ESAs Publish Report on Activities of Joint Committee
The Joint Committee of ESAs published a report on the work completed in 2020. The report highlights the continued efforts of ESAs in overseeing market developments and cross-sectoral risks, with the Joint Committee preparing its first cross-sectoral COVID-19 risk assessment report in 2020. The joint work during the year spanned areas of sustainable finance, securitization framework, financial technology innovation, cybersecurity, and consumer protection.
In 2020, the Joint Committee substantially contributed to development of the sustainable finance framework via mandates stemming from the Sustainable Finance Disclosure Regulation, the joint work on disclosure, and the joint input to the consultation on the Non-Financial Reporting Directive. The SFDR, which has been amended by Article 25 of the Taxonomy Regulation, aims to strengthen protection for end-investors by standardizing and enhancing environmental, social, and governance (ESG)-related disclosures. The report highlights that SFDR mandates ESAs to develop, through the Joint Committee, a number of technical standards. Six regulatory technical standards were to be delivered by the end of January 2021, two draft technical standards will be delivered by June 01, 2021, one draft technical standard by December 30, 2021, and two draft technical standards by June 01, 2022.
The Joint Committee also continued to work in the areas of financial conglomerate and securitization regulations. In July 2020, the Joint Committee had launched a consultation to gather feedback with respect to the report referred to in Article 44 of the Securitization Regulation. The report, which was expected to be delivered in the first quarter of 2021, must provide EC and the co-legislators with the ESAs’ assessment on:
- Implementation of the Simple, Transparent, and Standardized (STS) requirements and the functioning of the Securitization Regulation with respect to the due diligence, transparency, and risk retention requirements laid out therein
- Actions of competent authorities to tackle new material risks and emerging vulnerabilities in the securitization market
- Actions of market participants to standardize transaction documentation
In the context of the COVID-19 pandemic, the Joint Committee considered the potential impact of debt moratoria and public guarantee schemes on securitized debt. The Joint Committee also discussed the interpretation of “default” in securitization transactions subject to moratorium schemes. In addition, the European Forum for Financial Innovators (EFIF) continued to bring value in bridging national innovation facilitators (regulatory sandboxes and innovation hubs) on innovation-related issues. EBA handed its Chairmanship of this forum over to EIOPA in May 2020. Under the EIOPA chairmanship, discussions continued on how to strengthen the EFIF and deliver a procedural framework to facilitate cross-border testing in accordance with the mandate set out in the Digital Finance Strategy. EFIF members continued to exchange views on the design and development of new innovation facilitators, innovation trends, and the application of specific technologies in the financial sector, including the issues of multi-purpose digital platforms facilitating the provision of financial services, regtech, artificial intelligence, big data, and machine learning and on cross-cutting themes such as the role of fintech in responding to the COVID-19 crisis.
Related Links
Keywords: Europe, EU, Banking, Insurance, Securities, Annual Report, COVID-19, Sustainability-Related Disclosures, SFDR, Regulatory Technical Standards, Securitization Regulation, STS Securitization, ESG, NFRD, ESAs
Previous Article
ECB Amends Guideline on Euro Short-Term RateRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
