MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023, updated the supervisory reporting requirements for reporting framework 3.2, and published circulars on the draft regulatory technical standards on identification of groups of connected clients and on criteria for identifying shadow banking entities under the Capital Requirements Regulation (CRR or 575/2013).
Below are the key highlights of these regulatory developments:
- The supervisory priorities for 2023 build on the strategic objectives set out in the recently published MFSA Strategic Statement. The three high-level supervisory priorities for 2023 include resilience of supervised entities, digital finance, and sustainable finance. Apart from the high-level supervisory priorities, the Authority highlights three ongoing priorities namely Governance, Risk & Compliance, Financial Crime Compliance, and Consumer Protection & Education, which are considered crucial in the context of its day-to-day processes. The supervisory priorities for 2023 were identified following careful consideration of the market environment and regulatory developments, as well as the European Supervisory Authorities’ priorities, those of the European Central Bank (ECB) and the direction provided by the European Commission. The recommendations of international standard-setters, and MFSA’s own regulatory and supervisory experience were also taken into account.
- MFSA published circulars on the draft regulatory technical standards, which, in conjunction with the EBA Guidelines on connected clients (EBA/GL/2017/15), provide the complete framework for the identification of two or more natural or legal persons who are so closely linked by idiosyncratic (individual) risk factors, that it is prudent to treat as a single risk. The draft regulatory technical standards elaborate on conditions that lead to the identification of two or more legal persons being connected through control relationship, economic dependency, or combination of both. While the draft regulatory technical standards on criteria for the identification of shadow banking entities ensure consistent implementation from a prudential point of view of the large exposures framework. The draft standards on shadow banking address criteria for identifying both shadow banking and non-shadow banking entities, definition of banking activities and services, and criteria for excluding entities established in third countries from being deemed as shadow banking entities, differentiating between institutions and other entities. MFSA requires credit institutions to take note of the conditions set out in both draft regulatory technical standards, which are expected to be adopted by the European Commission in due course.
- MFSA updated the guidelines to supervisory reporting requirements for credit institutions and foreign bank branches relating to the reporting framework version 3.2. MFSA also updated supervisory reporting modules on net stable funding ratio, remuneration benchmarking, remuneration benchmarking of high earners, gender pay gap, and approved higher ratios, which are applicable as from reference date December 2022. In addition, MFSA updated the guidelines for credit institutions to upload and review certain supervisory reporting data through the LH Portal. The updated guidelines cover addition of an attribute that will be included in the summary of the ECB’s feedback.
Keywords: Europe, Malta, Banking, Basel, Regulatory Capital, Reporting, CRR, Supervisory Priorities, Sustainable Finance, Digital Finance, Connected Clients, Shadow Banking, Large Exposures, NSFR, Remuneration Benchmarking, High Earners, LH Portal, Supervisory Reporting, MFSA
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous ArticleHMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,