Regulatory Insight Banking Newsletter May 2016 · BANKS NEWSLETTER MAY 2016 Managing Editor Managing Director, ENTERPRISE RISK SOLUTIONS . Regulatory Insight . Key Developments at

BANKS NEWSLETTER

MAY 2016

ENTERPRISE RISK SOLUTIONS

Regulatory Insight

Key Developments at a Glance The Bank for International Settlements (BIS) released proceedings of a December 2015 workshop on “Combining micro and macro statistical data for financial stability analysis.” The Foreign Exchange Working Group of the BIS issued documents covering the first phase of a global code of conduct for wholesale foreign exchange markets and principles for adherence to the new standards.

The Enhanced Disclosure Task Force of the Financial Stability Board (FSB) completed its work on Risk Disclosures by major banks. Separately, the FSB named additional members to its task force on climate-related Financial Disclosures. The Basel Committee on Banking Supervision (BCBS) released Basel III monitoring documents, including updated instructions, workbooks, and Frequently Asked Questions (FAQs).

KEY DEVELOPMENTS PER REGION

> EUROPE: The European Banking Authority (EBA) published updates to the Single Rule Book Q&A and also final Guidelines on stress tests for deposit guarantee schemes. Separately, the EBA provided guidance for computing International Monetary Fund (IMF) Financial Soundness Indicators (FSIs) for deposit taking institutions and launched a consultation on Liquidity Coverage Ratio (LCR) disclosure guidelines. As part of its mandate to monitor financial innovation, the EBA published a discussion paper on the innovative uses of consumer data by financial institutions.

The European Commission (EC) launched targeted consultations on market risk capital requirements, covering among other items the new standardized approach for counterparty credit risk (SA-CCR), and the implementation of Net Stabilized Funding Requirements (NSFR).

Regulations on the organization and collection of granular credit and credit risk data (Analytic Credit or “AnaCredit”) were approved by the European Central Bank (ECB). These regulations push back AnaCredit’s Phase 1 start date six months to September 2018.

The European Systemic Risk Board (ESRB) published a review of Macroprudential Policy in the EU in 2015. The Prudential Regulation Authority (PRA) of the Bank of England issued a consultation paper on Pillar 2 liquidity. The central bank of the Netherlands issued changes and amendments to several upcoming reports covering LCR, Funding Plans, and Additional Liquidity Monitoring Metrics.

> MIDDLE EAST AND AFRICA: The IMF published a report on Macroprudential Policy and Financial Stability in the Arab Region.

> AMERICAS: The IMF issued and Article IV Consultation on Columbia. Canada’s Office of the Superintendent of Financial Institutions (OSFI) issued a consultation on residential real estate loan regulatory capital requirements. The US Office of Financial Research (OFR) published reports on regulatory data collection best practices and on collateral flow and uses. Separately, the OFR issued an examination of the living wills prepared by eight US Global Systematically Important Banks (GSIBs).

> ASIA PACIFIC: The Hong Kong Monetary Authority (HKMA) is launching a consultation and a Quantitative Impact Study on the revision of the Large Exposures Concentration Risk regulation.

Managing Editor Pierre-Etienne Chabanel Managing Director, Regulatory & Compliance Solutions

Contact Us Americas +1.212.553.1653 [email protected]

Europe +44.20.7772.5454 [email protected]

Asia-Pacific (Excluding Japan) +85.2.3551.3077 [email protected]

Japan +81.3.5408.4100 [email protected]

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Table of Contents

International 3

Europe 9 European Union 9 Netherlands 22 United Kingdom 23

Middle East & Africa 24 Algeria 24 Arab Region 25

Americas 26 United States of America 26 Canada 31 Colombia 31 Paraguay 32

Asia Pacific 33 Hong Kong 33 Malaysia 33 Philippines 34 Singapore 34

Glossary 35

2 MAY 2016


International

Key Developments

Global Code of Conduct for the Foreign Exchange Market

- FXWG

May 26, 2016

Type of Information: Statement

The Foreign Exchange Working Group (FXWG) released the first phase of a global code of conduct for wholesale foreign exchange markets and principles for adherence to the new standards. The complete global code and adherence mechanisms, which aim to provide the integrity and effective functioning of foreign exchange markets will be released in May 2017.

