The European Commission (EC) adopted a Delegated Regulation (2023/511), which supplements the Capital Requirements Regulation, on the calculation of risk-weighted exposure amounts of collective investment undertakings under the mandate-based approach. Additionally, EC welcomed a political agreement between the European Parliament and the Council on the proposal for a European Green Bond Regulation and is seeking views, until June 15, 2023, on the review of the scope and regime for non-EU benchmarks under the Benchmarks Regulation.
The European Green Bond Regulation, which is an integral part of the European Green Deal, aims to establish a voluntary high-quality standard for green bonds. The European Green Bond Standard, or EUGBS, will enable companies and public entities that wish to raise funds on capital markets to finance their green investments. The Regulation outlines that issuers of the European Green Bond would need to ensure that at least 85% of the funds raised by the bond are allocated to economic activities that align with the Taxonomy Regulation. As part of the agreement, EC will publish EU templates for issuers of other bonds with environmental objectives, even if they do not make use of the European Green Bond Standard. For first-time issuers, a standardized template will be introduced to report information on the Taxonomy-alignment of green bonds, thus reducing administrative burdens and uncertainty, both for green bond issuers and for their investors. The Regulation also creates a regime for the registration and supervision of external reviewers. External reviewers play an important role in the market by assessing green bonds in detail and providing confirmation to investors about their environmental credentials. Issuers making use of the new European Green Bond Standard will be required to employ such external reviewers at several points during the bond's lifecycle, including to check the alignment of the funded projects with the Taxonomy Regulation.
The recently adopted Delegated Regulation 2023/511 addresses the regulatory technical standards for calculation of risk-weighted exposure amounts of collective investment undertakings. The Regulation determines exposure value of a collective investment undertakings' derivatives positions, where the underlying is unknown for the purpose of Article 132a(2) of the CRR Regulation. It also outlines the calculation methodology of the exposure values for the counterparty credit risk of a netting set of a collective investment undertakings' derivatives positions. The Regulation shall come in effect from March 29, 2023.
Keywords: Europe, EU, Banking, Derivatives, Green Bond Standard, Sustainable Finance, ESG, Benchmarks Regulation, Green Bonds, EUGBS, Taxonomy Regulation, Basel, CRR, Regulatory Capital, Regulatory Technical Standards, EC
Previous ArticleBSP Issues Guidelines for Reporting Submissions by Digital Banks
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.
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.
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.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
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.
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.
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.