European Banking Authority

EBA advises on macroprudential rules. The EBA published an opinion on the macroprudential tools laid down in the Capital Requirements Regulation and Directive. The Opinion assesses whether current rules are effective, efficient and transparent as well as the possible degrees of overlap across different macroprudential tools and the consistency of the EU framework with global standards. The Opinion also includes policy recommendations for the EU Commission. (7/8/2014) EBA press release.

Final guidelines on significant credit risk transfer for securitizations. The EBA published final guidelines that will support both originator institutions and competent authorities in the assessment of significant risk transfer for securitization transactions. (7/7/2014) EBA press release.

Consultation on a framework for common supervisory procedures and methodologies. The EBA opened a consultation on its guidelines for common procedures and methodologies for the supervisory review and evaluation process. The guidelines would provide a common framework for the work of supervisors in their assessment of risks to banks’ business models’, their solvency and liquidity. Comments should be submitted by October 7, 2014. (7/7/2014) EBA press release.

Final draft technical standards on conditions for assessing materiality of extensions and changes of internal approaches for market risk. The EBA published its final Regulatory Technical Standards specifying the conditions for assessing the materiality of extensions and changes of the Internal Models Approach for market risk. (7/7/2014) EBA press release.

Final draft technical standards on the margin periods of risk for the treatment of clearing members’ client exposures. The EBA published its final draft Regulatory Technical Standards specifying the minimum margin periods of risk that institutions acting as clearing members may use for the calculation of their capital requirements for exposures to clients. (7/7/2014) EBA press release.

Regulatory regime for virtual currencies proposed. The EBA published an opinion addressed to the EU Council, European Commission and European Parliament setting out the requirements that would be needed to regulate virtual currencies. The opinion also advises discouraging financial institutions from buying, holding or selling virtual currencies while no regulatory regime is in place. (7/7/2014) EBA press release.

Consultation on technical standards on home host cooperation in the EU banking sector. The EBA launched a public consultation on standards on colleges of supervisors and on standards on joint decisions on approval of internal models. The technical standards on colleges detail supervisory activities performed by colleges in going concern and emergency situations, while the implementing technical standards on joint decisions relate to the approval of internal models and detail the processes to be followed by competent authorities when reaching joint decisions. (7/3/2014) EBA press release.

Prudential filter guidance. The EBA published its technical advice to the European Commission on the use of a prudential filter for gains and losses arising from banks’ own credit risk of derivatives. (7/2/2014) EBA press release.

Credit risk capital requirements lists. The EBA published lists to assist EU institutions in the determination of their capital requirements for credit risk. The lists cover the treatment of exposures to EU regional authorities, changes to capital requirements for exposures secured by immovable property, the treatment of equity exposures by banks using the Internal Ratings-Based approach and the eligibility of physical collateral. (7/2/2014) EBA press release.

Covered bonds opinion. The EBA published an opinion on the preferential capital treatment of covered bonds and a detailed report on the European covered bonds frameworks. The EBA recommends additional criteria to qualify for preferential treatment. The opinion also calls for further clarification of current disclosure requirements and provides advice on the preferential treatment of some specific cover assets. Finally, based on the analysis presented in the report, the EBA has identified a series of best practices ensuring a robust and consistent regulatory framework for covered bonds. (7/1/2014) EBA press release.

Guidelines for credit institution funding plans. The EBA published final guidelines on harmonized definitions and templates for credit institution reporting of funding plans. The guidelines provide a tool for competent authorities to assess the feasibility, viability and soundness of funding plans, as well as their impact on the supply of credit to the real economy. (6/30/2014) EBA press release.

Asset disclosure guidelines. The EBA published guidelines on the disclosure of encumbered and unencumbered assets, including all central bank operations conducted by institutions. (6/27/2014) EBA press release.

Countercyclical capital buffer disclosure. The EBA is consulting on draft regulatory technical standards concerning the information that institutions should disclose with regard to their obligation to maintain a countercyclical capital buffer. Comments should be submitted by September 27, 2014. (6/27/2014) EBA press release.

Semi-annual risk report. The EBA published its fifth semi-annual report on risks and vulnerabilities in the EU banking sector. The report shows improvements in market sentiment and confidence but urges caution with respect to ongoing uncertainties on asset valuations and future profitability. (6/25/2014) EBA press release.

European Commission

EU remuneration guidance. The European Union published guidance on its new rules regarding remuneration in banks and investment firms. (6/26/2014) FAQs.

Consultation on financing arrangements for the Single Resolution Mechanism. The EC launched a consultation on the contributions of credit institutions to resolution financing arrangements under the Bank Recovery and Resolution Directive and the Single Resolution Mechanism. Comments should be submitted by July 14, 2014. (6/20/2014) EC press release.

