A Management Solutions compila novidades regulatórias publicadas durante as últimas semanas por diferentes órgãos reguladores e supervisores (com foco no setor financeiro).
EBA Work Programme
(26/10/2018) EBA – 2019 Work Programme
The EBA has published the 2019 Work Programme. The 2019-2022 multi-annual work programme is defined by the strategic areas that the EBA has proposed for the forthcoming years. Furthermore, the 2019 work programme includes a summary of the main objectives derived from the mandates specified in the regulation and from the relevant EU banking sector legislation.
(26/10/2018) EIOPA – Analysis of IFRS 17 Insurance Contacts
The European Insurance and Occupational Pensions authority (EIOPA) has published a Report which includes an analysis of IFRS 17, presenting several which have been analysed, such as, potential effects on financial stability and the European public good, on product design, supply and demand of insurance contracts; and IFRS 17’s practical implementation in light of the applicable inputs and processes for Solvency II. In particular, this report includes analyses on the following aspects: i) expected impact on financial stability and the European public good; ii) potential effects on attractiveness, competitiveness and availability of insurance products; and iii) using solvency II inputs, approaches and processes.
(19/10/2018) BCBS – 2018 Stress testing principles
The BCBS has published its 2018 Stress testing principles, which update and replace the ones published in 2009. In particular, these updates were made due to the increased importance of stress testing, in combination with the number of measures taken by supervisory authorities.
(19/10/2018) ESAs – 2019 Work Programme
The ESAs have published the 2019 Work Programme through which the joint committee will continue to focus its work on the following aspects: i) Consumer protection and financial innovation; ii) areas of risks and vulnerabilities; iii) anti-money laundering; iv) financial conglomerates. In addition, in this Work Programme, other actions will be carried out by the ESAs during the coming year covering the following aspects: i) issues emanating from the UK withdrawing from the EU; ii) ongoing developments regarding the proposals to enhance the operation of the ESAs; iii) Securitisation Regulation and; v) the work on the long-term performance of retail investment products.
Financial risks from climate change
(18/10/2018) PRA – Consultation Paper 23/18, enhancing banks’ and insurers’ approaches to managing the financial risks from climate change
The Prudential Regulation Authority (PRA) has published a Consultation Paper enhancing banks´ and insurers´ approaches to managing the financial risks from climate change, with the aim of giving proposals for how to address them. In order to do so, these proposals can be summarised under the following sections: i) governance; ii) risk management; iii) scenario analysis; and iv) disclosure.
Energetic transition and consumer protection
(09/10/2018) Gobierno de España – Real Decreto-ley 15/2018, on urgent measures for the energy transition and the protection of consumers
The Gobierno de España has approved the Real Decreto-ley 15/2018, on urgent measures for the energy transition and the protection of consumers, with the aim of ensuring that during high and sustained final prices expectations over time, consumers have information and instruments to manage their demand, optimise their consumption and reduce their energy bills. In particular, this Real Decreto-ley aims to generate a regulatory framework that encourages and allows consumers, companies and other entities to respond adequately to the economic signals that the price of the rights for CO2 emission sends, producing the transformation of technology and uses to make possible a cleaner and cheaper energy.
(02/10/2018) Gobierno de España – Real Decreto-ley 14/2018, por el que se modifica el texto refundido de la Ley del Mercado de Valores, aprobado por el Real Decreto Legislativo 4/2015
The Spanish Government has approved a Real Decreto-ley 14/2018, which amends the consolidated text of the Securities Market Law, in order to complete the transposition of MiFID II into the Spanish legal system. In particular, this Real Decreto-ley introduces certain amendments to the current Law, including restrictions to the receipt of inducements; higher oversight and control of products; record of telephone conversations or electronic communications; introduction of new requirements for marketing structured deposits; and the requirement to establish a branch in Spain.
(22/10/2018) FSB – Financial vulnerabilities and deliverables for G20 Summit Review
The FSB has published reviews of the financial vulnerabilities and deliverables for G20 Summit. In particular, the following aspects are included: i) market developments and vulnerabilities; ii) deliverables to the G20 Leaders’ Summit; iii) removing legal barriers to trade reporting of OTC derivatives; iv) systemic risk in the insurance sector; v) non-bank financial intermediation; vi) processes and transparency review; and vii) FSB work programme for 2019 and beyond.
(19/10/2018) SMSG – Own Initiative Report on Initial Coin Offerings and Crypto-Assets
The Securities and Markets Stakeholders Group (SMSG) has published a report which presents the SMSG‘s advice to the European Securities and Markets Authority (ESMA) on crypto assets that could present risks to investors or financial stability but might also provide innovation in the field of finance. In particular, the goal of this report is to give advice to ESMA on potential steps it can take in order to contain the risks of ICO’s and virtual currencies, on top of existing regulation.