This working group seeks to establish a single set of global principles of good practice for foreign exchange markets.

Link: FXWG Documents Keywords: Code of Conduct, Foreign Exchange

3 MAY 2016

http://www.bis.org/about/factmktc/fxwg.htm?m=3%7C332%7C610&bcbs_groups=FX%20Global%20Code%20-%20phase%201


Thematic Review on the Implementation of the FSB Policy Framework for Shadow Banking Entities

- FSB

May 25, 2016

Type of Information: Report

The Financial Stability Board (FSB) published its thematic peer review on the progress made by member jurisdictions in implementing its policy framework for strengthening oversight and regulation of shadow banking entities. This first peer review on the implementation of the policy framework is the twelfth thematic peer review conducted by FSB.

The review highlights that most non-bank financial entities fall within the regulatory perimeter and there is a broad range of institutional arrangements for their regulation and supervision. Investment funds have experienced the fastest growth in recent years and they represent the majority of the assets of entities covered by the information-sharing exercise. This underscores the growing importance that securities regulators play in promoting financial stability. Most jurisdictions classified non-bank financial entities into the five economic functions broadly in line with the policy framework, but there are some differences and inconsistencies in the classification and assessment of risks based on those functions. Reviews of the regulatory perimeter in most jurisdictions appear to be ad hoc and undertaken in response to concerns about a particular activity or entity type.

Data from existing reporting and disclosure arrangements for non-bank financial entities was not designed for collecting shadow-banking-specific information, so it may not be adequate or sufficiently granular to assess related risks. It is unclear whether disclosure requirements for non-bank financial entities and reports published by authorities (for example, financial stability reviews) enable market participants to adequately assess shadow banking risks posed by these entities. Few jurisdictions report planning reviews that could enhance those disclosures. Jurisdictions report a range of policy tools to address shadow banking risks posed by non-bank financial entities. Some of these tools, especially for investment funds, are discretionary in nature. Most jurisdictions report no initiatives to change their toolkit.

The peer review makes a number of recommendations to FSB jurisdictions to fully implement the policy framework:

» Establish a systematic process involving all relevant domestic authorities to assess the shadow banking risks posed by non-bank financial entities or activities.

» Address data gaps to be able to better assess the potential financial stability risks posed by non-bank financial entities or activities.

» Remove impediments to cooperation and information-sharing between authorities, including on a cross-border basis.

» Review and enhance public disclosures by non-bank financial entities as necessary to help market participants understand the shadow banking risks posed by such entities.

The FSB will continue to monitor the implementation of the policy framework by jurisdictions, including the above recommendations. It will also conduct follow-up work to:

» Enhance consistency across jurisdictions in their classification of non-bank financial entities into economic functions.

» Develop approaches to help jurisdictions better monitor and assess risks from those entities’ interconnectedness and cross-border activities.

» Facilitate the sharing of information among member authorities on policy tools and public disclosures.

Links: Press Release, Peer Review Report, Summaries on Implementation of the FSB Policy Framework Keywords: Peer Review, Regulatory Perimeter, Shadow Banking

4 MAY 2016

http://www.fsb.org/2016/05/fsb-publishes-thematic-review-on-the-implementation-of-its-policy-framework-for-shadow-banking-entities/

http://www.fsb.org/wp-content/uploads/Shadow-banking-peer-review.pdf

http://www.fsb.org/wp-content/uploads/Shadow-banking-PR-jurisdiction-summaries.pdf


Additional Members of the Task Force on Climate-Related Financial Disclosures Announced

- FSB

May 20, 2016


The FSB announced the names of additional members of the Task Force on Climate-Related Financial Disclosures (TCFD) for phase 2 of the work of the task force.

