Featured Product

    ECB Proposes to Amend Policies for Exercising Options and Discretions

    June 29, 2021

    ECB launched a consultation to update the harmonized policies for exercising options and discretions under the EU law. The proposal entails amendments to four policy instruments: ECB Guide on options and discretions, Regulation 2016/445 on exercise of options and discretions, Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions, and Guideline 2017/697 on the exercise of options and discretions in relation to the less significant institutions. ECB has published the draft instruments that constitute this proposal, along with an explanatory memorandum and a set of questions and answers (Q&A) on the review of the policies on the exercise of options and discretions available in EU law. The comment period for this consultation ends on August 23, 2021.

    The proposed policy revisions primarily account for legislative changes adopted since 2016. Most notably, the legislative changes arising from the revised Capital Requirements Regulation and Directive (CRR2 and CRD5), which introduced certain options and discretions into the legislative framework while amending some of the existing options and discretions. ECB is proposing new or revised policy guidance in relation to 56 specific options and discretions assigned to competent authorities in the banking legislation in EU. It is also proposing to remove policies and guidance in relation to 16 options and discretions, in many cases because the option or discretion in question no longer exists in the banking law in EU. The largest number of proposed revisions relate to options and discretions in the application of liquidity requirements, specifically the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). The relatively large number of liquidity-related policies result from the CRR2's introduction of NSFR as a new liquidity requirement for banks, applicable as of June 28, 2021. Additionally, several amendments to the LCR Delegated Regulation 2015/61 were introduced in 2018 and became applicable on April 30, 2020. The consultation also relates to many aspects of supervision, including permissions for banks seeking to reduce their capital, the treatment of certain exposures in the calculation of the leverage ratio, and certain exemptions from the large exposures limit.

    These instruments that are part of this consultation provide transparency on how ECB exercises options and discretions in its supervision of significant institutions, ensure the consistent application of high supervisory standards, and support consistency in the supervision of significant and less significant institutions. The European legislative framework grants supervisors the authority to exercise a significant number of options and discretions when supervising banks. In 2016, ECB first harmonized 122 options and discretions to streamline its supervision in the countries participating in the Single Supervisory Mechanism.

     

    Related Links

    Comment Due Date: August 23, 2021

    Keywords: Europe, EU, Banking, Securities, Options and Discretions, CRR2, CRD5, Basel, Regulatory Capital, NSFR, LCR, Liquidity Risk, Large Exposures, Significant Institutions, Less Significant Institutions, ECB

    Featured Experts
    Related Articles
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    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.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    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.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    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.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    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.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    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.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    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.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    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.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    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.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699