Latest news of financial regulation
05 November 2015
The European Securities and Markets Authority (ESMA) opened a public consultation on indirect clearing arrangements for OTC derivatives and exchange-traded derivatives (ETD).
This consultation paper thus covers the draft regulatory technical standards (RTS) on indirect clearing arrangements for ETD under Regulation No 600/2014 (MiFIR) as well as the draft amendments to Commission Delegated Regulation No 149/2013 with regard to the regulatory technical standards on indirect clearing arrangements for OTC derivatives under Regulation No 648/2013 (EMIR).
Consultation will run until 17 December 2015.
06 November 2015
The European Banking Authority (EBA) launched a public consultation on its draftGuidelines on stress tests of Deposit Guarantee Schemes (DGSs). The proposed Guidelines will provide the methodological principles toassess whether the operational and funding capabilities of DGSs are sufficient to ensure deposit protection in the event of a bank failure.
The consultation runs until 8 February 2016.
05 November 2015
The European Banking Authority (EBA) published its 2016 EU-wide stress test (ST) draft methodology for discussion. The stress test will be formally launched in the first quarter of 2016 and will cover over 70% of the EU banking sector and will assess EU banks' ability to meet relevant supervisory capital ratios during an adverse economic shock. The results will inform the 2016 Supervisory Review and Evaluation Process (SREP), acting as a challenge to banks' forward looking capital plans. The exercise will also provide market participants with a consistent basis to compare and assess the resilience of EU banks.
05 November 2015
The Basel Committee on Banking Supervision issued for public consultation aproposalfor incorporating the FSB’s policy framework for haircut floors for non-centrally cleared SFTs into the Basel III framework.
This proposal is based on the FSB's report on “Strengthening Oversight and Regulation of Shadow Banking - Regulatory framework for haircuts on non-centrally cleared securities financing transactions” published in October 2014, which recommended that its policy framework for haircut floors for non-centrally cleared SFTs be incorporated into the Basel III framework by the end of 2015. The objective of this proposal is to create incentives for banks to set their collateral haircuts above the floors rather than hold more capital.
Consultation will run until 5 January 2016.
PRA publishes two supervisory statements for all UK firms within the scope of Solvency II, and where applicable, to third-country branches
30 October 2015
The Prudential Regulation Authority (PRA) published two supervisory statements for all UK firms within the scope of Solvency II, and where applicable, to third-country branches.
03 November 2015
The Financial Stability Board (FSB) published an updated list of global systemically important banks (G-SIBs). The updated list comprises a total of 30 banks with one new bank, China Construction Bank, being added and one bank, BBVA, being removed from the list, and with Royal Bank of Scotland being moved down into the 1% bucket for required higher loss absorbency.
The next update to the list will be published in November 2016.
The FSB also published an updated list of global systemically important insurers (G-SIIs). This updated list comprises a total of nine insurers with one new insurer, Aegon, being added and with Generali being removed.
The next list will be published in November 2016.
03 November 2015
The Financial Stability Board (FSB) released two finalised guidance papers and three consultative documents as part of its policy agenda to end “too-big-to-fail” and promote the resolvability of all financial institutions that could be systemic in failure through full implementation in substance and in scope of the Key Attributes of Effective Resolution Regimes for Financial Institutions.
The two finalised guidance papers are:
The FSB issued the following documents for consultation:
Consultations will run until 4 January 2016.
30 October 2015
Five federal agencies issued a final rule to establish capital and margin requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants regulated by one of the agencies ("covered swap entities"), as required by the Dodd-Frank Act.
Additionally, the agencies also issued an interim final rule relating to the rule’s exemption from margin requirements for certain non-cleared swaps and non-cleared security-based swaps used for hedging purposes by commercial end-users and certain other counterparties. The regulation was issued as an interim final rule, as required by the law passed by the Congress in January 2015.
Comments should be received by 31 January 2016.
30 October 2015
The Federal Reserve Board proposed a new rule that would strengthen the ability of the largest domestic and foreign banks operating in the United States to be resolved without extraordinary government support or taxpayer assistance.
The proposed rule would apply to domestic firms identified by the Board as global systemically important banks (GSIBs) and to the U.S. operations of foreign GSIBs. These institutions would be required to meet a new long-term debt requirement and a new “total loss-absorbing capacity”, or TLAC, requirement. The requirements will bolster financial stability by improving the ability of banks covered by the rule to withstand financial stress and failure without imposing losses on taxpayers.
Comments should be received by 1 February 2016.
29 October 2015
The European Commission welcomes adoption by the European Parliament of the Regulation on Transparency of Securities Financing Transactions (known as ). This new law, proposed by the European Commission in January 2014, significantly improves the transparency of securities financing transactions in the shadow banking sector. These new rules also help identify the risks associated with these financial transactions, as well as their magnitude. This regulation is in line with the G20 leaders' commitment to ensure more transparency on financial markets.
FDIC approves a final rule to establish margin requirements for swaps that are not cleared through a clearinghouse
22 October 2015
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a final rule to establish margin requirements for swaps that are not cleared through a clearinghouse.
