing on off-balance sheet items under the standardized approach of credit risk. These RTS delineate the criteria for classifying off-balance sheet items and identify factors that could restrict institutions' ability to cancel unconditionally cancellable commitments. These RTS are placed in the context of the EBA's roadmap on the implementation of the European Union (EU) banking package. Additionally, the document outlines the conversion process from off-balance sheet to on-balance sheet equivalent amounts under the Standardized Approach for Credit Risk, detailing various bucket allocations and providing examples of specific off-balance sheet items and their respective categorizations. The consultation period for feedback extends until June 4, 2024.
Annual transparency calculations
(01/03/2024) ESMA - ESMA publishes the results of the annual transparency calculations for equity and equity-like instruments
The European Securities and Markets Authority (ESMA) has published the results of the annual transparency calculations for equity and equity-like instruments, which will apply from 1 April 2024 until 6 April 2025. The calculations made available include: i) the liquidity assessment; ii) the determination of the most relevant market in terms of liquidity; iii) the determination of the average daily turnover relevant for the determination of the pre-trade and post-trade large in scale thresholds; iv) the determination of the average value of the transactions and the related the standard market size; and v) the determination of the average daily number of transactions on the most relevant market in terms of liquidity relevant for the determination of the tick-size regime.
Euribor’s Hybrid methodology
(01/03/2024) EMMI - Final results: Euribor Consultation Paper on Enhancements to Euribor’s Hybrid Methodology
The European Money Markets Institute (EMMI) has concluded its public consultation on proposed enhancements to the Euribor benchmark’s methodology with support from industry participants, including market participants, trade associations, infrastructure providers, and others. The proposed modifications to the Euribor Hybrid methodology resulted in a material change in the methodology which led EMMI to release a Public Consultation as per EMMI’s internal policy. The consultation, which aimed to refine the Euribor hybrid methodology, garnered positive responses and provided insights into the future of this critical benchmark.
New approach to FCA activity
(28/02/2024) FCA - FCA Enforcement Guide (EG) and publicizing enforcement investigations–a new approach
The Financial Conduct Authority (FCA) has released a Consultation Paper containing a proposal to increase transparency in the FCA’s activities. Proposed revisions to the rest of EG aim to improve the accessibility of information about how FCA carries out their investigations, and strengthen the impact of its work as it responds to current challenges. To this end the FCA has considered how to maximize the benefits of transparency by disclosing more information about its enforcement activities at an earlier stage FCA wants the information they provide to be concise, relevant and, ultimately, more useful.
Transparency in the repo market
(28/02/2024) ECB - Enhancing repo market transparency: the EU Securities Financing Transactions Regulation
The European Central Bank (ECB) has released a paper that aims to show that the Securities Financing Transaction Data Store (SFTDS) can greatly enhance the ECB’s understanding of repo markets from a financial stability perspective, supporting efforts to increase resilience. It starts by showing how the data reported under the Securities Financing Transactions Regulation (SFTR) increases transparency and will help authorities obtain more timely and comprehensive insights into market trends. By providing a comprehensive picture of daily activity for a broad range of market segments and counterparties, it will support market monitoring and the development of policy.
Inflation in the Euro Zone
(28/02/2024) ECB - What caused the euro area post-pandemic inflation?
In this paper, the ECB uses the Bernanke and Blanchard (henceforth “BB”) to estimate a model using euro area quarterly data over the period from the first quarter of 1999 to the second quarter of 2023. The document points out that the pandemic period saw high macroeconomic volatility and the relationship between economic variables may have changed, temporarily or permanently. To conduct the study, the model parameters estimated over the full sample are compared with the coefficients estimated over a shorter sample ending in the fourth quarter of 2019, as a way of assessing how more recent data from the pandemic period affect the model estimation and simulation. The most relevant conclusions of the report are the following: i) supply shocks are the main drivers of inflation in the Eurozone, ii) shortages caused by the pandemic may have a more lasting effect on Eurozone inflation than initially expected, and iii) the risk of higher inflation persists mainly due to energy price expectations.