During phase 2, the TCFD will seek to develop a set of recommendations for consistent, comparable, reliable, clear and efficient climate-related financial disclosures. It will continue to conduct outreach with a wide range of stakeholders to ensure that it receives the necessary input into the development of the final recommendations. The TCFD will present a final report for consultation by end-December. More effective disclosures will help to reduce financial stability risks by avoiding an abrupt repricing of financial assets as the impact of climate change becomes clearer.

Additionally, new members of the TCFD took part in the recent meeting of the task force in Washington DC on May 4-5. At the meeting, members of the task force discussed the initial responses to the phase 1 consultation response and announced that the consultation will stay open until May 31. The task force will hold plenary meetings on 12-13 July in New York, on September 13-14 in Paris, and on November 15-16 in London. Some of these meetings may include public sessions. More details will be published on the TCFD website closer to these dates.

The TCFD is considering the physical and non-physical risks associated with climate change and what constitutes effective corporate financial disclosures regarding this. Given that access to better quality information on climate-related financial risks will allow market participants to understand and manage these risks better, the FSB at its March 31 Plenary meeting welcomed the phase 1 report by the industry-led task force and its intention to undertake extensive stakeholder consultation.

The industry-led task force, which initially had 22 members, is chaired by Michael R. Bloomberg. The members added for phase 2 of the task force’s work augment the mix of skills in the task force to help fulfil the scope and objectives for phase 2 of the work as set out in the phase 1 report (published on April 01) and take the total membership to 31. This task force was created in December and is developing voluntary, consistent climate-related financial disclosures for use by companies in providing information to lenders, insurers, investors, and other stakeholders. The task force contains members from both financial and non-financial companies across a range of countries and relevant areas of expertise. Its membership includes a balance between preparers and users of financial disclosures and the members act in a personal capacity.

Links: Press Release, Phase 1 Report and Public Consultation of the TCFD Keywords: Climate Risks, Disclosures, TCFD

IFC Bulletin No. 41: Highlights of the Irving Fisher Committee on Central Bank Statistics Workshop on Combining Micro- and Macro-Statistical Data for Financial Stability Analysis

- BIS

May 18, 2016

Type of Information: Research

The Bank for International Settlements (BIS) published the proceedings of the workshop of Irving Fisher Committee on Central Bank Statistics (IFC) on “Combining micro and macro statistical data for financial stability analysis” and the associated experiences, opportunities, and challenges in IFC Bulletin Number 41. More than 25 papers were presented at the IFC workshop, allowing for an in-depth exploration of the six main themes:

» Session 1 took stock of the different ways of analyzing financial stability that result from having a macro or a micro perspective.

» Session 2 described the challenges of integrating micro and macro data into an encompassing statistical framework.

» Session 3 described how the micro data can be harmonized and used to close gaps in financial stability analysis.

» Session 4 showed how entity-level data can help to better understand systemic risks.

» Session 5 focused on the emerging market economies, which have gained considerable experience in this area, reflecting their specific challenges.

» Session 6 reviewed various ongoing international initiatives that can be instrumental in advancing much-needed new statistical frameworks.

Links: IFC Bulletin No 41, Presentation on Macro-Prudential Statistics, Gateway to Treasures of Micro Data on the German Financial System, Standardised Micro Data for Financial Stability Purposes, Discussion of Session 4, Indonesia Financial System Statistics, Malaysia’s Experience in Managing the Credit Registers, Shadow Banking: Some Consideration for Measurement Purposes, Reporting of derivatives transactions in Europe, Dual Micro/Macro Dimension of Statistics Keywords: Macro-Statistical Data, Micro-Statistical Data, Statistics

