On September 24, 2016, a Commission Delegated Regulation outlining Regulatory Technical Standards specifying the information on financial contracts that a firm may be required to maintain was published in the Official Journal of the European Union. The Bank Recovery and Resolution Directive gives resolution authorities the power temporarily to suspend the termination rights of any counterparty to a contract with a firm that is under resolution. Both national regulators and resolution authorities may require a firm to maintain detailed records of financial contracts (generally, these are securities contracts, commodities contracts, futures and forwards contracts, swap agreements and inter-bank borrowing agreements) including as to whether or not they include suspensory provisions.
The RTS set out the minimum set of information on financial contracts that should be included in the detailed records held by a firm, which includes information such as whether a contract includes contractual recognition of resolution powers, information on value and valuation, collateral, termination rights, maturity and netting arrangements. The RTS also prescribe the circumstances in which the requirement to hold such records should be imposed and take a wide approach by including all firms or entities that might be subject to resolution actions.
Firms must retain, on an ongoing basis, the minimum set of information outlined in the RTS for each financial contract in its records. If access to such information is requested by a regulator or resolution authority, the firm must make available and transmit such information within the timeframe set out in the request. A firm may apply to have a field excluded from the request by successfully demonstrating to the requesting regulator that the information field is not applicable to the financial contract in question.
Firms that would be placed into an insolvency procedure need not be subject to these requirements, but the RTS does not prohibit national regulators or resolution authorities from imposing similar requirements on such firms, or any other firms.
The EBA published its final draft RTS in December 2015 and the final RTS are not substantively different from the final draft RTS. The RTS will be directly applicable across the EU from October 14, 2016.
The Regulation is available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R1712&from=EN.