Alternative investment funds
(26/02/2024) Council - Capital markets union. Council adopts new rules on alternative investment fund managers and plain-vanilla EU investment funds
The Council has approved new regulations to strengthen European capital markets and investor protection in the European Union (EU). These rules amend the alternative investment fund managers directive and update regulations for undertakings for collective investment in transferable securities (UCITS). They aim to integrate asset management markets, modernize regulatory frameworks, and enhance liquidity management tools for fund managers during financial instability. Additionally, the directive addresses loan-originating funds, improves delegation rules, encourages data sharing among authorities, and introduces measures to identify unjustifiable costs to investors and prevent misleading fund names. The directive will be published in the EU's official Journal, taking effect 20 days later, with member states having 24 months to incorporate these rules into national legislation.
Geospatial environment data
(26/02/2024) EC - GreenData4All – updated rules on geospatial environmental data and access to environmental information
The European Commission has published a public consultation about the GreenData4All initiative. It will help deliver on Europe’s green and digital transformation by updating EU rules on environmental geospatial data and on public access to environmental information. The aims are to: i) enable greater sharing of data between the public & private sectors and with the general public; and ii) unlock the full benefits of data sharing for data-driven innovation and evidence-based decisions. The feedback period is open until the 25th of March.
Impact of covid-19
(26/02/2024) ECB - The impact of the COVID-19 pandemic and policy support on productivity
The European Central Bank (ECB) has published a report aiming to understand the channels of transmission and quantify the short- and long-term impacts of the COVID-19 pandemic on productivity within the European Union (EU). This report, produced in collaboration with an Expert Group on Productivity, Innovation, and Technological Change, comprised experts from the European System of Central Banks (ESCB) and utilized macro, sector, and firm-level data. The analysis highlighted the distinct nature of productivity developments during the pandemic compared to previous economic downturns, shedding light on the effects of containment measures and policy support measures. Key findings include shifts in labor productivity and firm dynamics, such as the accelerated adoption of teleworking, beneficial to to productivity under certain conditions, and e-commerce, which is expected to have a positive and lasting impact on productivity. The report underscores the importance of understanding these implications for future policy analysis and economic recovery efforts.
Impact of climate change
(26/02/2024) ECB - The impact of climate change and policies on productivity
The European Central Bank (ECB) has published a report analyzing the impact of climate change and associated policies on labor productivity. Climate-related physical and transition risks are expected to adversely affect capital, labor, and total factor productivity, particularly in Southern Europe. Disorderly transition scenarios could temporarily suppress productivity growth due to higher emission costs, whereas an orderly transition path would lead to higher labor productivity in the medium to long term. Environmental regulations may spur innovation, potentially offsetting regulatory costs, although their impact varies across industries and firms. The green transition will necessitate significant capital and labor reallocation, with mixed effects on productivity, potentially leading to regional and occupational disparities akin to stranded assets in financial markets.
Financial stability reporting
(20/02/2024) EIOPA - Risk-free interest rate term structures
The European Insurance and Occupational Pensions Authority (EIOPA) has published its first shocked risk-free interest rate term structures (RFR). These term structures are used to calculate the Option-adjusted duration of technical provisions to be reported in the context of the Guidelines for reporting for financial stability purposes. The shocked RFR aims to ensure consistent calculation of the Option-adjusted duration. EIOPA will update the term structures and publish them twice a year on its website. The next update is coming in July 2024.
Market data transparency
(20/02/2024) Council - MiFIR and MiFID II: Council adopts new rules to strengthen market data transparency
The Council has approved amendments to EU trading regulations (MiFIR and MiFID II) to enhance market data transparency, enabling easier access to crucial financial information for investors and boosting the European Union´s (EU) capital markets competitiveness. The changes introduce consolidated market data feeds, aiming to provide real-time transaction information across the EU. Additionally, the regulations ban payment for order flow practices, with some exceptions until 2026, and include provisions on commodity derivatives. Once published in the EU's Official Journal, member states have 18 months to comply.
Capital and liquidity self-assessment processes
(19/02/2024) BdE - Modification of the Guide for Capital (PAC) and Liquidity (PAL) Self-Assessment Processes of Credit Institutions, regarding the treatment of interest rate and credit spread risks of activities other than trading
The Bank of Spain (BdE) has published modifications to the Guide for Capital (PAC) and Liquidity (PAL) Self-Assessment Processes of Credit Institutions, with the aim of aligning them with the guidelines EBA/GL/2022/14 adopted on April 24, 2023. These amendments seek to ensure consistency with supervisory expectations and Directive (EU) 2019/878. These modifications include the explicit assessment of credit spread risk (CSRBB) in capital self-assessment reports, alignment with macroeconomic stress tests, and new rules for calculating structural interest rate risk. The modifications will be applicable to supervised entities regarding their Capital and Liquidity Self-Assessment Reports as of December 31, 2023.
