Financial Services Regulation & Compliance - Cross Sectoral March 2018

DOMESTIC

Demographics of applications for regulatory approval for senior financial roles released

The Central Bank has published an analysis of over 3,600 applications received in 2017 for approval to occupy senior roles within regulated firms in Ireland under the Fitness and Probity regime. The report breaks down the applications for regulatory approval by gender, age and country of origin. The Central Bank stated that it remains concerned by the continued evidence of a lack of diversity at senior level in regulated firms.

Sovereign Bond-Backed Securities: A VAR-for-VAR and Marginal Expected Shortfall Assessment

This paper forms part of the research-based evidence of the ESRB Task Force on Safe Assets that was set up to assess Brunnermeier's proposal of a sovereign bond-backed securitisation solution to the problem of euro area banks' concentrated exposures to their own country's sovereign bonds.

How effective are Sovereign Bond-Backed Securities as a Spillover Prevention Device?

Following the proposal to introduce sovereign bond-backed securities (SBBS) in the euro area, a number of papers were published which assess how the securitisation would insulate senior bond holders from actual default-related losses. This paper generalises the assessment that the by using the VAR-based Diebold and Yilmaz (2012) spillover index methodology to assess potential attenuation of the spillover of shocks in holding-period returns across bond markets due to the introduction of SBBS.

Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018

The Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018 entered the first stage of the legislative process. The Bill will be enacted to amend the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 to allow for the regulation of loan owners and sale of loans; and to provide for related matters.

Intermediary Times - Special Edition - March 2018

The Central Bank published a special edition of its Intermediary Times. The edition contains information regarding service continuity post the withdrawal of the United Kingdom from the European Union, relevant to insurance intermediaries and mortgage credit intermediaries.

EUROPEAN                                                                          

Proposal for a Regulation of the European Parliament and of the Council concerning the respect for private life and the protection of personal data in electronic communications and repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communications) E-Privacy Regulation

Single Rulebook Q&A – Regulation 575/2013 (CRR)

The EBA updated its single rulebook Q&A in relation to CRR. The updates relate to the following topics:

  • own funds (Articles 36 and 42)
  • Market Risk (Articles 298, 340, 342, 350)
  • Supervisory Reporting (Article 415)

Single Rulebook Q&A – Directive 2014/59/EU (BRRD)

The EBA updated its single rulebook Q&A in relation to BRRD. The updates relate to the topic of recovery and resolution (Article 27, 36, 44, 45, 88, 89, 94, 96, and 101).

Single Rulebook Q&A - Directive 2013/36/EU (CRD)

The EBA updated its single rulebook Q&A in relation to CRD. The update relates to the topic of supervisory reporting (Article 78).

The Proposal for a Directive of the European Parliament and of the Council on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA has been updated on 8 March 2018

This proposal repeals Framework Decision 2001/413/JHA combating fraud and counterfeiting of non-cash means of payment by updating most of its current provisions and is consistent with the findings of the Commission's evaluation of the current EU legislative framework together with the impact assessment accompanying the proposal. The directive aims at updating the current rules to ensure a clear, robust and technology-neutral legal framework is in place. It also eliminates operational obstacles that hamper investigation and prosecution as well as foresees actions to enhance public awareness of fraudulent techniques such as phishing or skimming.

Commission Delegated Regulation (EU) 2018/345 and Commission Delegated Regulation (EU) 2018/344

The Commission has adopted Delegated Regulation (EU) 2018/345 and Delegated Regulation (EU) 2018/344, supplementing Directive 2014/59/EU (BRRD). Delegated Regulation (EU) 2018/345 is with regard to regulatory technical standards specifying the criteria relating to the methodology for assessing the value of assets and liabilities of institutions or entities. Delegated Regulation (EU) 2018/344 is with regard to regulatory technical standards specifying the criteria relating to the methodologies for valuation of difference in treatment in resolution.

Commission Delegated Regulation (EU) 2018/389

The Commission has adopted Delegated Regulation (EU) 2018/389. The Delegated Regulation, which supplements Directive (EU) 2015/2366 (PSD2), establishes the requirements to be complied with by payment service providers for the purpose of implementing security measures for strong customer authentication and common and secure open standards of communication.

Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/36/EU

This proposal relates to the amendment of Directive 2013/36/EU (CRD) as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures.

Proposal for a Directive of the European Parliament and of the Council amending Directive 2014/59/EU

This proposal relates to the amendment of Directive 2014/59/EU (BRRD) with regard to loss-absorbing and recapitalisation capacity of credit institutions and investment firms.

