Featured Product

    ESMA Publishes Report on Trends, Risks, and Vulnerabilities in EU

    February 28, 2019

    ESMA published its report on the trends, risks, and vulnerabilities in EU. The report reveals that overall risk levels for EU financial markets remained stable but at high levels for most risk categories—particularly liquidity, market contagion, and credit risk. Securities markets experienced several episodes of short-term volatility and equity markets suffered sharp declines from October onward, erasing all the gains made in the first half of 2018.

    In addition to the Brexit-related political uncertainty in EU, volatility on equity and sovereign bond markets increased in the fourth quarter of 2018, equity prices continued to decrease, repricing on corporate and sovereign bond markets continued, and regional developments led to localized sell-offs and increased short-selling activity. Market risk thus remains very high. Outlook for liquidity, contagion, and credit risks remains unchanged. Operational risk remains elevated with a negative outlook, as cyber threats and Brexit-related risks to business operations continue to be a major concern.

    The report reveals that EU financial markets can be expected to become increasingly sensitive to mounting political and economic uncertainty, with concerns over a no-deal Brexit weighing on the economic and market expectations. Overall, weakening growth prospects and political and geopolitical tensions are likely to be the main drivers of volatility looking forward. ESMA, in a series of articles in the Vulnerabilities section of the report, also looks in more detail at the following key issues:

    • Regtech and Suptech. The article on this topic helps to examine how technology can help supervised entities and supervisors to perform their duties. New automated tools in areas such as fraud detection, regulatory reporting, and risk management are available for firms, while potential applications of new tools for regulators include greater surveillance capacity and improved data collection and management.
    • New stress-testing requirements for Money Market Funds (MMFs) in EU. The article on this topic provides an overview of the potential financial stability risks posed by MMFs and discusses how the MMF stress test guidelines aim to increase the resilience of the sector by addressing the identified issues, including the “first-mover advantage.” The MMF Regulation also introduces new stress-testing requirements, as part of the fund risk management and regulatory disclosure. ESMA will design common parameters and scenarios to coherently capture the risks in the sector. Stress test results will be reported to ESMA and the national competent authorities.

     

    Related Links

    Keywords: Europe, EU, Securities, Brexit, Regtech, Suptech, Stress-Testing, Market Risk, Credit Risk, MMFs, ESMA

    Featured Experts
    Related Articles
    News

    PRA Consults on Approach to Supervising Liquidity and Funding Risks

    In consultation paper (CP27/19), PRA published a proposal (CP27/19) to update the supervisory statement SS24/15 on the PRA approach to supervising liquidity and funding risk.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Consult on Policy Statement on Allowance for Credit Losses

    US Agencies (FDIC, FED, NCUA, and OCC) are consulting on the policy statement on allowances for credit losses and on the guidance on credit risk review systems.

    October 17, 2019 WebPage Regulatory News
    News

    FSI Paper Examines Use of Suptech Initiatives by Financial Authorities

    The Financial Stability Institute (FSI) of BIS published a paper that examines the suptech developments by analyzing suptech initiatives of 39 financial authorities globally.

    October 17, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation and Impact of G20 Financial Reforms

    FSB published fifth annual report on the implementation and effects of the G20 financial regulatory reforms.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Launches Consultation on Comprehensive Pillar 3 Disclosures

    EBA proposed the new comprehensive implementing technical standard (ITS) for public disclosures by financial institutions.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Consults on Revised Technical Standards on Supervisory Reporting

    EBA launched a consultation on the revised implementing technical standards, or ITS, on supervisory reporting.

    October 16, 2019 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel Framework

    BCBS published the seventeenth progress report on adoption of Basel regulatory framework.

    October 16, 2019 WebPage Regulatory News
    News

    BoE and FCA Examine Use of Machine Learning in Financial Sector in UK

    BoE and FCA published a report on the results of a joint survey by BoE and FCA in 2019 to better understand the use of machine learning in the financial services sector in UK.

    October 16, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation of OTC Derivative Reforms

    FSB published annual progress report on implementation of the agreed G20 reforms for over-the-counter (OTC) derivatives markets.

    October 15, 2019 WebPage Regulatory News
    News

    APRA Proposes Measures to Strengthen Capital for Bank Depositors

    APRA proposed changes to APS 111, which is the prudential standard on measuring capital adequacy and establishes the criteria for regulatory capital requirements of authorized deposit-taking institutions.

    October 15, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3981