Shared national credit report
(16/02/2024) Fed - Agencies issue 2023 Shared National Credit Program report
The Federal Reserve (Fed) has published the 2023 Shared National Credit (SNC) report. It indicates moderate credit quality in large, syndicated bank loans but highlights declining trends due to higher interest rates and squeezed margins in specific sectors. Risks persist in leveraged loans and certain industries, while pandemic-affected sectors are improving. The report shows an increase in loans needing management's attention, with Unites States (US) banks holding a smaller share of risky loans compared to total commitments.
Ipcei to support hydrogen infrastructure
(15/02/2024) EC - EC approves up to €6.9 billion of State aid by seven Member States for the third IPCEI in the hydrogen value chain
The European Commission (EC) has approved, under European Union (EU) State aid rules, a third Important Project of Common European Interest (IPCEI) to support hydrogen infrastructure. This IPCEI is expected to boost the supply of renewable hydrogen, thereby reducing dependency on natural gas and helping to achieve the objectives of the European Green Deal and the REPowerEU Plan. The Member States will provide up to €6.9 billion in public funding, which is expected to unlock €5.4 billion in private investments. As part of this IPCEI, 32 companies with activities in one or more Member States, including small and medium-sized enterprises (SMEs), will participate in 33 projects. Participants will also collaborate on interoperability and common standards to prevent barriers and facilitate future market integration. The IPCEI will support the gradual emergence of an EU-wide hydrogen infrastructure starting from different regional clusters.
Streamlining variation margin
(14/02/2024) IOSCO - CPMI-IOSCO publish discussion paper and call for comments on streamlining variation margin in centrally cleared markets
The Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) has published the report with examples of effective practices of the Streamlining variation margin in centrally cleared markets. This report sets out for consultation eight effective practices addressing variation margin (VM) processes and transparency between Central Counterparties (CCPs), clearing members and their clients. The eight effective practices aim to provide examples of how standards set out in the Principles for Financial Market Infrastructures (PFMI) and CCP resilience guidance can be met. They are intended to inform CCPs in designing their VM call and collection processes. The deadline for comments is 14 April 2024.
Reporting requirements under RTS 28
(13/02/2024) ESMA - ESMA clarifies certain best execution reporting requirements under MiFID II
The European Securities and Markets Authority (ESMA) has issued a statement addressing the removal of the obligation for investment firms to publish regulatory technical standards (RTS28) on the quality of execution of client orders. ESMA expects National Competent National Competent Authorities (NCAs) not to prioritise supervisory actions towards investment firms relating to the periodic RTS 28 reporting obligation, from 13 February 2024 until the forthcoming transposition into national legislation in all Member States of the MiFID II review.
AI ACT
(13/02/2024) EP –Provisional agreement on the AI Act
The Internal Market and Civil Liberties Committees of the European Parliament (EP) have voted on the outcome of the negotiations with Member States on the Artificial Intelligence Act (AI Act), and endorsed the provisional agreement on the AI Act that ensures security and respects fundamental rights. The agreed draft text includes amendments to the definition of AI, high-risk AI systems, the general purpose of AI (GPAI), responsibilities along the AI chain, the fundamental rights impact assessment and sanctions and exemptions. The IA Act is expected to be adopted at the next session of the EP on 11 April 2024.
Change in company size criteria
(12/02/2024) MINECO - Preliminary draft law amending the criteria for determining the size of companies or groups in the field of corporate reporting
The Ministerio de Economía, Comercio y Empresa (MINECO) has published for consultation the draft bill modifying the criteria for determining the size of companies or groups in corporate reporting. This preliminary draft aims to transpose the European Union (EU) Delegated Directive 2023/2775 to adjust the criteria for the size of a company or group of companies in order to take into account the impact of inflation. This takes the form of the following: i) adjusting the thresholds for considering an entity as a micro enterprise (balance sheet total amount is adjusted from 350 thousand to 450 thousand euros and net turnover from 700 thousand to 900 thousand euros); ii) adjusting the thresholds for considering an entity as a small entity (balance sheet total is adjusted from 4 million to 5 million euros and net turnover from 8 million to 10 million); and iii) adjusting the amounts to consider an institution as medium or large (adjusting the balance sheet total from 20 million to 25 million euros and the net turnover from 40 million to 50 million). The deadline for comments is 23 February 2024.
