EBA has published an analysis of the current RegTech landscape in the EU.
The Report assesses the overall benefits and challenges faced by financial institutions and RegTech providers in the use of RegTech. It also identifies potential risks arising from RegTech solutions that supervisors will need to address and proposes actions designed to enhance knowledge and skills in competent authorities. These actions also aim to ensure technological neutrality in regulatory and supervisory approaches to RegTech, whilst addressing any inadvertent obstacles within the Single Market to facilitate the adoption of RegTech across the EU.
The comprehensive revisions aim at implementing the recent amendments to the Capital Requirements Directive (CRD V) and Capital Requirements Regulation (CRR II), as well as aligning with other regulatory developments and best supervisory practices. The consultation runs until 28 September 2021.
The current review of the SREP Guidelines affects all main SREP elements. The amendments implementing the requirements laid down in the CRD V and CRR II include the following:
- reviewing institutions’ categorisation and application of the minimum engagement model to reflect the new definitions on small and non-complex as well as large institutions, thus better embedding the proportionality principle;
- incorporating an assessment of money laundering and terrorist financing (ML/TF) risks, in line with the EBA Opinion on how to take into account ML/TF risks in the SREP published in November 2020;
- reviewing the provisions on Pillar 2 capital add-ons and the Pillar 2 guidance in accordance with Articles 104a and 104b of Directive 2013/36/EU, to ensure that they reflect a purely microprudential perspective;
- providing clarifications on the assessment of the risk of excessive leverage and the related Pillar 2 capital add-ons and the Pillar 2 guidance in order to reflect the separate stack of own funds requirements based on the leverage ratio;
- adjusting the requirements for the assessment of the interest rate risk in the non-trading book, as well as the assessment of liquidity risk and liquidity adequacy to align them with the current regulatory framework.
All ABSs seeking eligibility as Eurosystem collateral are subject to the same loan-level data requirements, regardless of any exemption from the disclosure requirements under the Securitisation Regulation. Therefore, eligible ABS issuers are required to provide information to the Eurosystem according to the procedures established in Sections 1 and 2 of the Commission Delegated Regulation (EU) 2020/1224.
Most of the revisions are related to options and discretions in the application of liquidity requirements. The consultation covers many aspects of supervisory activity, including the authorisation of capital calls by banks, the treatment of certain exposures in the calculation of the leverage ratio, and certain exemptions from the limits on large exposures.
The ECB’s policies concerning options and discretions are laid down in four instruments:
- an ECB Guide and an ECB Regulation setting out how the ECB exercises options and discretions for significant institutions, which it supervises directly;
- an ECB Recommendation and an ECB Guideline addressed to the national competent authorities of countries participating in the Single Supervisory Mechanism, which request that they adopt similar policies in their direct supervision of less significant institutions.
The consultation will end on 23 August 2021.
MMFs are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions. These features can make individual MMFs, or even the entire MMF sector, susceptible to runs, and may also give rise to system-wide vulnerabilities.
The policy options are grouped according to the main mechanism through which they aim to enhance MMF resilience – namely, to:
- impose on redeeming investors the cost of their redemptions;
- absorb losses;
- reduce threshold effects; and
- reduce liquidity transformation.
Policies aimed at enhancing the resilience of MMFs could be accompanied by additional reforms in two areas: (i) policies to support robust risk management by fund managers and risk monitoring by authorities; and (ii) measures to improve the functioning of the underlying short-term funding markets.
Responses to the public consultation should be sent by 16 August 2021.
The Bank for International Settlements (BIS) has published its Annual Economic Report for 2021.
The Report examines:
- The Covid effects on global recession;
- The distributional footprint of monetary policy;
- The Central bank digital currencies (CBDCs).
(Only in Italian)
L’IVASS ha pubblicato il Bollettino di vigilanza n. 5 relativo al mese di maggio.
In particular, the amendments introduce a new listing scheme for “Dividend Futures on equities” and “Futures on the FTSE MIB Dividend Index”, aimed at fostering liquidity support activities on shorter maturities.
In addition to the figure of the Primary Market Maker, for both the mentioned instruments, the figure of the Liquidity Provider is introduced, who will be obliged to respect the quotation obligations, according to the market rules, for each trading day and each contract for at least 60% of the duration of the continuous trading.
The quantity and spread obligations will be defined in the Guide to Parameters by a specific Exchange Notice.
The amendments concern the procedure for compulsory execution of contracts, it is specified that communications under the compulsory execution procedure must be sent by email and no longer by fax and, in addition, the application of the cash settlement rule is clarified.
In view of the entry into force of the EU buy-in rules set out in Regulation (EU) No. 909/2014 and its implementing provisions at the beginning of 2022, the rules on compulsory execution for unsecured markets will be comprehensively reviewed and the amendments will be subject to further consultation.
In addition, the provision relating to the ex officio appointment of the buy-in agent and sell-out agent is removed, in line with the procedures set out in Regulation (EU) No. 1229/2018, which provide only for appointment by the performing participant.
The amendments will take effect from 12 July 2021.