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013

This proposal relates to the amendment of Regulation (EU) No 575/2013 (CRR) with regards to the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements.

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014

This proposal relates to the amendment of Regulation (EU) No 806/2014 as regards loss-absorbing and Recapitalisation Capacity for credit institutions and investment firm.

ESAs weigh benefits and risks of Big Data

The Joint Committee of the European Supervisory Authorities (ESAs) published its final report on Big Data analysing its impact on consumers and financial firms. The ESAs found that, overall, while the development of Big Data poses some potential risks to financial services consumer, the benefits of this innovation currently outweigh these.

EBA publishes its Roadmap on FinTech

The EBA has published a FinTech Roadmap setting out its priorities for 2018/2019. The priorities include:

  • monitoring the regulatory perimeter
  • monitoring emerging trends and analysing the impact on incumbent institutions' business models and the prudential risks and opportunities arising from the use of FinTech
  • promoting best supervisory practices on assessing cybersecurity and promoting a common cyber threat testing framework
  • addressing consumer issues arising from FinTech
  • identifying and assessing money laundering/terrorist financing risks

The Roadmap also sets out the establishment of a FinTech Knowledge Hub to enhance knowledge sharing and foster technological neutrality in regulatory and supervisory approaches. The EBA also published FAQs in relation to the roadmap.

Targeted exploratory consultation on the finalisation of Basel III

The Commission has invited replies to its consultation on the finalisation of Basel III. The consultation aims to gather views from interested parties on the potential impact that amendments may have on the EU banking sector and the wider economy, as well as to highlight possible implementation challenges. The consultation will close on the 12 Aril 2018.

High risks persist for European securities markets and investors

In its latest Trends, Risks, and Vulnerabilities (TRV) Report (No 1, 2018), ESMA has said that European securities markets, infrastructures and investors remain at risk. ESMA also re-iterated its concerns about retail investors investing in speculative and risky products, such as virtual currencies and Initial Coin Offerings.

Fitness check on the EU framework for public reporting by companies

The Commission has opened its consultation on a fitness check on the EU framework for public reporting by companies. The fitness check of the EU framework on public reporting by companies aims to assess whether the EU reporting framework is still fit for purpose. The consultation will close on the 21 July 2018.

ESMA updates the CSDR Q&As

ESMA has updated its Q&As regarding the implementation of the Central Securities Depository Regulation (CSDR). The new Q&As cover the following topics:

  • The first Q&A concerns the assessment of CSD links to be made by the competent authorities in the context of the authorisation procedure.
  • The second Q&A modifies an existing Q&A on the implementation of Article 35 of CSDR, to specify the extent of the flexibility that can be granted to CSDs in the use of international standards by CSDs to communicate with their participants or with other market infrastructures.
  • The third Q&A clarifies the qualification of links established between two CSDs for the settlement of securities through T2S.

ESMA updates its market abuse Q&As

ESMA has updated its Q&As on the implementation of the Market Abuse Regulation. ESMA has approved an update to the existing MAR Q&A on Pillar 2 requirements and the obligation to disclose inside information, in order to cover the Minimum Requirement for own funds and Eligible Liabilities (MREL) exercise. MRELs should ensure that banks have, at all times, enough capital and eligible liabilities to be bailed-in, where necessary.

ESMA consults on requirements for securitisation repositories

ESMA has published two consultation papers on draft technical standards implementing the Securitisation Regulation (SR). The consultation, which is open until 23 May 2018, seeks stakeholders' views on the application requirements for firms seeking to register with ESMA as securitisation repositories and technical advice to the European Commission on securitisation repository fees.

Guidelines on the assessment of the suitability of members of the management body and key function holders

ESMA has issued guidelines on the assessment of the suitability of members of the management body and key function holders, pursuant to Article 16 of the ESMA Regulations. The guidelines specify the requirements regarding the suitability of members of the management body of credit institutions, investment firms, financial holding companies and mixed financial holding companies. They also specify requirements regarding the suitability of the heads of internal control functions and the chief financial officer (CFO) of credit institutions and certain investment firms, where they are not part of the management body,

Commission Delegated Regulation (EU) 2018/480

The Commission has adopted Delegated Regulation (EU) 2018/480. The regulation supplements Regulation (EU) 2015/760 on European long term investment funds of the European Parliament and of the Council and is in relation to regulatory technical standards on financial derivative instruments solely serving hedging purposes, sufficient length of the life of the European long-term investment funds, assessment criteria for the market for potential buyers and valuation of the assets to be divested, and the types and characteristics of the facilities available to retail investors.

For further information please contact a member of the Financial Regulation team.

Date Published: 9 April 2018