Featured Product

    EU Council Adopts Legislative Reforms Under Capital Markets Union

    November 08, 2019

    European Council adopted a set of legislative reforms contributing to the Capital Markets Union, including sustainable finance reforms and legislative frameworks for investment firms and covered bonds. The Council also published the adopted texts that concern the creation of a new category of benchmarks contributing to sustainable finance, transparency obligations for sustainable investments, a new prudential framework for investment firms, a harmonized framework for covered bonds, and the rules promoting access to small and medium enterprise (SME) growth markets.

    With respect to sustainable finance, the first reform introduces disclosure obligations on how financial companies integrate environmental, social, and governance factors in their investment decisions. The second reform creates new types of benchmarks aimed at giving greater information on an investment portfolio's carbon footprint: the EU climate transition benchmarks, which aim to lower the carbon footprint of a standard investment portfolio, and the EU Paris-aligned benchmarks, which have the more ambitious goal to select only components that contribute to attaining the 2°C reduction set out in the Paris climate agreement.

    Another package of measures that was adopted sets out new prudential requirements and supervisory arrangements for investment firms. The reform adapts the requirements to the firms' risk profiles and business models while preserving financial stability. The largest firms that are considered systemic will be subject to the full banking prudential regime and will be supervised as credit institutions, while smaller firms will enjoy a new bespoke regime with dedicated prudential requirements.

    The Council also adopted a set of new rules on harmonized product requirements and supervision of covered bonds, to ensure a high level of investor protection. This framework specifies a common definition for receiving an EU covered bond label and benefit from preferential capital treatment. Harmonized regulatory framework would provide a stable funding source for credit institutions, which would be better placed to provide affordable mortgages for consumers and businesses and would make alternative safer investments available to investors. Covered bonds are financial instruments issued by a credit institution and backed by a separate pool of assets—typically mortgages or public debt—to which investors have a preferential claim in case of failure of the issuer. 

    The Council adopted a new SME framework to help small and medium businesses access new sources of funding. This specifically concerns access to "SME growth markets," a recently introduced category of trading venue dedicated to small issuers. The proposal contains amendments to the market abuse and the prospectus regulations, which make the obligations placed on SME growth market issuers more proportionate while preserving market integrity and investor protection.

     

    Related Link: Press Release and Adopted Texts

    Keywords: Europe, EU, Banking, Securities, Capital Markets Union, Sustainable Finance, ESG, Climate Benchmarks, Covered Bonds, Prudential Framework for Investment Firms, SME, Climate Change Risk, Proportionality, European Council

    Related Articles
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    News

    BCBS Consults on Disclosure of Climate Risks, Issues Other Updates

    The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.

    December 18, 2023 WebPage Regulatory News
    News

    US Government Moves to Regulate Development and Use of AI Models

    The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).

    December 18, 2023 WebPage Regulatory News
    News

    MAS Launches Gprnt Digital Platform for ESG Reporting for SMEs

    The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”

    November 29, 2023 WebPage Regulatory News
    News

    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
    News

    NGFS Publishes Phase IV Long-term Climate Scenarios for Banks

    The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.

    November 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8947