(17/10/2018) PRA – PS22/18 ‘Solvency II: Volatility adjustment’ / PS23/18 ‘Solvency II: Internal models – modelling of the volatility adjustment’ / PS24/18 ‘Solvency II: Updates to internal model output reporting’ / PS25/18 ‘Solvency II: External audit of the public disclosure requirement’
The Prudential Regulation Authority (PRA) has published 4 Policy Statements (PS) relevant to Solvency II insurers. In particular, the following PS have been published: i) volatility adjustments; ii) modelling of the volatility adjustments; iii) updates to internal model output reporting; and iv) external audit of the public disclosure requirements.
(16/10/2018) Fed – Changes in U.S. Payments Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study
The Federal Reserve (Fed) has published a report which provides estimates of payments fraud totals and rates for payments processed over general-purpose credit and debit card networks, including non-prepaid and prepaid debit card networks; the automated clearinghouse (ACH) transfer system; and the check clearing system. In particular, the report includes detailed discussions and highlights on the following surveys: i) Depository Institution Survey, 2012 and 2015; and ii) Card Network Survey, 2015 and 2016.
(15/10/2018) FMI – Regional Economic Outlook: Capital Flows and The Future of Work
The International Monetary Fund has published a Regional Economic Outlook report for Su-Saharan Africa, which analyses the following aspects: i) recovery and rising risks; ii) capital flows; and iii) the future of work. Further, the macroeconomic outlook for sub-Saharan Africa continues to strengthen. In particular, growth is expected to increase, reflecting domestic policy adjustments and a supportive external environment, including continued steady growth in the global economy, higher commodity prices, and accommodative external financing conditions. In addition, Inflation is abating and fiscal imbalances are being contained in many countries.
Early modelling for banks
(15/10/2018) ECB – Working Paper Series - A framework for early-warning modeling with an application to banks
The ECB has published a working paper series, which proposes a framework for deriving early-warning models with optimal out-of-sample forecasting properties and applies it to predicting distress in European banks. In particular, the main contributions of the paper are the following: i) introduction of a conceptual framework to guide the process of building early-warning models, which highlights and structures the numerous complex choices that the modeler needs to make; ii) proposal of a flexible modeling solution to the conceptual framework that supports model selection in real-time; and iii) illustration of how the modeling framework can be used in analysis supporting both micro and macro-prudential policy by applying it to a large dataset of EU banks and showing some examples of early-warning model visualizations.
(12/10/2018) PRA – Consultation Paper | CP22/18 Liquidity reporting: FSA047 and FSA048
The PRA has published a Consultation Paper (CP), through which it proposes to delay terminating the existing ‘daily flows’ and ‘enhanced mismatch’ liquidity reports for a limited period. In particular, the purpose of the proposed change is to mitigate risks to the supervision of liquidity in the initial period.
Terms and Conditions
(11/10/2018) ECB – ECB/2018/24 Decision of the ECB of 8 October 2018 amending Decision ECB/2007/7 concerning the terms and conditions of TARGET2-ECB
The ECB has amended Decision ECB/2007/7 in order to reflect the amendments made to Guideline ECB/2012/27, published on the 3rd of August 2018, regarding the terms and conditions of TARGET2-ECB. In particular, the amendments on Decision ECB/2007/7 affect the following aspects: i) the oversight of entities managing ancillary systems; ii) intraday credit by the ECB; and iii) respecting terms and conditions of TARGET2-ECB.
Trust and Household-bank
(11/10/2018) ECB – Working Paper Series Trust and the household-bank relationship
The ECB has published a Working Paper containing research conducted within the Household Finance and Consumption Network (HFCN) on the role of trust in households’ decisions to hold a bank account and to switch to a new bank. In particular, the paper includes an analysis of Italian household-level data on the banks where the households operate, as well as measures of trust in the households’ main bank and the banking sector.
(10/10/2018) FSB – Crypto-asset markets: Potential channels for future financial stability implications
The Financial Stability Board (FSB) has published a Report containing the results obtained from an analysis made on crypto-assets. In particular, this Report includes a study of the primary risks present in crypto-assets and their markets, such as low liquidity, the use of leverage, market risks from volatility, and operational risks.
Stress testing in UK
(09/10/2018) BoE – Bank of England stress testing results to be published on 5 December 2018
The Bank of England (BoE) has published a timetable for the publication of the UK annual stress test results. In particular, the BoE has already received banks’ initial stress-testing submissions and are in the process of analysing the results. Furthermore, the full annual results will be published in the Financial Stability Report on the 5th December 2018.
(09/10/2018) EBA – EBA acknowledges adoption of amended supervisory reporting standards by the European Commission
The EBA has acknowledged the adoption by the European Commission of the Implementing Act amending Regulation (EU) No 680/2014 (Implementing Technical Standards on Supervisory Reporting) with regard to the inclusion of prudent valuation into COREP as well as other amendments. In particular, the amended requirements will apply as of 31 December 2018.