Delay in upcoming CSRD related standards
(07/02/2024) EP/Council - Council and Parliament agree to delay sustainability reporting for certain sectors and third-country companies by two years.
The Council and the European Parliament have reached a provisional deal on a directive on the time limits for the adoption of sustainability reporting standards for certain sectors and for certain third-country undertakings amending the Corporate Sustainability Reporting Directive (CSRD). This agreement will give more time for companies to prepare for the sectorial European Sustainability Reporting Standards (ESRS) and for specific standards for large non-EU companies, which will be adopted in June 2026, two years later than the originally scheduled date.
Technical package for reporting framework
(06/02/2024) EBA - The EBA releases technical package for its 3.4 reporting framework
The European Banking Authority (EBA) has published a technical package for version 3.4 of its reporting framework. This package provides the standard specifications that include the validation rules, the Data Point Model (DPM) and the XBRL taxonomies to support the amendments to the reporting and disclosure technical standards on minimum requirement for own funds and eligible liabilities and total loss absorbing capacity (MREL/TLAC), as well as some minor corrections to the technical package on the interest rate risk in the banking book (IRRBB). The DPM Query Tool has also been updated to reflect the current release.
Requirements when publishing investment recommendations on social media
(06/02/2024) ESMA - Requirements when posting investments recommendations on social media
When posting on social media, transparency and accuracy are key to mitigate the risk of market manipulation, especially when making investment recommendations. That's why, if you're a financial influencer, a technical expert, or someone with an interest in financial investments, it's necessary to know the rules established under the Market Abuse Regulation (MAR) and to be able to recognize when you're making an investment recommendation in order to comply with the rules established in the MAR. Failure to do so may result in National Competent Authorities imposing administrative or criminal sanctions that may vary according to the member state for certain types of infringements.
Third country insurers
(06/02/2024) EC - Prolongation of US provisional equivalence decision (Solvency II)
The European Commission (EC) has published a draft act that pertains to the renewal of the provisional equivalence determination for the solvency regime in the United States (US) under Solvency II. It highlights that the factual statements regarding the US solvency regime have not changed since the initial decision in 2015, and regular dialogues between US and EU authorities confirm that the criteria for equivalence continue to be met. The decision proposes a renewal of the provisional equivalence from 2026 to 2035, emphasizing the need for regular monitoring and potential reviews based on relevant developments. Additionally, it mentions the EC´s intention to renew provisional equivalence decisions for other third countries after receiving assessments from European Insurance and Occupational Pensions Authority (EIOPA). This draft act is open for feedback until the 5th of March.
EU´s green industry
(06/02/2024) EP/Council - Net-Zero Industry Act: Council and Parliament strike a deal to boost EU’s green industry
The Council and the European Parliament have reached a provisional deal on the regulation establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem, better known as the net-zero industry act (NZIA). The regulation aims at boosting the industrial deployment of net-zero technologies needed to achieve EU’s climate goals, using the strength of the single market to reinforce Europe’s leadership in industrial green technologies.
Regulation on ESG rating activities
(05/02/2024) EP/Council - Environmental, social and governance (ESG) ratings. Council and Parliament reach agreement
The European Council and Parliament have reached a provisional agreement on regulation for ESG ratings to enhance investor confidence in sustainable products. This regulation aims to strengthen transparency and integrity among ESG rating providers and mitigate conflicts of interest. Under the new rules, ESG rating providers will be authorized and supervised by the European Securities and Markets Authority (ESMA), and a lighter registration regime will be introduced for small businesses. The provisional agreement is pending final approval from the Council and Parliament, with the regulation set to take effect 18 months after approval.
