As part of the questions and answers (Q&A) on AnaCredit, ECB clarified the sector classification of investment firms authorized as credit institutions and the type of instruments that should be reported under the AnaCredit Regulation in the case of instruments extended to investment firms. The new Q&A extend and complement the clarifications already provided in the AnaCredit Manual Part II.
Modification of the definition of a credit institution in the Capital Requirements Regulation (CRR) as a result of Article 62(3)(a) of the Investment Firms Regulation (IFR) implies that investment firms which pose significant risks to financial stability will become part of the AnaCredit reporting population once they have been authorized by the competent authority as credit institutions. However, even if they have been authorized as credit institutions, investment firms which do not carry out business under Article 4(1)(1)(a) of the amended CRR should not be treated as monetary financial institutions (MFIs), because they do not belong to any MFI subsector—that is, central bank (S.121), deposit-taking corporations except the central bank (S.122), and money market funds (S.123). Consequently, for the purposes of institutional sector classification under AnaCredit investment, firms that do not carry out business under Article 4(1)(1)(a) of the amended CRR will continue to be classified as “Other financial intermediaries,” even if they have been authorized by the competent authorities as credit institutions.
AnaCredit Manual II clarifies that for AnaCredit reporting agents that are investment firms which meet any of points (b)(i) to (b)(iii) of Article 4(1)(1) but not point (a), the institutional sector of the reporting agent is “Other financial intermediaries” (S.125). Such institutions are non-MFI credit institutions. Meanwhile, credit institutions that meet the conditions referred to in Article 4(1)(1) in point (a) of the amended CRR are classified in the S.122 institutional sector as MFI credit institutions. Similarly, an investment firm authorized as a credit institution is classified as an MFI credit institution in the S.122 institutional sector, provided it conducts the business referred to in both point (a) and point (b) of Article 4(1)(1) of the amended CRR.
Additionally, AnaCredit Manual Part II clarifies that the type of instrument “deposits other than reverse repurchase agreements” covers any type of deposit or loan (except those that meet the definition of a reverse repurchase agreement) where the debtor is a monetary financial institution. In line with the clarifications related to sector classification, credit extended to investment firms which are non-MFI credit institutions should not be classified as deposits under AnaCredit. Meanwhile, credit other than reverse repurchase agreements extended to investment firms that conduct business under both Article 4(1)(1)(a) and Article 4(1)(1)(b) of the amended CRR and that are, therefore, classified under the S.122 institutional sector as “MFI credit institutions,” is reported to AnaCredit as “deposits other than reverse repurchase agreements.”
- Q&A on Sector Classification of Investment Firms
- Q&A on Reporting of Instrument Under AnaCredit
- AnaCredit Q&A Notification
Keywords: Europe, EU, Banking, Investment Firms, CRR, Basel, AnaCredit, IFR, Reporting, Q&A, Reverse Repurchase Agreement, AnaCredit Manual, ECB
Previous ArticleEBA Publishes Single Rulebook Q&A Updates for June 2021
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.