Risks and vulnerabilities of the EU banking sector
(08/10/2018) EBA – Dashboard Q2 2018 / Interactive Dashboard / Risk parameters annex
The EBA has published the periodical update to its Risk Dashboard, which summarises the main risks and vulnerabilities in the EU banking sector using quantitative risk indicators. In particular, in the second quarter (Q2) of 2018, the updated Dashboard identified ongoing improvements in the repair of the EU banking sector but also residual risks in banks' profitability. Among others, an analysis of capital ratios, quality of loans ‘portfolio, profitability and loan to deposits is provided.
(04/10/2018) EBA – 2018 Basel III Monitoring Exercise Report / 2018 Report on Liquidity measures under Article 509(1) of the CRR
The EBA has published two reports, which measure the impact of implementing Basel III reforms and monitor the current implementation of liquidity measures in the EU. In particular, the EBA Basel III capital monitoring Report includes a preliminary assessment of the impact of the Basel reform package on EU banks assuming its full implementation. The EBA estimates that the Basel III reforms would determine an average increase by 16.7% of EU banks' Tier 1 minimum required capital. Furthermore, the Report on liquidity measures monitors and evaluates the liquidity coverage requirements currently in place in the EU, obtaining a result of the liquidity coverage ratio (LCR) of EU banks of around 145% in December 2017, materially above the minimum threshold of 100%.
MiFID II & MiFIR
(04/10/2018) ESMA – Questions and Answers on MiFID II and MiFIR transparency topics / Questions and Answers on MiFID II and MiFIR market structures topics
The European Securities and Markets Authority (ESMA) has updated its Questions and Answers regarding market structures and transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). In particular, The purpose of these Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR. Moreover, They provide responses to questions posed by the general public and market participants in relation to the practical application of level 1 and level 2 provisions relating to transparency and market structures issues.
(04/10/2018) BCBS – Basel III Monitoring Report
The Basel Committee on Banking Supervision (BCBS) has published the Basel III monitoring Report for October 2018, in order to provide relevant stakeholders with a useful benchmark for analysis. In particular, the Report includes Highlights and detailed results of the Basel III monitoring exercise as of 31 December 20187, covering the following aspects: i) general remarks; ii) regulatory capital, capital requirements, capital shortfalls and TLAC; iii) level and composition of regulatory capital; iv) components and determinants of risk-based capital requirements; v) interactions between risk-based, output floor and leverage ratio capital requirements; and vi) liquidity.
(04/10/2018) ECB – Occasional Paper Series on systemic liquidity concept, measurement and macroprudential instruments
The ECB has published an Occasional Paper series which provides a conceptual and monitoring framework for systemic liquidity, as well as a legal assessment of the possible use of macroprudential liquidity tools in the European Union. In particular, this paper covers the following aspects: i) systematic liquidity; ii) systematic liquidity tools; iii) available macroprudential tools from a legal perspective; iv) materiality of systemic liquidity risk; v) using the systemic liquidity risk indicators; and vi) conclusions and way forward.
(04/10/2018) FDIC/CFR – Working Paper Series on the Rise of the FinTechs—Credit Scoring using Digital Footprints
The Federal Deposit Insurance Corporation (FDIC) and the Center for Financial Research (CFR) have published a working paper series on the rise of the FinTechs, specifically on Credit Scoring using Digital Footprints. In particular, this paper analyses the importance of simple, easily accessible digital footprint variables for default prediction using a comprehensive and unique data set covering approximately 250,000 observations from an E-Commerce company located in Germany. Furthermore, results suggest that even the simple, easily accessible variables from the digital footprint proxy for income, character and reputation and are highly valuable for default prediction.
(03/10/2018) Fed – Potential Federal Reserve Actions to Support Interbank Settlement of Faster Payments
The Federal Reserve (Fed) has published a request for comments on its Potential Actions to Support Interbank Settlement of Faster Payments. In particular, the Fed has fundamental interest in ensuring there is a safe and robust U.S. payment system, including a settlement infrastructure on which the private sector can provide innovative faster payment services that serve the broad public interest.
(03/10/2018) ESMA – Withdrawal of MiFID guidelines on ‘systems and controls in an automated trading environment for trading platforms, investments firms and competent authorities’
The ESMA has announced the withdrawal of MiFID guidelines on systems and controls in an automated trading environment for trading platforms, investments firms and competent authorities. In particular, the ESMA has decided to withdraw the guidelines based on the subject matter being successfully and fully incorporated into MiFID II and its implementing measures.
© GMS Management Solutions, S.L., 2018. Todos os direitos reservados. A informação contida nesta publicação tem caráter geral e não constitui opinião profissional e nem serviço de assessoramento de nenhuma espécie. Os dados utilizados nesta publicação proveem de fontes de informação públicas. A GMS Management Solutions, S.L. não assume responsabilidade alguma sobre a veracidade ou correção de tais dados.