Vulnerabilities in the residential real estate
(01/02/2024) ESRB - ESRB publishes follow-up report on residential real estate sector vulnerabilities
The European Systemic Risk Board (ESRB) has published a follow-up report on vulnerabilities in the residential real estate (RRE) sectors of European Economic Area (EEA) countries. The ESRB assesses vulnerabilities in the RRE sectors regularly because of their importance for financial and macroeconomic stability. In 2016, 2019 and 2021, the ESRB conducted systematic, forward-looking assessments of such vulnerabilities in the EEA. The most recent assessment focuses on changes in financial stability risks related to RRE markets and macroprudential policy responses adopted since the last assessment at the end of 2021.
Capital structure
(01/02/2024) BdE - Circular 1/2024, on capital structure reporting, addressed to banks, credit unions and other supervised institutions
The Bank of Spain (BdE) has issued a circular comprising five rules, one transitory provision, one repealing provision, and two final provisions, with two appendices. Chapter I establishes the objectives and scope, focusing on information requirements regarding stakes in entities and their capital, applicable to banks, cooperatives, etc. Chapter II regulates the submission of information on these stakes and capital structure. Chapter III sets out rules for presenting this information to the BdE.
RTS on residual risk
(01/02/2024) EBA - The EBA consults on draft technical standards on residual risk add-on hedges under the Fundamental Review of the Trading Book
The European Banking Authority (EBA) consults on draft technical standards on residual risk add-on hedges under the Fundamental Review of the Trading Book (FRTB). The EBA launched a public consultation on its draft Regulatory Technical Standards (RTS) on the conditions for determining whether an instrument attracting residual risk acts as a hedge. These RTS are part of the Phase 1 deliverables of the EBA roadmap on the implementation of the EU banking package in market risk. The consultation runs until 3 May 2024.
Transition risks
(01/02/2024) ECB - Risks from misalignment of banks’ financing with the EU climate objectives
The European Central Bank (ECB) has published a report which focuses on the transition risks stemming from banks’ credit portfolios. Banks that fall within the scope of European Banking Authority (EBA) Implementing Technical Standards (ITS) on Pillar 3 disclosures on environmental, social and governance (ESG) risks will have to disclose the alignment of their credit portfolios by the end of 2024 at the latest, including their degree of deviation from a decarbonization pathway. The methods set out in this report provide a concrete approach for banks to follow in meeting this requirement.
Approach to enforcement
(30/01/2024) BoE - PS1/24 – The Bank of England's approach to enforcement
The Bank of England's (BoE) has published a policy statement (PS) provides feedback on responses to consultation paper CP 9/23 and outlines final policies, including amendments to the Prudential Regulation Authority's (PRA) enforcement approach and procedures relevant to financial market infrastructures (FMIs). It also includes changes to decision-making allocation, supervisory approaches, and Enforcement Decision Making Committee (EDMC) Procedures. Applicable to PRA-authorised entities, senior employees under the Senior Managers and Certification Regime (SM&CR), credit unions, and professional advisers, these policies impact firms, and individuals subject to potential enforcement actions by the Bank and/or the PRA.
EU alternative investment funds
(30/01/2024) ESMA - ESMA steps up its monitoring of EU alternative investment funds and sees potential risks in funds exposed to leverage and liquidity mismatches
The European Securities and Markets Authority (ESMA) has published a report on the European Union (EU) alternative investment funds (AIFs)’ market and an article on the risks posed by leveraged AIFs in the EU. ESMA confirms the risks posed by real estate (RE) funds, in a context of declining volumes of transactions and falling prices in several jurisdictions. Existing liquidity mismatches in AIFs are particularly heightened by the high share of open-ended RE funds, some of which offer daily liquidity. This vulnerability could be systemically relevant in jurisdictions where RE funds own a large share of the RE market.
New ECB focus areas
(30/01/2024) ECB - ECB steps up climate work with focus on green transition, climate and nature-related risks
The European Central Bank (ECB) has decided to expand its work on climate change, identifying three focus areas that will guide its activities in 2024 and 2025: (i) the impact and risks of the transition to a green economy, especially the associated transition costs and investment needs; (ii) the increasing physical impact of climate change, and how measures to adapt to a hotter world affect the economy and (iii) the risks stemming from nature loss and degradation, how they interact with climate-related risks and how they could affect the ECB’s work through their impact on the economy and financial system.
