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Latest news of financial regulation

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Global Systemically Important Banks: The FSB announces the launch of Phase 2 of its Data Gaps initiative

Created
Wednesday, 07 May 2014

                                                              06 May 2014

 

The FSB announced the launch of Phase 2 of its Data Gaps initiative to collect information on the G-SIBs’ major funding providers, assessing relevant interlinkages and concentrations. Phase 1 of the project, started in March 2013, focused on the exposures of G-SIBs to their largest counterparties and to major risk dimensions. Phase 2 will fill a substantial data gap by adding information on G-SIBs’ Institution-to-Institution liabilities, their largest funding providers (banks and non-banks) and their funding structure (e.g. use of wholesale funding).

Related document

Press release

EBA Risk Dashboard Q1 2014

Created
Wednesday, 07 May 2014

This edition of the EBA dashboard also highlights a persistent shifting of balance sheets structure. During this last quarter of 2013, weighted average of debt-to-equity ratio fell to the lowest level of the last 4 years. Loan-to-deposit ratio declined significantly, also reaching the lowest level of the last 4 years.

 

Bank Resolution: Council adopts a directive harmonising national rules

Created
Tuesday, 06 May 2014

                                                              06 May 2014

 

The Council adopted a directive harmonising national rules on bank recovery and resolution.

The directive provides national authorities with common powers and instruments to pre-empt bank crises and resolve any financial institution in an orderly manner in the event of failure, whilst preserving essential bank operations and minimising taxpayers’ exposure to losses.

 

Related documents

Press release

Text of directive

Document drafted by the Economic Governance Support Unit of the EP

Next step

Publication of the final act in the Official Journal

Credit Rating Agencies: Commission adopts report on feasibility of a network

Created
Tuesday, 06 May 2014

                                                              05 May 2014

 

The Commission adopted a report addressed to the European Parliament and the Council on the feasibility of a network of smaller CRAs in the EU. The report assesses how the establishment of such a network could contribute to the strengthening of smaller CRAs, facilitating their growth to become more competitive market players. The report proposes the establishment of a regulatory dialogue with smaller CRAs. It also recommends that a full assessment of the feasibility to establish a more integrated network of smaller CRAs be carried out within the medium to long term when the overall impact of the recently enacted legislation can be effectively analysed.

Related documents

Press release

Report

Commission staff working document

Stress Test: EIOPA launches EU Wide Insurance Stress Test

Created
Monday, 05 May 2014

                                                            30 April 2014                    

 

The EIOPA launched an EU wide stress test for the insurance sector. The test package comprises two modules. The core module of the exercise includes two adverse market scenarios, covering financial asset stresses (sovereigns, corporate bonds and equities) as well, as shocks to real estate assets prices’ and interest rates stresses. The adverse market scenarios are complemented by a set of independent insurance-specific shocks covering mortality, longevity, insufficient reserves and catastrophe shocks. The second module addresses the impact of a low yield environment and is a follow-up to EIOPA’s Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment.

Related documents

Press release

Stress Test 2014 Specifications

Technical Specifications for the Solvency II Preparatory Phase - Part I(Annexes)

Technical Specifications for the Solvency II Preparatory Phase - Part II

Solvency II: PRA publishes supervisory statement setting out its expectations of general insurers in relation to the calculation of technical provisions and the use of internal models

Created
Wednesday, 30 April 2014

                                                             25 April 2014

 

PRA published supervisory statement setting out its expectations of general insurers in relation to the calculation of technical provisions and the use of internal models. As part of the PRA’s preparations for the Solvency II regime, this statement seeks to ensure that firms set an adequate level of technical provisions and hold sufficient capital.

 

Related documents

Press release

Supervisory statement

Bank Capital Requirements: The PRA set out proposals for implementing the Capital Requirements Directive (CRD) provisions on capital buffers

Created
Wednesday, 30 April 2014

                                                             30 April 2014

 

The PRA set out proposals for implementing the Capital Requirements Directive (CRD) provisions on capital buffers.

The Policy Statement contains the final rules and supervisory statement to implement the CRD IV capital buffers framework.