European Securities and Markets Authority

ESMA updates list of authorized CCPs. ESMA updated its list of central counterparties that have been authorized to offer services and activities in the EU in accordance with the European Markets Infrastructure Regulation. With the authorization of Keler CCP (HU), there are now nine authorized CCPs. (7/7/2014)ESMA notice.

Guide to retail investors. ESMA published a guide for retail investors explaining the impact of the changes to be made in investor protection under the MiFID II reform. (7/1/2014) ESMA notice.

Draft RTS on CRA3 transparency requirements. ESMA published its Final Report on draft Regulatory Technical Standards required under the Credit Rating Agencies Regulation regarding information on transparency of structured finance instruments, the European Rating Platform and periodic reporting of fees charged by credit rating agencies. (6/24/2014) ESMA notice.

EMIR Q&A updates. ESMA published an update of its Questions & Answers document regarding the implementation of the European Markets Infrastructure Regulation (EMIR). The latest Q&As provide answers to questions mostly in relation to the population of specific fields relating to reporting of data on exposures (i.e. collateral and valuations). The reporting start date for such data is August 11, 2014, which means that the first counterparties reports are due no later than the end of August 12, 2014. The updated Q&As also cover how to report contracts with no maturity date, notional amount field, OTC derivatives novations and the issue of backloading. (6/23/2014) ESMA notice.

UK Financial Conduct Authority

FCA interim report on cash savings market study. The FCA reported the interim findings of its cash savings market study. The report sets forth the FCA’s initial observations on the nature of competition in the cash savings market. The interim report found that because many consumers do not shop around, banks are able to pay lower interest rates to customers that have stayed with the same account for a number of years. In addition, the largest personal current account providers are able to attract a large proportion of easy-access deposits despite on average offering lower rates. In light of those findings, the FCA is asking for suggestions on whether and if so how, it should respond. (7/8/2014) FCA press release.

FCA and PRA review barriers to entry for banks. The FCA and PRA published a review of the changes introduced last year to reduce the barriers to entry for new financial institutions. The review shows that in the twelve months following the changes, the PRA authorized five new banks and there has been a substantial increase in the number of firms discussing the possibility of becoming a bank. (7/7/2014) PRA press release.

Regulated fees and levies. The FCA published its rules for 2014-2015 regulatory fees, the Financial Ombudsman Service general levy, and the Money Advice Service. (7/3/2014) FCA press release.

Policy statement on ISAs. The FCA published a policy statement on rule changes that will affect investment firms managing individual savings accounts (ISAs). The rule changes require all investment firms who hold any money within stocks and shares ISAs to hold these sums as client money and allow investment firms that manage cash ISAs to opt into the CASS regime and elect to hold money in cash ISAs as client money. (7/1/2014) FCA press release.

EMIR reporting requirements. The FCA advised authorized firms identified as clearing members and clients of a Central Counterparty (CCP) that authorized or recognized CCPs under European Market Infrastructure Regulation are required to calculate hypothetical capital information. This information must be supplied by CCPs to their clearing members as well as to the competent authority of the clearing member. (6/30/2014) FCA statement.

Discussion paper on recovering administrative costs. The FCA published a discussion paper on how it should recover from firms the costs of administering the regulatory gateway. Comments should be submitted by August 22, 2014. (6/23/2014) FCA press release.

Guidance on annuity comparison websites. The FCA published its final guidance on what constitutes a fair, clear and not misleading annuity comparison website. (6/20/2014) FCA press release.

Statement on serious failings in firms. The FCA published a statement on how it will address serious failings of standards in firms, outlining an “Enhanced Supervision” for such firms. (6/19/2014) FCA press release.

UK Prudential Regulation Authority

Policy statement on regulated fees and levies. The PRA issued a policy statement setting forth its Final Annual Funding Requirement (AFR) and Special Project Fees for Solvency II for 2014/15; its allocation of the AFR to fee blocks and final tariff rates for 2014/15; and the refund of the underspend for 2013/14. (7/2/2014) PRA press release.

CRD IV consultation. The PRA opened a consultation on proposed changes to its rules, guidance and supervisory statements in the areas of credit risk mitigation, credit risk, governance and market risk. (6/30/2014) PRA press release.

Capital and leverage ratios statement. The PRA issued a supervisory statement clarifying its expectations regarding the capital and leverage ratios for the eight major UK banks and building societies. (6/26/2014) PRA press release.

Statements of policy. The PRA published three statements of policy. The first pertains to its exercise of the financial stability information power conferred by Section 165A of the Financial Services and Markets Act 2000, which gives the PRA the power to require certain persons to provide specified information or information of a specified description that it considers might be relevant to the stability of one or more aspects of the UK financial system. The second relates to its powers to address serious failings in the culture of firms and the third sets forth the final set of Fundamental Rules which replace the six Principles for Businesses inherited from the Financial Services Authority. (6/19/2014)

Supervisory approach. The PRA published papers on its approaches to the supervision of banks and the supervision of insurers. (6/19/2014)