The Joint Committee of ESAs published a report on the work completed in 2020. The report highlights the continued efforts of ESAs in overseeing market developments and cross-sectoral risks, with the Joint Committee preparing its first cross-sectoral COVID-19 risk assessment report in 2020. The joint work during the year spanned areas of sustainable finance, securitization framework, financial technology innovation, cybersecurity, and consumer protection.
In 2020, the Joint Committee substantially contributed to development of the sustainable finance framework via mandates stemming from the Sustainable Finance Disclosure Regulation, the joint work on disclosure, and the joint input to the consultation on the Non-Financial Reporting Directive. The SFDR, which has been amended by Article 25 of the Taxonomy Regulation, aims to strengthen protection for end-investors by standardizing and enhancing environmental, social, and governance (ESG)-related disclosures. The report highlights that SFDR mandates ESAs to develop, through the Joint Committee, a number of technical standards. Six regulatory technical standards were to be delivered by the end of January 2021, two draft technical standards will be delivered by June 01, 2021, one draft technical standard by December 30, 2021, and two draft technical standards by June 01, 2022.
The Joint Committee also continued to work in the areas of financial conglomerate and securitization regulations. In July 2020, the Joint Committee had launched a consultation to gather feedback with respect to the report referred to in Article 44 of the Securitization Regulation. The report, which was expected to be delivered in the first quarter of 2021, must provide EC and the co-legislators with the ESAs’ assessment on:
- Implementation of the Simple, Transparent, and Standardized (STS) requirements and the functioning of the Securitization Regulation with respect to the due diligence, transparency, and risk retention requirements laid out therein
- Actions of competent authorities to tackle new material risks and emerging vulnerabilities in the securitization market
- Actions of market participants to standardize transaction documentation
In the context of the COVID-19 pandemic, the Joint Committee considered the potential impact of debt moratoria and public guarantee schemes on securitized debt. The Joint Committee also discussed the interpretation of “default” in securitization transactions subject to moratorium schemes. In addition, the European Forum for Financial Innovators (EFIF) continued to bring value in bridging national innovation facilitators (regulatory sandboxes and innovation hubs) on innovation-related issues. EBA handed its Chairmanship of this forum over to EIOPA in May 2020. Under the EIOPA chairmanship, discussions continued on how to strengthen the EFIF and deliver a procedural framework to facilitate cross-border testing in accordance with the mandate set out in the Digital Finance Strategy. EFIF members continued to exchange views on the design and development of new innovation facilitators, innovation trends, and the application of specific technologies in the financial sector, including the issues of multi-purpose digital platforms facilitating the provision of financial services, regtech, artificial intelligence, big data, and machine learning and on cross-cutting themes such as the role of fintech in responding to the COVID-19 crisis.
Keywords: Europe, EU, Banking, Insurance, Securities, Annual Report, COVID-19, Sustainability-Related Disclosures, SFDR, Regulatory Technical Standards, Securitization Regulation, STS Securitization, ESG, NFRD, ESAs
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