5 MAY 2016

http://www.fsb.org/2016/05/fsb-names-additional-members-of-the-task-force-on-climate-related-financial-disclosures/

https://www.fsb-tcfd.org/phase1report/

http://www.bis.org/ifc/publ/ifcb41.htm

http://www.bis.org/ifc/publ/ifcb41d.pdf

http://www.bis.org/ifc/publ/ifcb41l.pdf

http://www.bis.org/ifc/publ/ifcb41l.pdf

http://www.bis.org/ifc/publ/ifcb41m.pdf

http://www.bis.org/ifc/publ/ifcb41o.pdf

http://www.bis.org/ifc/publ/ifcb41y.pdf

http://www.bis.org/ifc/publ/ifcb41z.pdf

http://www.bis.org/ifc/publ/ifcb41zc.pdf

http://www.bis.org/ifc/publ/ifcb41zd.pdf

http://www.bis.org/ifc/publ/ifcb41zd.pdf

http://www.bis.org/ifc/publ/ifcb41ze.pdf


Confirmation of Amendments to the Insurance Contracts Standard

- IASB

May 17, 2016


The International Accounting Standards Board (IASB) confirmed that it will amend the current insurance contracts standard (IFRS 4). This is to address the issues that may arise from implementing the new financial instruments standard, IFRS 9, before implementing the new insurance contracts standard that will replace IFRS 4. The amendments to IFRS 4 will supplement the existing options in that standard, that could be used to address the volatility that may be caused by applying IFRS 9 before the new insurance contracts standard.

Responding to the concerns of some companies about the timing of the implementation of the two standards and their related consequences, the Board has, following public consultation, confirmed that it will issue amendments to IFRS 4 that:

» give companies that issue insurance contracts, the option to remove from profit or loss, the volatility that may be caused by certain changes in the measurement of financial assets, when applying IFRS 9 before the new insurance contracts standard

» give companies whose predominant activities are insurance-related, an optional temporary exemption from applying IFRS 9 until 2021

The new insurance contracts standard is being drafted and the Board expects to issue it around the end of 2016, with an effective date no earlier than 2020. Both IFRS 9 Financial Instruments (which will be effective from January 01, 2018) and the new insurance contracts standard are relevant to companies that issue insurance contracts.

Link: IFRS Homepage Keywords: IFRS 4, IFRS 9, Insurance Contracts

Remarks of Jaime Caruana of Bank for International Settlements on Financial Regulations and Cementing the Gains of Post-Crisis Reforms

- BIS

May 17, 2016

Type of Information: Speech

Jaime Caruana, General Manager of the BIS, spoke about cementing the gains of post-crisis reforms, at a meeting of the Central Bank Governors of the Centre for Latin American Monetary Studies in Lisbon.

He highlighted that it is time to cement the gains of the post-crisis regulatory reform and the immediate task is to complete the regulatory agenda. The overall calibration of capital regulation will need to recognize the fundamental importance of equity capital for financial intermediation. Regulatory risk weights will need to be rid of excess variability while maintaining risk sensitivity. In performing this task and in looking forward, policymakers should adopt a holistic view that considers the constant evolution of financial system and the morphing of attendant risks. Such a view also demands that proactive supervision play a more prominent role, complementing regulation and corporate governance, to sustain the gains of the post-crisis reforms in the long run.

Furthermore, the challenge of sustaining the risk sensitivity of regulation comes to the fore in the context of banks' sovereign exposures. Regulation allows national supervisors to accept zero risk weights for sovereign exposures denominated and funded in the obligor's domestic currency and there has been a general use of this clause. The preferential treatment of sovereign exposures extends to liquidity requirements and to large exposure rules. This treatment is currently under review, the timeline of which will mostly likely extend beyond the finalization of the other components of the regulatory reform.

Link: Speech Keywords: Basel III, RWA, Sovereign Exposures

Disbanding of the Enhanced Disclosure Task Force

- FSB

May 13, 2016


The FSB announced the formal disbanding of the Enhanced Disclosure Task Force (EDTF), as it believes that the EDTF does not need to undertake another progress report on the major banks’ implementation of the EDTF’s Principles and Recommendations on Risk Disclosures.

In December 2015, the FSB had published EDTF’s third progress report, which reinforced the continued increase in implementation of EDTF recommendations by banks. The FSB believes that a further survey is unlikely to deliver significant increases.

