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.
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 ArticleEBA Consults on Standards Related to FRTB-SA
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.