News from Europe

European Union 

ESMA clarifies CCPs’ portfolio margining under EIMR. ESMA announced that it has issued an opinion regarding the implementation on portfolio margining requirements for central counterparties under the European Market Infrastructure Regulation. (4/10/2017)

ESMA reports on EU accounting enforcement in 2016. ESMA announced its publication of its annual report on the enforcement and regulatory activities of accounting enforcers within the EU in 2016. (4/10/2017)

EBA issues amended technical standards on supervisory reporting for EU institutions. The EBA announced that it has published its final draft Implementing Technical Standards (ITS) amending the EC’s Implementing Regulation (EU) No 680/2014 on supervisory reporting so as to keep reporting requirements in line with changes in the regulatory framework and with the evolving needs for Supervisory Authorities’ risk assessments. The updated ITS include new information on sovereign exposures; changes to operational risk; changes to additional monitoring metrics for liquidity and Q&A-based changes and other minor amendments. These changes form part of the EBA reporting framework version 2.7, which will be applicable for submissions of data as of March 2018. (4/7/2017)

EBA provides guidance on bail-in under the BRRD. The EBA announced that it has issued three sets of final Guidelines on bail-in under the Bank Recovery and Resolution Directive (BRRD). These Guidelines complement existing regulation and guidance to facilitate the use of the bail-in power as a way of absorbing losses and recapitalizing banks in resolution. (4/5/2017)

ESMA issues clarification on credit ratings and rating outlooks publication timelines. ESMA announced that it has published an update to its Questions & Answers on the application of the CRA Regulation, adding a new section on Disclosure and Presentation of Credit Ratings. (3/29/2017)

ESMA discusses haircuts in EU securities financing transactions. ESMA announced that it has issued a research piece on shadow banking published in its recent report on trends, risks and vulnerabilities. (3/27/2017)

EBA publishes annual assessment of EU supervisory colleges for 2016. The EBA announced that it has published its 2016 annual assessment of EU supervisory colleges, which are established for the effective supervision of EU cross-border banking groups. The Report highlighted achievements made by colleges in 2016, including a good level and quality of engagement, and identified areas for improvement as well as topics for supervisory attention for 2017. The Report relied on the EBA staff observations gained through their participation in colleges of supervisors and on the consolidated results of the individual college assessments conducted at the end of 2016. (3/22/2017) 

United Kingdom 

PRA issues materials on its General Insurance Stress Test 2017. The PRA announced that it sent a request to the United Kingdom’s largest general insurers to provide information about the impact of a range of stress tests on their projected Own Funds, as well as providing additional information on their sectoral exposures to the UK economy. The General Insurance Stress Test 2017 is split into two broad areas of interest: a set of five severe but conceivable scenarios (four natural catastrophe scenarios and one economic downturn scenario consistent with the Banking Stress Test); and a capture of exposures that will allow the PRA to better understand the impact of potential losses by various sectors of the economy. Submission of the completed Excel template by the participating firms is due by July 14, 2017. (4/11/2017)

FCA consults on rules for credit card firms to help customers in persistent debt. The UK Financial Conduct Authority requested comments on a consultation paper that proposes rules for how firms deal with customers in persistent credit card debt. Comments are due on or before July 3, 2017. (4/3/2017) FCA press release. 

FCA releases near final rules on MIFID II. The FCA published a policy statement that contains near final rules on the implementation of the Markets in Financial Instruments Directive II with respect to data reporting services providers; position limits and reporting for commodity derivatives; and systems and controls requirements for firms providing MIFID investment services. The policy statement also clarifies the FCA’s approach to the recording of telephone conversations by retail financial adviser firms. (3/31/2017) FCA press release. 

FCA publishes fifth consultation on implementation of MIFID II. The FCA is seeking comments on its fifth consultation paper on the implementation of MIFID II, which proposes changes to its Handbook regarding Occupational Pension Scheme firms, the extension of FCA enforcement powers to persons subject to UK implementing legislation, and the use of third parties by firms required to report financial instrument reference data or commodity derivative positions to the FCA. Comments on the proposals related to OPS firms are due on or before May 12, 2017. Comments on the remaining proposals are due on or before June 23, 2017. (3/31/2017) 

PRA releases 2016 Q4 banking sector regulatory capital data. The PRA published statistical data on the levels of capital and risk-weighted assets for the UK banking sector for the fourth quarter of 2016. (3/28/2017) PRA press release. 

PRA consults on expectations for firms seeking approval of IRB models. The PRA requested comments on a consultation paper that clarifies the PRA’s expectations for firms applying to have their Internal Ratings Based approach models approved regarding their demonstration of “prior experience” using IRB models and the use of external data to supplement internal data for estimating Probability of Default and Loss Given Default for residential mortgages. Comments are due on or before June 28, 2017. (3/28/2017) PRA press release. 

BOE’s FPC offers assessment of financial stability outlook for the UK. The Bank of England’s Financial Policy Committee issued a statement following its meeting on March 22, 2017, which contained the FPC’s assessment of the outlook for UK financial stability. The FPC indicated that while the overall level of risk to UK financial stability is largely unchanged, the relative weight on the various risks has shifted. (3/27/2017) FPC statement. 

BOE explains 2017 stress test scenarios. The BOE released the details regarding its 2017 stress test scenarios, which will include an additional exploratory scenario alongside the annual cyclical scenario to measure how the UK banking system might change if current conditions that limit bank profitability remain or intensify. (3/27/2017) BOE 2017 stress test scenarios. See also a letter from the PRA on stress test model management principles for firms participating in the 2017 concurrent stress test. 

PRA consults on rates for 2017/18 regulated fees and levies. The PRA requested comments on a consultation paper that proposes the rates for the PRA’s fees and levies for 2017/18. Comments are due on or before May 24, 2017. (3/24/2017) PRA press release.