ESMA Introduces Its Approach for Analyzing Operational Risk
ESMA published an article on its approach toward the assessment of operational risk in its first Trends, Risks, Vulnerabilities (TRV) Report in 2018. In this article, ESMA underlines the importance of operational resilience of market participants in its remit, such as central counterparties (CCPs), central securities depositories (CSDs), or trading venues.
The article introduces the new systematic and comprehensive analytical approach of ESMA to the operational-risk monitoring in EU markets. ESMA will take a wide range of quantitative indicators into consideration, complemented by in-depth market intelligence. In doing so, ESMA focuses on three priority risk areas:
- Market misconduct, including market abuse, fraud, investor detriment and impairment of market data
- Infrastructure disruptions, such as outages or unavailability of systems
- Cyber-attacks, which may lead to system outages, discontinuity in financial system operations, and impaired integrity of client data
On this basis, ESMA will cover its operational risk assessment in its semi-annual Trends, Risks, Vulnerabilities Reports. Developments such as the recent surges in cyber-attacks on financial firms, or technical glitches leading to flash crashes on trading venues, have heightened the sensitivity of market participants and regulators to potential disruptions in financial services providers’ operations.
Related Links
Keywords: Europe, EU, Securities, Operational Risk, Market Conduct, Cyber Risk, ESMA
Previous Article
IMF Publishes Report on the 2018 Article IV Consultation with TurkeyRelated Articles
BCBS Amends Guidelines on Sound Management of AML/CFT Risks
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS Publishes List of Internationally Active Insurance Groups
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB Consults on Supervisory Approach to Consolidation in Banking
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
PRA Letter Sets Expectations on Approach to Managing Climate Risks
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
US Agencies Finalize Amendments to Swap Margin Rule
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
IAIS on Package for 2020 Data Collection on ICS and Aggregation Method
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.
