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    ESMA on Responses to Consultation on Indices and Exchanges Under CRR

    July 12, 2019

    ESMA published responses to its consultation proposing amendments to the main indices and recognized exchanges under the Capital Requirements Regulation (CRR). The consultation was launched on May 24, 2019 and responses on the consultation were to be submitted by July 05, 2019. ESMA has published responses from the Association for Financial Markets in Europe (AFME), Cboe Europe Limited, and Morgan Stanley Capital International (MSCI). Post finalization of the proposed implementing technical standards that amend Regulation 2016/1646, ESMA will submit a final report to EC for endorsement.

    ESMA considers it necessary to introduce amendments to the Commission Implementing Regulation (EU) 2016/1646 to ensure that the most updated list of main indices and recognized exchanges is incorporated into the legislative text. The Implementing Regulation (EU) 2016/1646 sets the criteria to identify the main indices and recognized exchanges for the purposes of CRR. As there is no legislative procedure, other than amending the implementing technical standard, ESMA had proposed, in May, to update the legislative text to take into account relevant amendments to the list of main indices and recognized exchanges since the publication of the original implementing technical standard. ESMA, to identify the main indices, also proposed to use a new methodology that can be homogeneously applied to EU and non-EU indices. Under this new methodology, an index would qualify as a main index if it passes one of following two tests:

    • The first test aims to capture indices composed predominantly by medium and large cap stocks.
    • The second test ensures that indices composed predominantly of small cap stocks are also eligible to be included in the list of main indices, provided that all components of the index are sufficiently liquid.

     

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    Keywords: Europe, EU, Banking, Securities, Regulation 2016/1646, Recognized Exchanges, Implementing Technical Standards, Indices, Responses to Consultation, CRR, ESMA

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