On March 24, 2016, the European Central Bank Regulation on the exercise of options and discretions relating to the prudential requirements for credit institutions was published in the Official Journal of the European Union. The prudential treatment of options and discretions by regulators is outlined in the Capital Requirements Directive and the Capital Requirements Regulation, known collectively as CRD IV. The ECB is the prudential regulator for Eurozone banks and directly supervises the large Eurozone banks under the Single Supervisory Mechanism, designated as “significant credit institutions.” The ECB Regulation sets out the waivers, options and discretions that the ECB has decided to apply to significant credit institutions in its capacity as the prudential regulator of these firms, which will replace those adapted by the national regulators. The waivers and discretion cover own funds, capital requirements, liquidity and large exposures. The ECB Regulation will apply, subject to limited exceptions, from October 1, 2016, although transitional provisions have been included so that existing national provisions will apply until the ECB sets a common approach for those waivers and discretions not covered in this Regulation.The ECB also published its Guide to harmonizing the exercise of options and discretions regarding the prudential supervision of credit institutions.
The ECB Regulation is available at: http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=uriserv:OJ.L_.2016.078.01.0060.01.ENG&toc=OJ:L:2016:078:TOC and the ECB Guide is available at: https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/reporting/ecb_guide_options_discretions.en. pdf.