Featured Product

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    July 29, 2022

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022. EBA also seeks comments on the revised guidelines on the Deposit Guarantee scheme (DGS) contributions, draft regulatory technical standards on the homogeneity of underlying exposures in simple, transparent, and standardized (STS) securitizations, and the supervisory handbook for the validation of internal ratings based systems.

    The key highlights of the aforementioned updates follow:

    • The guidelines on liquidity requirements exemption specify the criteria under which competent authorities may exempt small and non‐interconnected investment firms from liquidity requirements. The guidelines, which are in accordance with the Investment Firms Regulation or IFR, address three main elements: the set of investment services and activities provided by investment firms which are eligible for the exemption, the criteria for the exemption, and the guidance for competent authorities when granting and withdrawing an exemption. The guidelines will be applicable from two months after issuance date.
    • The updated version 5.2 of filing rules document for supervisory reporting modifies rule 3.6 to redefine the condition to apply the new reporting subject and to explicitly instruct the usage of entity types to indicate aggregate levels in the reporting subject of an aggregate reporting document. The filing rules represent a collection of additional rules and guidance specifically applicable to the remittance of eXtensible Business Reporting Language (XBRL) reports for reporting entities in scope of relevant EBA regulations (for example, banks) regulatory filings by relevant national and supranational authorities to EBA.
    • The EBA Single Rulebook Q&A tool updates for July 2022 include answers to 18 questions. The updates cover queries on topics such as credit risk, market risk, own funds, k-factor requirements, leverage ratio, STS securitization, and minimum requirements for own funds and eligible liabilities (MREL). The overall objective of the Q&A tool is to ensure consistent and effective application of regulatory framework across the Single Market. Institutions, supervisors, and other stakeholders can use the Single Rulebook Q&A tool to submit questions on certain EU regulations and directives.
    • The revised guidelines on DGS contributions aim to enhance proportionality between the risk of a credit institution and its contributions to the deposit guarantee schemes and at streamlining and simplifying the original guidelines. EBA, in its latest review of the guidelines in 2021-22, concluded that, overall, the methodology remains appropriate, and identified several elements of the calculation method that should be improved. The key proposals include setting minimum thresholds for the majority of core risk indicators, adjusting the minimum weights of the core risk indicators, replacing the formula for determining the risk adjustment factor of each member institution, specifying how to account for deposits where the DGS coverage is subject to uncertainty, including in relation to client funds, and clarifying the addressees of the guidelines and their respective roles. The consultation period ends on October 31, 2022.
    • The draft regulatory technical standards on homogeneity of underlying exposures in STS securitizations specify which underlying exposures are deemed to be homogeneous as part of the simplicity requirements under the Securitization Regulation and as amended by the Capital Markets Recovery Package. The draft regulatory technical standards carry over the provisions on homogeneity set out in the existing RTS (Regulation No 2019/1851) with some modifications and will be applicable to all securitizations, including asset-backed commercial paper (ABCP), non-ABCP, and on-balance-sheet securitizations. The consultation period ends on October 28, 2022. Following a submission to the European Commission for endorsement, these standards will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.
    • The supervisory handbook for validation of internal ratings-based systems clarifies the role of the validation function as part of corporate governance, in terms of scope of work and interaction with the credit risk control unit. The handbook provides general guidance on the expectations relative to the validation function, in accordance with article 185 of the Capital Requirements Regulation (CRR). The handbook does not present any specific methodology to be used by the validation function. Instead, the handbook provides a set of expectations and good practices on the work of the validation function depending on its position in the model cycle (that is, first or subsequent validation) as well as some additional guidance for the validation of rating systems when using external data, when outsourcing some validation tasks, as well as in a situation of data scarcity. The consultation period ends on October 28, 2022.


    Related Links


    Keywords: Europe, EU, Banking, Securities, Investment Firms, IFR, Liquidity Risk, XBRL, Filing Rules, Deposit Guarantee Scheme, Credit Risk, STS Securitization, Securitization Regulation, Regulatory Technical Standards, Supervisory Handbook, CRR, Single Rulebook, Q&A, Reporting, Basel, Market Risk, MREL, Own Funds, IRB Approach, EBA

    Featured Experts
    Related 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.

    November 28, 2023 WebPage Regulatory News

    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.

    October 31, 2023 WebPage Regulatory News

    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.

    October 19, 2023 WebPage Regulatory News

    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.

    October 18, 2023 WebPage Regulatory News

    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.

    October 18, 2023 WebPage Regulatory News

    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.

    October 17, 2023 WebPage Regulatory News

    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.

    October 14, 2023 WebPage Regulatory News

    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.

    September 18, 2023 WebPage Regulatory News

    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.

    September 18, 2023 WebPage Regulatory News

    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.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938