Links: Press Release, Third Progress Report Keyword: EDTF

6 MAY 2016

http://www.ifrs.org/Pages/default.aspx

http://www.bis.org/speeches/sp160517.htm

http://www.fsb.org/2016/05/enhanced-disclosure-task-force-completes-its-work/

http://www.fsb.org/2015/12/fsb-publishes-fourth-edtf-report-on-bank-risk-disclosures/


Highlights of the Annual Conference on Addressing Global Challenges to Securities Market

- IOSCO

May 11, 2016


The International Organization of Securities Commissions (IOSCO) published the highlights of the four-day meetings at its Annual Conference in Lima. The conference focused on SME financing, investor protection and education, and the opportunities and challenges of new financial technologies. During this event, the IOSCO Board, the Growth and Emerging Markets (GEM) Committee, the four Regional Committees, and the Affiliate Members Consultative Committee (AMCC) discussed policy initiatives to strengthen securities market resilience and ensure that securities markets continue to be sustainable sources of finance.

IOSCO’s Presidents Committee approved the text of an enhanced Multilateral Memorandum of Understanding (MMoU) on cooperation and the exchange of information. The enhanced MMoU provides for the additional powers that IOSCO believes are necessary for its member regulators, to ensure their continued effectiveness in deterring cross-border misconduct and fraud in securities markets. Additionally, the IOSCO Board considered how to address gaps in asset management data collected by securities regulators and intends to publish a statement regarding this shortly. The Board also approved publication of the Survey Report on Audit Committee Oversight of Auditors, in an effort to improve audit quality. In other key policy areas, the IOSCO Board heard updates on work on CCP resilience and recovery, market conduct in wholesale markets, and revisions to IOSCO’s objectives and principles of securities regulation and supporting methodology.

On the issue of infrastructure finance, the Board agreed to establish a working group comprising Board members from both advanced and growth and emerging markets; the working group will engage with development banks, institutional investors, and other stakeholders to discuss issues relevant to market-based finance for infrastructure development. On identifying and addressing the emerging risks, the Board discussed the issue of liquidity in securities markets, with a focus on liquidity in corporate bond markets. The Board intends to publish a consultation paper shortly on corporate bond market liquidity and will take up further work on corporate bond market transparency.

IOSCO’s work on cyber resilience and financial technologies was also discussed. The Board agreed to consider different mechanisms for securities regulators to share and gather information on cyber risk and cyber security issues that are relevant to securities regulators across its membership. It also received an update on IOSCO work on the potential impact of financial technologies and digitalization on securities markets and regulation. The work will culminate in a report that draws on contributions from IOSCO’s Committee on emerging risks, the GEM Committee, relevant policy committees, and the AMCC.

Link: Media Release Keywords: Data Gaps, Enhanced MMoU, Liquidity

Stability Report on Islamic Financial Services Industry

- IFSB

May 10, 2016


The Islamic Financial Services Board (IFSB) published the fourth edition of the report (2016) on the financial stability of the Islamic financial services industry (IFSI).

The report begins by offering an overview of the industry, covering trends and developments in the three main sectors of the industry—Islamic banking, the Islamic capital market, and Takāful (Islamic insurance); and recent developments in the Islamic micro-finance sector. The report then highlights the initiatives undertaken by the international standard-setting bodies to further ensure the stability of financial institutions and markets; and addresses the implications of such reforms for the institutions offering Islamic financial services. It also reviews the progress of various projects and initiatives undertaken by the IFSB to enhance the supervisory framework, with an aim to ensure stability and soundness of the IFSI. Next, the report assesses the resilience of the Islamic financial system, covering technical analysis of selected financial indicators of the three main sectors of the Islamic financial system to identify imminent risks to the industry’s stable performance. Finally, the report discusses the three emerging issues in Islamic finance:

» Cross-sectoral links among various sectors of IFSI and the implications for systemic stability.

» The implementation of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regulations in jurisdictions where Islamic financial services are offered. This development is captured in a case study of AML and CFT regulations in Malaysia, where they are applied to a dual financial system.

