ECB launched a consultation to update the harmonized policies for exercising options and discretions under the EU law. The proposal entails amendments to four policy instruments: ECB Guide on options and discretions, Regulation 2016/445 on exercise of options and discretions, Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions, and Guideline 2017/697 on the exercise of options and discretions in relation to the less significant institutions. ECB has published the draft instruments that constitute this proposal, along with an explanatory memorandum and a set of questions and answers (Q&A) on the review of the policies on the exercise of options and discretions available in EU law. The comment period for this consultation ends on August 23, 2021.
The proposed policy revisions primarily account for legislative changes adopted since 2016. Most notably, the legislative changes arising from the revised Capital Requirements Regulation and Directive (CRR2 and CRD5), which introduced certain options and discretions into the legislative framework while amending some of the existing options and discretions. ECB is proposing new or revised policy guidance in relation to 56 specific options and discretions assigned to competent authorities in the banking legislation in EU. It is also proposing to remove policies and guidance in relation to 16 options and discretions, in many cases because the option or discretion in question no longer exists in the banking law in EU. The largest number of proposed revisions relate to options and discretions in the application of liquidity requirements, specifically the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). The relatively large number of liquidity-related policies result from the CRR2's introduction of NSFR as a new liquidity requirement for banks, applicable as of June 28, 2021. Additionally, several amendments to the LCR Delegated Regulation 2015/61 were introduced in 2018 and became applicable on April 30, 2020. The consultation also relates to many aspects of supervision, including permissions for banks seeking to reduce their capital, the treatment of certain exposures in the calculation of the leverage ratio, and certain exemptions from the large exposures limit.
These instruments that are part of this consultation provide transparency on how ECB exercises options and discretions in its supervision of significant institutions, ensure the consistent application of high supervisory standards, and support consistency in the supervision of significant and less significant institutions. The European legislative framework grants supervisors the authority to exercise a significant number of options and discretions when supervising banks. In 2016, ECB first harmonized 122 options and discretions to streamline its supervision in the countries participating in the Single Supervisory Mechanism.
Comment Due Date: August 23, 2021
Keywords: Europe, EU, Banking, Securities, Options and Discretions, CRR2, CRD5, Basel, Regulatory Capital, NSFR, LCR, Liquidity Risk, Large Exposures, Significant Institutions, Less Significant Institutions, ECB
Previous ArticleEBA Report Examines Regtech Landscape in Financial Sector
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.