ESAs Publish Report on Activities of Joint Committee
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.
Related Links
Keywords: Europe, EU, Banking, Insurance, Securities, Annual Report, COVID-19, Sustainability-Related Disclosures, SFDR, Regulatory Technical Standards, Securitization Regulation, STS Securitization, ESG, NFRD, ESAs
Previous Article
ECB Amends Guideline on Euro Short-Term RateRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
