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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

EBA, ESMA and EIOPA consult on draft technical standards for the European Market Infrastructure Regulation (EMIR)

Created
Monday, 14 April 2014

                                                             14 April 2014

 

The European Supervisory Authorities  launched a consultation on draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation. These RTS cover the risk management procedures for counterparties in non-centrally cleared OTC derivatives, the criteria concerning intragroup exemptions and the definitions of practical and legal impediments. The consultation will allow gathering public views on how to ensure a proportionate implementation of the requirements, as well as any other specific aspects that need discussion.

Consultation runs until 14 July 2014.

Related documents

EBA press release

Consultation paper

Foreign Exchange Financial Instruments: The EC launches a Consultation on FX financial instruments

Created
Monday, 14 April 2014

                                                             10 April 2014

 

The European Commission launched a consultation on exchange of foreign currency. Concerns have been raised about the lack of harmonisation between the EU Member States on where the boundary lies between what is an FX financial instrument and a spot FX contract. The Commission therefore seeks stakeholders input on where they consider this boundary should be set.

Consultation runs until 9 May 2014.

Related documents

Consultation document

Consultation page

Council adopts strengthened rules on market abuse

Created
Monday, 14 April 2014

 

                                                             14 April 2014

 

The Council adopted strengthened EU rules aimed at clamping down on insider dealing and market manipulation on securities markets. The new rules comprise a regulation aimed at enhancing the protection of investors, amending and replacing directive 2003/6/EC, and a directive establishing a framework for criminal sanctions.

 

 

Related document

 

Press release

 

Next step

 

Publication of the directive and regulation in the Official Journal of the EU.

 

OMNIBUS II: Council approves amending rules for the insurance industry

Created
Monday, 14 April 2014

                                                             14 April 2014

 

The Council approved amendments to EU rules for the insurance industry in respect of the powers of two EU-level supervisory authorities. The amendments, introduced via the so-called Omnibus II directive, include the provision of specific tasks for European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA).

Related document

Council press release

Next step

Publication of the directive in the Official Journal of the EU.

The member states have until 1 January 2016 to transpose the directive's provisions into national law.

Corporate governance: EC proposes to strengthen shareholder engagement and introduces a “say on pay” for Europe’s largest companies

Created
Thursday, 10 April 2014

                                                             09 April 2014

 

The European Commission presented a proposal for the revision of the Shareholder Rights Directive, a Recommendation on corporate governance reporting and a proposal for a Directive on single-member private limited liability companies.

The Shareholder Rights Directive will tackle certain corporate governance shortcomings relating to the behaviour of companies and their boards, shareholders (institutional investors and asset managers), intermediaries and proxy advisors (i.e. firms providing services to shareholders, notably voting advice).

The Recommendation aims at improving corporate governance reporting by listed companies. Finally, the Directive on single-member companies aims to facilitate the creation of companies with a single shareholder across the EU; it should make it easier for businesses to establish subsidiaries in other Member States as, in most cases, subsidiaries tend to have only one shareholder – a parent company.

Related documents

Press release

Speech by Commissioner Barnier

Directive on the encouragement of long-term shareholder engagement

Recommendation on the quality of corporate governance reporting

Impact assessment (Summary)

Frequently asked questions

Directive on single-member private limited liability companies

Impact assessment (Summary)

Frequently asked questions

 

EC related web page

News & articles

European Commission proposes ‘say on pay’ rules (Accountancy Live)

Bank capital requirements: BCBS finalizes the capital standard for bank exposures to central counterparties

Created
Thursday, 10 April 2014

                                                             09 April 1914

 

The BCBS completed its work on the capital treatment of bank exposures to central counterparties. The final policy framework for bank exposures to CCPs retains many of the features from the interim framework, including the general terms, scope of application, treatment of trade exposures to qualifying CCPs, and the capital requirements for bank exposures to non-qualifying CCPs.

The final standard will take effect on 1 January 2017. The interim requirements will continue to apply until then.

 

Related documents

Press release

Capital treatment of bank exposures to central counterparties - final standard

News & articles

Basel Committee finalises standard for central counterparty exposures (London South Est)

Leverage Ratio: Agencies adopt enhanced supplementary leverage ratio final rule and issue supplementary leverage ratio notice of proposed rulemaking

Created
Wednesday, 09 April 2014

                                                             08 April 2014

 

The Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) adopted a final rule to strengthen the leverage ratio standards for the largest, most interconnected U.S. banking organizations.

The final rule applies to U.S. top-tier bank holding companies with more than $700 billion in consolidated total assets or more than $10 trillion in assets under custody (covered BHCs) and their insured depository institution (IDI) subsidiaries.

The final rule, which has an effective date of January 1, 2018, currently applies to eight large U.S. banking organizations that meet the size thresholds and their IDI subsidiaries. The final rule is substantively the same as the rule proposed by the banking agencies in July 2013.

The banking agencies also issued a notice of proposed rulemaking (NPR) that would modify the denominator calculation for the supplementary leverage ratio in a manner consistent with recent changes agreed to by the BCBS.

The agencies also issued a separate NPR proposing a technical correction to the definition of "eligible guarantee" in the agencies' risk-based capital rules.

Comments on both NPRs will be welcomed through 13 June 2014.

Related documents

Press release

Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for Certain Bank Holding Companies and their Subsidiary Insured Depository Institutions

Regulatory Capital Rules: Regulatory Capital, Proposed Revisions to the Supplementary Leverage Ratio

News & articles

Big U.S. banks must boost capital by $68 billion under new rules (Reuters)

US banks must boost capital levels by $68b and change their leverage ratio under new rules (International Business Times)

Deposit guarantee schemes: position of the Council at first reading published in the O.J.

Created
Wednesday, 09 April 2014

                                                             08 April 2014

 

Position (EU) No 6/2014 of the Council at first reading with a view to the adoption of a Directive of the European Parliament and of the Council on Deposit Guarantee Schemes (recast) has been published in the Official Journal of the European Union.

Related document

Text

Next step

EP: Vote in plenary, 16 April 2014

Financial reporting: Regulation establishing a Union programme to support specific activities in the field of financial reporting and auditing published in the O.J.

Created
Wednesday, 09 April 2014

                                                             03 April 2014

 

Regulation (EU) No 258/2014 of the European Parliament and of the Council of 3 April 2014 establishing a Union programme to support specific activities in the field of financial reporting and auditing for the period of 2014-20 and repealing Decision No 716/2009/EC has been published in the Official Journal of the European Union.

This Regulation shall enter into force on 9 April 2014. It shall apply from 1 January 2014 until 31 December 2020.

Related document

Regulation

Basel implementation: BCBS publishes progress report on implementation of the Basel regulatory framework

Created
Tuesday, 08 April 2014

                                                             07 April 2014

 

The BCBS published updated progress report on implementation of the Basel regulatory framework. It provides a high-level view of Basel Committee members’ progress in adopting Basel II, Basel 2.5 and Basel III, as of end March 2014.

It focuses on the status of domestic rule-making processes to ensure that the Committee's capital standards are transformed into national law or regulation according to the internationally agreed timeframes. The Committee believes that disclosure will provide additional incentive for members to fully comply with the international agreements.

Related documents

Press release

Progress report

  • Last Update: Wednesday 23 July 2014, 11:37.
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