Exposures to ESG
(29/01/2024) EBA - The EBA seeks inputs from credit institutions on the classification methodologies for exposures to ESG risks
The European Banking Authority (EBA) has launched an industry survey to receive input from credit institutions on their methodologies to classify exposures to environmental, social and governance (ESG) risks, as well as on the accessibility and availability of ESG data for this purpose. The objective of the survey is to collect qualitative information on credit institutions’ current practices to inform the EBA’s work on the feasibility of introducing a standardized methodology to identify and qualify exposures to ESG risks. The deadline to respond to the industry survey is 29 March 2024.
Compendium of market practices
(29/01/2024) EC - Platform on Sustainable Finance report on a compendium of market practices
The Platform on Sustainable Finance (PSF) has published its report on a compendium of market practices. The report focuses on seven stakeholder groups (corporates, credit institutions, investors, insurers, auditors and consultants, small- and medium-sized enterprises, and the public sector), showing that the EU taxonomy and the other sustainable finance tools (e.g., the European Green Bond Standard (EUGBS)) is being used for setting transition strategies, structuring financial transactions, and reporting on sustainability efforts.
Post Trade Risk Reduction Services
(26/01/2024) IOSCO - IOSCO seeks feedback on Post Trade Risk Reduction Services
The Board of the International Organization of Securities Commissions (IOSCO) has published a consultation report on Post Trade Risk Reduction Services (PTRRS), which identifies potential policy considerations and risks associated with the use and offering of PTRRS associated with over-the-counter (OTC) derivatives trades, and presents sound practices as guidance to IOSCO members and regulated users of PTRRS. IOSCO is seeking to better assess the risks associated with the increased use of PTRRS and concentration of PTRRS providers, particularly in the areas of portfolio compression and counterparty risk optimization input from market participants on the discussion question in the report as well as the proposed sound practices. Comments on the consultation report should be sent before 1 April 2024.
FSB 2024 work pogramme
(24/01/2024) FSB - FSB sets out 2024 work programme
The Financial Stability Board (FSB) has published its 2024 work programme. One focus of FSB work in 2024 will be to promote the full implementation of the key attributes of effective resolution regimes for financial institutions across all sectors work on resolution, including addressing the lessons learned from the March 2023 banking turmoil. The FSB will take forward implementation of its global regulatory and supervisory framework for crypto-asset activities and continue to monitor the financial stability implications of other digital innovations, including tokenisation and artificial intelligence (AI).
Investor protection in SPACs
(24/01/2024) SEC - Special Purpose Acquisition Companies, Shell Companies, and Projections
The Securities and Exchange Commission (SEC) has adopted rules to enhance investor protections in in initial public offerings by special purpose acquisition companies (SPACs) and in subsequent business combination transactions between SPACs and private operating companies. These rules include disclosure requirements for compensation paid to sponsors, conflicts of interest, dilution, and board of directors’ determinations. The rule adopted deems any business combination transactions involving reporting shell companies, provides guidance on underwriter status, and updates guidance on using projections in filings, with additional disclosure requirements for SPAC-related transactions.
AI innovation package
(24/01/2024) EC - Commission launches AI innovation package to support Artificial Intelligence startups and SMEs
The European Commission (EC) has launched a package of measures to support European startups and small and medium-sized enterprises (SMEs) in the development of trustworthy Artificial Intelligence (AI) that respects European values and rules. It contains: i) an amendment of the EuroHPC Regulation to set up AI Factories, ii) a decision to establish an AI Office within the Commission; iii) an EU AI Start-Up and Innovation Communication outlining additional key activities. The Commission is also establishing, with a number of Member States, two European Digital Infrastructure Consortiums (EDICs).
Digital pound
(25/01/2024) BoE- Bank of England and HM Treasury respond to digital pound consultation
The Bank of England (BoE) and HM Treasury have published their response to the consultation on a digital pound that was launched in February 2023. Response confirms that neither the Bank nor the Government would have access to users’ personal data. Authorities committed to maintaining access to cash for those who prefer it.
Resource on emissions reporting
(18/01/2024) IFRS - New resource on emissions reporting using GRI and ISSB Standards
The Global Reporting Initiative (GRI) and the International Financial Reporting Standards (IFRS) Foundation have jointly published a new analysis and mapping resource: Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards. The publication illustrates the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions in accordance with both GRI 305: Emissions and IFRS S2 Climate-related Disclosures.