» Assessing Regulatory Consistency in the Implementation of Global Prudential Standards.

The report also contains Articles (in a Box) contributed by:

» the Bangladesh Bank, examining financial stability of the Islamic banking system in Bangladesh

» the EBA, summarizing its work on convergence of banking supervisory practices in the EU

» the Secretariat, highlighting the recent developments in the unconventional monetary policy in some crisis affected jurisdictions

Links: Press Release, Stability Report, 2016 Keywords: AML, CFT, IFSI, IIFS

7 MAY 2016

http://www.iosco.org/news/pdf/IOSCONEWS426.pdf

http://www.ifsb.org/preess_full.php?id=347&submit=more

http://www.ifsb.org/docs/IFSI%20Stability%20Report%202016%20(final).pdf


Basel III Monitoring Updates for the Month

- Basel Committee

May 06, 2016


This month, the Basel Committee on Banking Supervision (BCBS) published the following updates on Basel III monitoring:

» Version 3.2.4 of the Basel III monitoring workbook, along with instructions and frequently asked questions on Basel III monitoring

» Version 3.3.1 of Basel III monitoring workbook for ad hoc exercise, along with instructions

» Additional guidance for completing the internal ratings-based (IRB) quantitative study

» Updated workbook and instructions for Credit Valuation Adjustment (CVA) Quantitative Impact Study (QIS) (version 1.0.1)

The Basel Committee is monitoring the impact of Basel III global regulatory framework for more resilient banks and banking systems, Basel III leverage ratio framework and disclosure requirements, Basel III Liquidity Coverage Ratio (LCR) and liquidity risk monitoring tools, and Basel III Net Stable Funding Ratio (NSFR) on a sample of banks. The exercise is repeated semi-annually, with end-December and end-June reporting dates.

Links: Workbook 3.2.4, Basel III Monitoring Instructions, Basel III Monitoring FAQ, Workbook for Ad Hoc Exercise 3.3.1, Basel III Monitoring Instructions for Ad Hoc Exercise, Additional Guidance for Completing IRB QIS, Workbook for CVA QIS, Instructions for CVA QIS Keywords: Basel III Monitoring, QIS

8 MAY 2016

http://www.bis.org/bcbs/qis/biiiimplmoniwb_mar16.xlsx

http://www.bis.org/bcbs/qis/biiiimplmoninstr_mar16.pdf

http://www.bis.org/bcbs/qis/biiiimplmonifaq_mar16.pdf

http://www.bis.org/bcbs/qis/biiiimplmoniwb__adhocex_may16.xlsx

http://www.bis.org/bcbs/qis/biiiimplmoninstr__adhocex_apr16.pdf

http://www.bis.org/bcbs/qis/biiiimplmoninstr__adhocex_apr16.pdf

http://www.bis.org/bcbs/qis/biiiimplmoninstr_addguideirb_may16.pdf

http://www.bis.org/bcbs/qis/workbook_CVA_QIS.xlsx

http://www.bis.org/bcbs/qis/instructions_CVA_QIS.pdf

http://www.bis.org/bcbs/qis/instructions_CVA_QIS.pdf


Europe

European Union

Key Developments

Updates to Single Rulebook Q&A: Published as Final Q&A in May 2016

- EBA

May 27, 2016

Type of Information: Q&A

The updates for this month include 10 answers dated May 27, 2016; 1 answer dated May 20, 2016; and 7 answers dated May 13, 2016.

The overall objective of the Questions and Answers (Q&A) tool is to ensure consistent and effective application of the new regulatory framework across the Single Market. Institutions, supervisors, and other stakeholders can use the Single Rulebook Q&A tool for submitting questions on Capital Requirements Directive (CRD) IV, Capital Requirements Regulation (CRR), and the related technical standards developed by the EBA and adopted by the EC.

