The Joint Committee of the ESAs published its 2020 work program. The Joint Committee will continue its work in the areas of cross-sectoral risk analysis, consumer protection, financial conglomerates, securitization, accounting, and auditing. Key areas of focus include the packaged retail and insurance-based investment products (PRIIPs), sustainable finance, securitization, and financial innovation—also in relation to the fintech action plan of EC and the work of the European Forum for Innovation Facilitators (EFIF). For the EFIF, the Joint Committee will further promote coordination and cooperation among national innovation facilitators to foster the scaling up of innovation in the financial sector. The EFIF work program is also annexed to the Joint Committee work program.
The Joint Committee will continue to be an important forum for discussing key cross-sectoral trends and vulnerabilities to financial stability, with the publication of bi-annual cross-sectoral risk reports. In the area of Financial Conglomerates, the Joint Committee will further develop and finalize its work on specific reporting formats for financial conglomerates. In addition, the Joint Committee will continue to serve as an important body for addressing other cross-sectoral matters, such as the cross-sectoral mandates and questions (Q&As) stemming from the Securitization Regulation and the work to make the Joint Committee the coordination platform of data collected. The key cross-sectoral issues that have been identified are the jurisdictional scope of application, the due diligence requirements of EU institutional investors, the definition of sponsor for investment firms, and the credit granting criteria. The Joint Committee will also work on practical and operational issues in relation to supervision of the Securitization Regulation.
The Joint Committee enhances confidence and strengthens the protection of European consumers in relation to banking, insurance, and securities products. This will continue to be an area of priority for the Joint Committee in 2020. ESAs are undertaking a review of Commission Delegated Regulation 2017/653 and intend to propose amendments by February 2020 as requested by EC to allow the amendments to be scrutinized before expiry of the transitional exemption in Article 32 of the PRIIPs Regulation (No 1286/2014). Work will continue on the development of Q&As or other Level 3 tools to promote supervisory convergence and to give competent authorities and market participants further guidance on implementation of the new PRIIPs rules. ESAs will assess the phenomenon, focusing on potential consumer protection concerns and benefits associated to it. This will involve assessment of the fintech phenomenon, assessment of its benefits and risks, and, potentially, identification of any regulatory and/or supervisory measures that may need to be taken, taking into account the ongoing sectoral work that the ESAs are doing in this field.
The 2019-2020 work program of EFIF highlights that EFIF will be used to monitor developments in the design and operation of innovation facilitators, taking account of the best practices set out in the January 2019 joint report of the ESAs on regulatory sandboxes and innovation hubs. Additionally, EFIF will be used to monitor developments in the innovative products that have been identified in the context of innovation facilitator activities and to monitor the related regulatory and supervisory issues. Finally, EFIF will focus on certain thematic priorities—artificial intelligence, big data analytics, and machine learning; tokenization and distributed ledger technologies; open banking/application program interfaces; and platforms facilitating the re-aggregation of financial services (retail and institutional).
Keywords: Europe, EU, Banking, Insurance, Securities, Work Program, PRIIPs, Securitization, Fintech, Reporting, EFIF, ESAs
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Previous ArticleCongress Passes Economic Growth, Regulatory Relief, and CP Act
Next ArticleEIOPA Publishes Q&A on Regulations in October 2018
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.
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.