The supervisory statement is aimed at firms to which CRD IV applies. Its purpose is to set out the

expectations of the PRA on CRD IV capital buffers and provide some clarifications of the PRA rules.

Related documents

Press release

Implementing CRD IV: capital buffers (Policy Statement)

Implementing CRD IV: capital buffers (Supervisory Statement)

ECB publishes Single Supervisory Mechanism framework regulation

Created
Wednesday, 30 April 2014

                                                             25 April 2014

 

The ECB published the SSM Framework Regulation for the Single Supervisory Mechanism (SSM). The SSM Framework Regulation lays the basis for the work of the SSM when it takes over as supervisor of euro area banks in November 2014. This is an important milestone in the set-up of the SSM which is being delivered as scheduled.

 

Related documents

Press release

SSM Framework Regulation

Next step

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the EU.

European Long-Term Investment Funds: EU Council Presidency publishes compromise text

Created
Wednesday, 30 April 2014

                                                             24 April 2014

 

The EU Council Presidency published a compromise text to the EC proposed regulation on European Long-term Investment Funds.

Related document

Presidency Compromise

Next step

EU Council: Agreement on a general approach

EP: Vote in ECON Committee

Stress Test: Bank of England publishes details of UK stress test for major UK banks and building societies

Created
Tuesday, 29 April 2014

                                                             29 April 2014

 

Bank of England published details of UK stress test for major UK banks and building societies The 2014 UK stress testing exercise will be built on the EU-wide stress test, announced in January 2014 by the EBA, which will assess the resilience of EU banks under a common adverse scenario and which provides for national variants. The UK stress test will be run alongside the EBA’s EU-wide exercise. The Bank of England will add a number of additional UK layers to the EBA stress test (UK variant) which explore particular vulnerabilities facing the UK banking system.

Related documents

Press release

Stress testing the UK banking system: key elements of the 2014 stress test

Stress testing the UK banking system: guidance for participating firms

Single Supervisory Mechanism: ECB to give banks six to nine months to cover capital shortfalls following comprehensive assessment

Created
Tuesday, 29 April 2014

                                                             29 April 2014

 

The ECB informed banks how capital shortfalls must be addressed following the comprehensive assessment. Capital shortfalls will be expected to be covered within six months for those identified in the AQR or the baseline stress test scenario, and within nine months for those identified in the adverse stress test scenario. Recapitalisation measures to cover any shortfalls detected should rely on capital instruments of the highest quality, unless the shortfalls are reduced through other means.

Related documents

Press release

Note on the comprehensive assessment

ECB webpage on comprehensive assessment

Single Supervisory Mechanism: EBA publishes common methodology and scenario for 2014 EU-banks stress test

Created
Tuesday, 29 April 2014

                                                             29 April 2014

 

The EBA released its methodology and macroeconomic scenarios for the 2014 EU-wide stress test. The EBA's common methodology will be used by all EU supervisory authorities to ensure that the main EU banks are all assessed against common assumptions, definitions and approaches. It will allow for results that are comparable across the EU, shedding further light into the EU banking sector, and facilitating the work of supervisors. The EBA also released the macroeconomic scenarios, developed by the European Systemic Risk Board (ESRB) which will be used to assess the impact that changes in the economic environment have on EU banks.

Related documents

Press release

Adverse macroeconomic scenario

EC projections baseline

ESRB Letter - Adverse scenario

Market risk scenarios

Securitisation scenario

Methodological note

2014-04-29 Sovereign bond haircuts

FAQs

News & articles

EU bank stress tests will include housing slump and economic crash (IFA Magazine)

EP plenary session votes laws to regulate financial markets and curb high-frequency trading

Created
Wednesday, 16 April 2014

                                                             15 April 2014

 

Comprehensive rules to govern financial markets were adopted by Parliament. These rules are designed to close loopholes in the existing legislation, so as to ensure that financial markets are safer as well as more efficient, investors are better protected, high-frequency trading is regulated and speculative commodity trading is curbed. The new rules will apply to investment firms, market operators (trading on stock or financial markets) and services providing post-trade transparency information in the EU.

