EU published the final Capital Requirements Regulation II or CRR II (EU Regulation 2019/876) in the Official Journal of the European Union. Regulation 2019/876 of the European Parliament and of the Council amends Capital Requirements Regulation or CRR (Regulation No 575/2013). The amendments in the regulation cover the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and the European Market Infrastructure Regulation (EMIR/EU Regulation No 648/2012). CRR II shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Regulation 2019/876 shall largely apply from June 28, 2021 with certain exceptions.
The provisions of CRR II are in line with the internationally agreed standards and ensure the continued equivalence of Capital Requirements Directive (CRD IV) and CRR with Basel III framework. The existing risk-reduction measures and, in particular, reporting and disclosure requirements have also been improved to ensure that they can be applied in a more proportionate way and that they do not create an excessive compliance burden, especially for smaller and less complex institutions. Article 1 on the scope of the regulation states that Regulation 2019/876 lays down uniform rules concerning general prudential requirements that institutions, financial holding companies, and mixed financial holding companies supervised under CRD IV shall comply with in relation to the following items:
(a) Own funds requirements relating to entirely quantifiable, uniform and standardized elements of credit risk, market risk, operational risk, settlement risk and leverage
(b) Requirements limiting large exposures
(c) Liquidity requirements relating to entirely quantifiable, uniform, and standardized elements of liquidity risk
(d) Reporting requirements related to points (a), (b) and (c)
(e) Public disclosure requirements
CRR II lays down uniform rules concerning the own funds and eligible liabilities requirements that resolution entities that are global systemically important institutions (G-SIIs) or part of G-SIIs and material subsidiaries of non-EU G-SIIs shall comply with. CRR II does not govern publication requirements for competent authorities in the field of prudential regulation and supervision of institutions, as set out in CRD IV.
Effective Date: June 27, 2019
Keywords: Europe, EU, Banking, CRR 2, Credit Risk, Market Risk, Basel III, NSFR, LCR, TLAC, CRD IV, CRR, Reporting, European Council, European Parliament
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