EU published Regulations 2019/2175 and 2019/2176 and Directive 2019/2177 in the Official Journal of European Union. The finalized regulations reform tasks, powers, governance, and funding of ESAs and ESRB, to adapt the authorities to the changed context in which they operate. The finalized directive (2019/2177) amends Solvency II Directive (2009/138/EC), Markets in Financial Instruments Directive or MiFID (2014/65/EU), and Anti-Money Laundering Directive (EU 2015/849). The published regulations and the directive shall enter into force on the third day following that of their publication in the Official Journal of the European Union. For Regulation 2019/2175, Articles 1, 2, 3, and 6 shall apply from January 01, 2020 while Articles 4 and 5 shall apply from January 01, 2022.
The finalized directive introduces certain amendments to the Solvency II Directive, which provides that, in accordance with the risk-oriented approach to the Solvency Capital Requirement, it is possible in specific circumstances for insurance and reinsurance undertakings and groups to use internal models for the calculation of that requirement, instead of using the standard formula. Solvency II Directive also provides for a country component in the volatility adjustment. To ensure that this country component mitigates exaggerations of bond spreads in the relevant country effectively, an appropriate threshold for the risk-corrected country spread should be set for the activation of the country component. Therefore, Solvency II Directive has been amended by Directive (EU) 2019/2177 accordingly. Additionally, Section 2A on notification and collaboration platforms has also been inserted in Title I, Chapter VIII of the Solvency II Directive.
Additionally, Regulation 2019/2175 amends regulations establishing ESAs (Regulation 1093/2010, 1094/2010, and 1095/2010), Markets in Financial Instruments Regulation or MiFIR (EU No 600/2014), Benchmarks Regulation (EU 2016/1011), and Regulation (EU) 2015/847 on information accompanying transfers of funds. Regulation 2019/2176 amends Regulation (EU) No 1092/2010 on EU macro-prudential oversight of the financial system and establishing a ESRB.
Effective Date: December 30, 2019
Keywords: Europe, EU, Banking, Insurance, Securities, ESFS, Solvency II, SCR, Internal Model, Benchmarks Regulation, ESAs, ESRB, European Council
Previous ArticleFED Revises and Extends Reporting Form on Systemic Risk
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.
The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.
The European Banking Authority (EBA) Single Rulebook Question and Answer (Q&A) tool updates for this month include answers to 10 questions.
The European Commission, or EC, finalized the Implementing Regulation 2021/2017 with respect to the benchmark portfolios, reporting templates, and reporting instructions for the supervisory benchmarking of internal approaches for calculating own funds requirements.
The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.
The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).
The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.