Related documents

EP press release

EC statement

Text adopted on MiFIR – page 93

Text adopted on MiFID II

Frequently asked questions

Next step

Council: 1st reading position

EP plenary session adopts new rules for a safer and more efficient securities settlement

Created
Wednesday, 16 April 2014

                                                             15 April 2014

 

EP plenary session adopted a regulation on securities settlement and central securities depositories. The main objective of the Central Securities Depositaries Regulation is to increase the safety and efficiency of securities settlement and settlement infrastructures (CSDs) in the EU by providing, among others, for the following:

- Shorter settlement periods;

- Deterrent settlement discipline measures;

- Strict prudential and conduct of business rules for CSDs;

- Strict access rights to CSD services;

- Increased prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement.

Related document

EC statement

Next step

Council: 1st reading position

Packaged Retail Investment Products: EP approves new rules on key things small investors should be told

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

New EU rules on the information that small investors must be given before they sign a contract were approved by Parliament. This information will be set out in a mandatory, three-page A4 Key Information Document (KID). KIDs must not be misleading. If a small investor is able to show that a loss was caused by the information in a KID which was inaccurate or inconsistent with any binding contractual documents, then the investment product manufacturer could be liable under national law.

Related document

Press release

Next step

Council: 1st reading position

UCITS: EP approves rules clarifying who is liable for mismanagement of funds

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

Small investors will be better protected against investment funds that take excessive or unnecessary risks with their money, under rules approved by Parliament. These rules clarify who is liable for mismanagement of funds and tailor fund managers' remuneration rules to encourage them to take reasonable risks and a long-run view.

Undertakings for collective investments in transferable securities, which gather assets from small investors and pool them to buy bonds, shares or other financial products currently manage, around 85% of the European investment fund sector's assets

Related document

Press release

Next step

Council: 1st reading position

Bank Account: EP approves new law ensuring basic bank accounts for all

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

Anyone legally residing in the EU would have the right to open a basic payment account, and no-one could be denied this right on grounds of nationality or place of residence, under a new law passed by Parliament. This law should also ensure that fees and rules for all payment accounts are transparent and comparable and make it easy to switch to another payment account that offers better terms.

Related document

Press release

Next step

Council: 1st reading position

Bank Crises Management: EP lifts bank bailout burden from taxpayers’ shoulders

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

Three measures to ensure that banks shoulder the risks of failure rather than relying on taxpayers to bail them out were approved by Parliament. Two deal with restructuring and winding down troubled banks, and the third ensures that banks, not taxpayers, guarantee deposits under €100,000 in the event of a run on a bank. These measures complement the single bank supervision system, already in place, and take the EU far down the road towards banking union.

Related document

Press release

 

Prospectus Directive: Commission delegated regulation supplementing Directive with regard to regulatory technical standards for publication of supplements to the prospectus published in the Official Journal of the EU

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

Three measures to ensure that banks shoulder the risks of failure rather than relying on taxpayers to bail them out were approved by Parliament. Two deal with restructuring and winding down troubled banks, and the third ensures that banks, not taxpayers, guarantee deposits under €100,000 in the event of a run on a bank. These measures complement the single bank supervision system, already in place, and take the EU far down the road towards banking union.

Related document

Press release

Bank Capital Requirements: BCBS sets out a supervisory framework for measuring and controlling large exposures

Created
Tuesday, 15 April 2014

                                                             15 April 2014

 

The BCBS published final standard setting out a supervisory framework for measuring and controlling large exposures. It includes a general limit applied to all of a bank's exposures to a single counterparty, which is set at 25% of a bank's Tier 1 capital. This limit also applies to a bank's exposure to identified groups of connected counterparties (ie counterparties that are interdependent and likely to fail simultaneously). A tighter limit will apply to exposures between banks that have been designated as global systemically important banks (G-SIBs). This limit has been set at 15% of Tier 1 capital.

The standard will take effect from 1 January 2019.

Related documents

Press release

Supervisory framework for measuring and controlling large exposures - final standard

  • Last Update: Wednesday 30 July 2014, 10:43.
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The establishment of the SSM on 4th November 2014 will be an important milestone towards a banking union in Europe.

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