Resolution plan for some large financial institutions
(17/01/2024) FED - Agencies extend resolution plan submission deadline for some large financial institutions
The Federal Reserve Board and the Federal Deposit Insurance Corporation have announced that they are extending the resolution plan submission deadline for certain large financial institutions. These companies will be required to submit their resolution plans by March 31, 2025, instead of July 1, 2024. By law, certain large financial institutions must periodically submit resolution plans to the agencies. These resolution plans, also known as living wills, must describe a company's strategy for orderly resolution in the event of material financial distress or failure of the company.
Aspects of the NSFR
(17/01/2024) EBA - The EBA publishes an analysis of specific aspects of the net stable funding ratio framework
The European Banking Authority (EBA) has published its Report about some specific aspects of the net stable funding ratio (NSFR) framework. The Report provides an evaluation of the materiality of the specific items analysed as well as an assessment of the impact of possible changes to the current prudential treatment. The EBA conducted mostly a qualitative analysis based on expert judgement, as well as some sensitivity analysis. The items analysed are derivative contracts, securities financing transactions and unsecured transactions with a residual maturity of less than six months with financial customers, holding of securities to hedge derivative contracts. For the items for which data is available, the report provides an evaluation of the materiality of the phenomena as well as an assessment of the impact of possible changes to the current prudential treatment.
Margin models in non-centrally cleared markets
(17/01/2024) BIS - Streamlining VM processes and IM responsiveness of margin models in non-centrally cleared markets
The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have published a report on streamlining variation margin (VM) processes and initial margin (IM) responsiveness of margin models in non-centrally cleared markets, which sets out recommendations for good market practices to enhance market functioning. The consultative report sets out eight recommendations to encourage the widespread implementation of good market practices but does not propose any policy changes to the BCBS-IOSCO frameworks. The first four recommendations aim to address challenges that could inhibit a seamless exchange of variation margin during a period of stress. The other four highlight good practices for market participants to smoothly implement initiatives to ensure the calculation of initial margin is consistently adequate for contemporaneous market conditions and proposes that supervisors should monitor whether these developments are sufficient to make this model responsive enough to extreme market shocks. Consultation runs until 17 April 2024.
Improvements in macroprudential guidance
(16/01/2024) ESRB - Improvements to the ESRB macroprudential stance framework
The European Systemic Risk Board (ESRB) has published a report describing the progress made in the way it assesses macroprudential guidance. The assessment of macroprudential guidance is a conceptual framework for comparing systemic risks with the policy measures taken to address them. This assessment helps the ESRB determine whether the financial system has sufficient resilience and whether a country's macroprudential policy guidance is neutral, lenient, or strict in relation to the risks it seeks to address.
Initial margin in centrally cleared ecosystem
(16/01/2024) BIS - Transparency and responsiveness of initial margin in centrally cleared markets: review and policy proposals
The Basel Committee on Banking Supervision (BCBS), the Bank for International Sttlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) jointly published a consultative report on the transparency and responsiveness of initial margin in centrally cleared markets. This consultative report includes ten policy proposals which aim to increase the resilience of the centrally cleared ecosystem by improving participants’ understanding of central cpunterparties (CCPs’) initial margin calculations and potential future margin requirements. The proposal covers: i) CCP simulation tools; ii) CCP disclosures; iii) measurement of initial margin responsiveness; iv) governance frameworks and margin model overrides; and v) clearing member transparency. The consultation runs until 16 April 2024.
Implementation of the idd
(15/01/2024) EIOPA - EIOPA publishes second Report on the application of the Insurance Distribution Directive (IDD)
The European Insurance and Occupational Pensions Authority (EIOPA) has published the second Report on the application of the Insurance Distribution Directive (IDD), which examines the key developments regarding the distribution of insurance products in Europe in 2022/2023. Among others, the report examines changes in the market structure of insurance intermediaries, shifts in cross-border activity patterns, any improvements in the quality of advice and selling methods as well as the overall impact of the IDD on small and medium-sized enterprises operating as insurance intermediaries. Additionally, the report looks at whether competent authorities are sufficiently empowered and equipped with adequate resources to carry out their tasks.
Regulatory news from previous periods or FYs can be found in the Quarterly Regulatory Reports, section for current year reports, or the Annual Regulatory Reports section for previous year reports.
