EBA report on cyclicality of banks' capital requirements under CRD IV

The EBA has published a report on the cyclicality of banks' capital requirements (EBA-Op-2016-24).  The aim of the report is to clarify whether the risk-sensitive bank capital requirements laid down in the CRR and the CRD IV Directive create unintended pro-cyclical effects by reinforcing the endogenous relationships between the financial system and the real economy. EBA, 22 December 2016

FSCC publishes decision in relation to complaint against the FCA

The Office of the Complaints Commissioner has published the decision of the Complaints Commissioner in relation to a complaint against the FCA (FCA00181).  The complainant considered the FCA acted unreasonably and not in the interests of consumers in allowing a financial adviser firm to cease being authorised and dissolve. The complainant advised the commissioner that this resulted in a loss of £99,000, as determined by the Financial Ombudsman Service (FOS). The complainant alleged that, as the firm was allowed to de-authorise, it was unable to recover the FOS award from the firm or from its insurance provider. As a result, the complainant alleged it stands to lose a significant amount, since the Financial Services Compensation Scheme (FSCS) cannot cover all the losses incurred, even if it does find in its favour.

The commissioner dismissed the complaint, finding that the FCA did not act unreasonably in approving the firm's application for the cancellation of its permissions under Part 4A of the Financial Services and Markets Act 2000 (FSMA). FSCC, 22 December 2016


ESMA peer review report on CCP compliance with margin and collateral requirements

ESMA has published a report outlining the results of a peer review it has conducted on how national competent authorities assess compliance by central counterparties with the margin and collateral requirements under EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories (Regulation 648/2012)) (ESMA/2016/1683).

The review, which launched on 1 September 2015, compared the supervisory approaches of 16 NCAs supervising the 17 CCPs established at that time.  The report sets out good practice examples that emerged during the review, which include having direct access to supervised CCPs data and requesting the CCPs to verify the marketability of collateral and reliability of prices. ESMA, 22 December 2016

EBA reports recommends harmonised EU framework for covered bonds

The EBA has published a report with recommendations on how to harmonise covered bond frameworks in the EU. The recommendations seek to ensure that only those financial instruments that comply with harmonised structural, credit risk and prudential standards can be branded as "covered bonds" and have access to special regulatory and capital treatment as provided in the current EU financial regulation. EBA, 20 December 2016