EBA is consulting on the draft implementing technical standard on disclosure and reporting of the minimum requirement for own funds and eligible liabilities (MREL) and total loss absorbency requirement (TLAC). The draft standard follows an integrated approach and is aligned with disclosure standards under the Basel Pillar 3. The draft standard includes proposals for templates and tables implementing the TLAC and MREL disclosures and reporting requirements. In addition to the implementing technical standards, the consultation paper includes two recommended reporting templates covering the forecast of MREL and TLAC positions and funding structures, along with a mapping of the disclosure and reporting requirements. The consultation period ends on February 22, 2020.
MREL and TLAC are integrated for both the reporting and the disclosure templates, with both reporting and disclosure requirements being enshrined in a single set of implementing technical standards. This integrated approach aims to optimize efficiency by institutions when complying with the disclosure and reporting obligations, to facilitate the use of information by authorities and market participants, and to promote market discipline. The consultation paper presents proposals implementing the disclosure and reporting requirements on both MREL and TLAC in accordance with mandates included in the revised Capital Requirements Regulation (CRR 2) and the revised Bank Recovery and Resolution Directive (BRRD 2). The annexes to the consultation paper include the following information:
- Reporting templates (Annex 1) and instructions (Annex 2) on MREL and TLAC
- Data point model and validation rules (Annex 3)
- Reporting on MREL and TLAC related to standardized ranking (Annex 4)
- Disclosure templates (Annex 5) and associated instructions (Annex 6) on MREL and TLAC
- Reporting templates and instructions covering forecast of MREL and TLAC (Annexes 7 and 8, respectively)
This consultation paper is one of the deliverables presented in the EBA roadmap on risk-reduction measures package, which explains the Pillar 3 strategy of EBA to implement a comprehensive disclosure framework. The aim of this implementation is to become the EU-wide Pillar 3 hub and to facilitate the EBA pathway for a more efficient and proportionate supervisory reporting. EBA is expected to submit the final draft technical standard to EC in June 2020. With regard to the reporting requirements, EBA will develop data point model, XBRL taxonomy, and validation rules based on the final draft technical standard, which are likely to be published in the third quarter of 2020.
The provisions of this technical standard on the disclosure on TLAC are envisaged to apply immediately after its entry into force and adoption by EC. However, provisions on the MREL disclosure will apply from the date of the expiration of transition periods, pursuant to Article 45m of BRRD—that is, from January 01, 2024 or, where the resolution authority set a compliance deadline after January 01, 2024, from that compliance deadline. The first reference date for reporting in accordance with these technical standards is foreseen to be June 30, 2021, both for reporting on the MREL and the TLAC requirements. The expected implementation period for the proposed reporting requirements is approximately one year.
Comment Due Date: February 22, 2020
Keywords: Europe, EU, Banking, MREL, TLAC, Reporting, Disclosures, Pillar 3, Basel III, CRR 2, BRRD 2, Implementing Technical Standards, Proportionality, Bal-In, G-SIBs, EBA
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.