The final rule takes into account the risk posed by a swap dealer’s counterparties in establishing the minimum amount of initial and variation margin that the covered swap entity must exchange with such counterparties. The rule does not apply to swaps of financial institutions with $10 billion or less in total assets that enter into swaps for hedging purposes.
The rule will be phased in beginning September 2016.
In connection with adopting the new margin requirements, the FDIC also adopted an interim final rule to exempt commercial end-users and small banks. The interim final rule is effective 1° April 2016. Comments should be received on or before 31 January 2016.
News & Articles
23 October 2015
The HM Treasury launched a consultation on the implementation of the Directive 2014/91/EU on undertakings for collective investment in transferable securities (UCITS V) setting common EU regulatory standards relating to UCITS investment funds. This requires the UK Government to make changes to its existing law and regulations for UCITS funds. The amendments in UCITS V specifically deal with depositary functions, remuneration policies and sanctions for failure to comply with the Directive. The purpose of this consultation document is to consult on the legislative changes implemented by HM Treasury.
The consultation runs until 17 December 2015.
20 October 2015
The EC published a report to the European Parliament and the Council on Article 503 of Regulation (EU) No 575/2013 about capital requirement for covered bonds. Covered bonds are debt obligations issued by credit institutions and secured on the back of a ring-fenced pool of assets (the “cover pool” or “cover assets”) which bondholders have direct recourse to as preferred creditors. Bondholders remain at the same time entitled to a claim against the issuing entity or an affiliated entity of the issuer as ordinary creditors for any residual amounts not fully settled with the liquidation of the cover assets.
16 October 2015
The European Central Bank (ECB) published an opinion, requested from the Italian Ministry of Finance, on two legislative decrees on the recovery and resolution of credit institutions and investment firms. BRRD would be transposed by means of two legislative decrees.
a. The first decree defines the status and powers of the relevant national authorities as well as the forms of cooperation and exchange of information among them, resolution plans, resolution tools and procedures, the establishment of resolution funds, safeguards, the right of appeal against decisions regarding crisis prevention or crisis management measures and administrative penalties.
b. The second decree would amend the Consolidated Law on Banking and the Consolidated Law on Finance by laying down rules for recovery plans at individual and group level, agreements for group financial support, and early intervention measures, including the removal of senior management and the appointment of a temporary administrator of a credit institution.
EC refers six Member States to the Court of Justice of the EU for failing to transpose EU rules on Bank Recovery and Resolution
22 October 2015
The European Commission (EC) decided to refer the Czech Republic, Luxembourg, the Netherlands, Poland, Romania and Sweden to the Court of Justice of the EU over failure to transpose legislation on BRRD.
The deadline for the transposition of these rules into national law was 31 December 2014. The Commission sent a reasoned opinion to 11 EU Member States on 28 May 2015, asking them to transpose the BRRD. As full transposition of the new rules did not occur in six EU Member States, they are now being referred to the Court.
Referrals to the Court imply the imposition of, at least, a daily penalty payment until full transposition has taken place.
27 October 2015
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) adopted a proposal to increase the Deposit Insurance Fund (DIF) to the statutorily required minimum level of 1.35 percent.
The proposed rule would impose on banks with at least $10 billion in assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The FDIC expects the reserve ratio would likely reach 1.35 percent after approximately two years of payments of the proposed surcharges.
Comments will be due 60 days after the rule is published in the Federal Register, which is expected shortly.
EIOPA revises the Solvency II reporting and disclosure package and modifies the methodology for calculating the relevant risk-free interest rate term structures
27 October 2015
The European Insurance and Occupational Pensions Authority (EIOPA) modifies the methodology for calculating the relevant risk-free interest rate term structures for Solvency II.
The EIOPA published revised business documents related to the Solvency II reporting and disclosure package. In particular, the Final Reports on the consultation papers with the following registration numbers have been amended: CP-14-052, CP-14-055, CP-14-045 and CP-14-048.
27 October 2015
The European Securities and Markets Authority (ESMA) published a public statement on improving the quality of disclosures in financial statements following growing concern over their relevance. ESMA stresses the need for clear and concise disclosures which are company specific and to avoid boiler-plate templates, highlighting that the size of annual reports often makes it hard for users to identify key information.
EBA consults on guidelines on how confidential information collected under the BRRD should be disclosed
27 October 2015
The EBA launched a consultation on draft guidelines on how confidential information collected under the Bank Recovery and Resolution Directive (BRRD) should be disclosed in summary or collective form without identifying individual institutions or relevant entities. The aim of the Guidelines is to promote symmetric information and convergence of supervisory and resolution practices regarding the disclosure of confidential information.
The consultation runs until 27 January 2016.
EBA publishes final templates and instructions for the quantitative impact study on the definition of default
27 October 2015
The European Banking Authority (EBA) published the final set of templates and instructions that institutions participating in the Quantitative Impact Study (QIS) on the definition of default should complete and submit to their respective Competent Authorities by 10 December 2015 at the latest.
- Last Update: Friday 05 February 2016, 13:04.
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