EC Amends Regulation on Supervisory Disclosures Under CRD IV

By Regulatory News

June 05, 2019

Basel III, Basel Liquidity Compliance

EC published the Implementing Regulation (EU) 2019/912 regarding implementing technical standards on the format, structure, contents list, and annual publication date of the information to be disclosed by competent authorities, in accordance with the Capital Requirements Directive or CRD IV (Directive 2013/36/EU). Regulation (EU) 2019/912 amends the Implementing Regulation (EU) No 650/2014 and shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

The information to be provided by a third party seeking authorization to assess the compliance of securitizations with the STS criteria provided for in Securitization Regulation should enable a competent authority to evaluate whether and, to what extent, the applicant meets the conditions of Article 28(1) of the Securitization Regulation. An authorized third party will be able to provide STS assessment services across EU. The application for authorization should, therefore, comprehensively identify that third party, any group to which this third party belongs, and the scope of its activities. With regard to the STS assessment services to be provided, the application should include the envisaged scope of the services to be provided as well as their geographical scope, particularly the following:

To facilitate effective use of the authorization resources of a competent authority, each application for authorization should include a table clearly identifying each submitted document and its relevance to the conditions that must be met for authorization.
To enable the competent authority to assess whether the fees charged by the third party are non-discriminatory and are sufficient and appropriate to cover the costs for the provision of the STS assessment services, as required by Article 28(1)(a) of Securitization Regulation, the third party should provide comprehensive information on pricing policies, pricing criteria, fee structures, and fee schedules.
To enable the competent authority to assess whether the third party is able to ensure the integrity and independence of the STS assessment process, that third party should provide information on the structure of those internal controls. Furthermore, the third party should provide comprehensive information on the composition of the management body and on the qualifications and repute of each of its members.
To enable the competent authority to assess whether the third party has sufficient operational safeguards and internal processes to assess STS compliance, the third party should provide information on its procedures relating to the required qualification of its staff. The third party should also demonstrate that its STS assessment methodology is sensitive to the type of securitization and that specifies separate procedures and safeguards for asset-backed commercial paper (ABCP) transactions/programs and non-ABCP securitizations.

The use of outsourcing arrangements and a reliance on the use of external experts can raise concerns about the robustness of operational safeguards and internal processes. The application should, therefore, contain specific information about the nature and scope of any such outsourcing arrangements or use of external experts as well as the third party's governance over those arrangements. Regulation (EU) 2019/885 is based on the draft regulatory technical standards submitted by ESMA to EC.

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Effective Date: June 18, 2019

Press Release

Proposed Rule 1

Proposed Rule 2

Proposed Rule 3

Presentation on Regulatory Framework (PDF)

Presentation on Resolution Plan Rules (PDF)

The information required to be published by competent authorities in accordance with the Regulation (EU) No 650/2014 should now be updated to ensure consistency with changes that have been made to the framework for prudential supervision of institutions. To improve the quality of the published information and to allow for a more meaningful comparison of that information, the templates in the Annexes to Regulation (EU) No 650/2014 contain detailed guidance and instructions. The key amendments to Regulation (EU) No 650/2014 include the following:

Article 5 of Regulation (EU) No 650/2014 has been amended to clarify that competent authorities should only compile aggregate statistical data from institutions that fall under their supervision and to clarify for which period data should be reported.
Annex I sets out the templates for publishing information on the laws, regulations, administrative rules, and general guidance adopted in each member state. This Annex has been amended to provide more useful and relevant information on how competent authorities carry out supervision in their jurisdictions.
Annex II sets out the templates for publishing information on the options and discretions available in Union Law. This Annex has been amended to cover additional options and discretions stemming from Regulation (EU) 2015/61. It should also be amended to allow for the distinction between the transitional or permanent nature of those options and discretions and to allow for the distinction between the application of those options and discretions to, on the one hand, credit institutions and, on the other hand, investment firms.
The implementation of EBA Guidelines on the supervisory review and evaluation process (SREP) should be more transparent. Annex III, therefore, has been amended to include a description of the supervisory approach to the internal liquidity adequacy assessment process (ILAAP).
Overlaps should be avoided and the comparability of the aggregate statistical data published by competent authorities should be improved. Annex IV has been amended to take into account the level of prudential consolidation applied by institutions in accordance with Chapter 2 of Title II of Part One of Capital Requirements Regulation, or CRR (Regulation No 575/2013).

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Effective Date: June 25, 2019

Keywords: Europe, EU, Banking, Supervisory Disclosure, CRD IV, CRR, Options and Discretions, SREP, ILAAP, Regulation 2019/912, Regulation 650/2014, EC

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EC Amends Regulation on Supervisory Disclosures Under CRD IV

By Regulatory News

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