ESMA issued the final report on draft amendments to the Implementing Regulation (EU) 2016/1646, which specifies the main indices and recognized exchanges, under the Capital Requirements Regulation (CRR), that are relevant to credit institutions and investment firms subject to prudential requirements and trading venues. ESMA introduced these amendments to ensure that the most relevant criteria are applied to specify the main indices and that the list of recognized exchanges is updated to reflect the legislative changes and changes in market structures. ESMA has submitted the final report, including the draft implementing technical standards amending Implementing Regulation (EU) 2016/1646 to the EC, which now has three months to decide whether to endorse the proposed amendments.
ESMA had published a consultation paper on amendments to the Implementing Regulation (EU) 2016/1646 on May 24, 2019 and had invited stakeholders to provide feedback by July 05, 2019. Post consultation, the amended technical standards provide for a new methodology to ensure that the main indices captured comprise instruments that are sufficiently liquid and can, therefore, serve as adequate eligible collateral. In addition, an amendment by ESMA will provide credit institutions and investment firms with the option to use, as eligible collateral, instruments traded on new European exchanges as well as instruments traded on third-country exchanges, from the jurisdictions for which EC has adopted equivalence decisions under Article 25(4) of the Markets in Financial Instruments Directive (MiFID) II, as now required under CRR 2.
Due to the uncertainty about the date when UK will leave EU, ESMA has included two versions of the amended technical standards in the final report. The first version includes UK exchanges and is to be used in case there is a Brexit deal. The second version of the technical standards excludes UK exchanges and should be used in case of a no-deal outcome and in the absence of a Commission Equivalence decision in respect of the UK. Annex I to the report contains the full text of the draft technical standards under the two Brexit scenarios, Annex II includes the cost-benefit analysis of the proposal, Annex III provides the detailed feedback to the consultation paper, and Annex IV contains a brief analysis of additional indices suggested in the responses to the consultation.
Keywords: Europe, EU, Securities, Banking, CRR, Regulation 2016/1646, Recognized Exchanges, Implementing Technical Standards, Indices, ESMA
Previous ArticleDNB Announces Amendment to Treatment of NHG-Backed Mortgage Loans
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.