Link: Q&A Keywords: CRD IV, CRR, Single Rulebook

Consultation on Further Considerations for Implementation of Net Stable Funding Ratio

- EC

May 26, 2016

Type of Information: Regulation

Regulatory Status: Proposed Rule

The EC launched a targeted consultation to gather the views of selected stakeholders on specific issues that could be raised by the implementation of NSFR at the EU level. The stakeholders include financial institutions that could be impacted by the implementation of NSFR at the EU level, associations representing their interests, and supervisory authorities.

Comments Due Date: June 24, 2016 Effective Date: N/A First Reporting Date: N/A Link: Consultation Paper Keywords: CRD IV, CRR, NSFR

Consultation on Proportionality in the Future Market Risk Capital Requirements and the Review of the Original Exposure Method

- EC

May 26, 2016


Regulatory Status: Propose Rule

The European Commission (EC) launched a consultation to gather the views of selected stakeholders on proposed options to implement the principle of proportionality in the future market risk capital framework, and on the review of the Original Exposure Method. Views are also invited on replacing the current standardized approaches for counterparty credit risk (SA-CCR) by the new SA-CCR.

The EC is particularly interested in the views of institutions that use the standardized approach for market risk and/or for counterparty credit risk for the vast majority of their exposure, or that are eligible for the derogation for small trading books; the associations representing these institutions; and supervisory authorities.

Comments Due Date: June 24, 2016 Effective Date: N/A First Reporting Date: N/A Link: Consultation Document Keywords: CRD IV, CRR, SA-CCR

9 MAY 2016

http://www.eba.europa.eu/single-rule-book-qa

http://ec.europa.eu/finance/bank/docs/regcapital/crr-crd-review/20160526-nsfr-consultation_en.pdf

http://ec.europa.eu/finance/bank/docs/regcapital/crr-crd-review/20160526-trading-book-consultation_en.pdf


Regulation on Time Horizons for the Liquidation Period to be Considered for Different Classes of Financial Instruments

- EC

May 26, 2016


Regulatory Status: Final Rule

The EC published the Commission Delegated Regulation (CDR) 2016/822, which amends CDR 153/2013, on the time horizons for the liquidation period to be considered for different classes of financial instruments. Article 26 of the Delegated Regulation (EU) No 153/2013 has been amended as follows:

“(1) paragraphs 1 and 2 are replaced by the following:

‘1. For the purposes of Art 41 of Regulation (EU) No 648/2012 (EMIR) , a CCP shall determine the appropriate time horizons for the liquidation period taking into account the characteristics of the financial instrument cleared, of the type of account in which the financial instrument is held, of the market where the financial instrument is traded, and the following minimum time horizons for the liquidation period:

(a) five business days for OTC derivatives;

(b) two business days for financial instruments other than OTC derivatives held in accounts not meeting the conditions laid down in point (c);

(c) one business day for financial instruments other than OTC derivatives held in omnibus client accounts or in individual client accounts provided that the following conditions are met:

(i) the CCP keeps separate records of the positions of each client at least at the end of each day, calculates the margins in respect of each client, and collects the sum of the margin requirements applicable to each client on a gross basis;

(ii) the identity of all the clients is known to the CCP;

(iii) the positions held in the account are not proprietary positions of undertakings of the same group as the clearing member;

(iv)the CCP measures the exposures and calculates for each account initial and variation margin requirements on a near to real-time basis and at least every one hour during the day using updated positions and prices;

(v) where the CCP does not allocate new trades to each client during the day, the CCP collects the margins within one hour where the margin requirements calculated in accordance with point (iv) are higher than 110 % of the updated available collateral in accordance with Chapter X, unless the amount of the intraday margins to be paid to the CCP is not material on the basis of predefined amount defined by the CCP and agreed by the competent authority, and to the extent that trades previously allocated to clients are margined separately from trades that are not allocated during the day.

2. In all cases, for determining the appropriate time horizons for the liquidation period, the CCP shall evaluate and sum at least the following:

(a) the longest possible period that may elapse from the last collection of margins up to the declaration of default by the CCP or activation of the default management process by the CCP;

(b) the estimated period needed to design and execute the strategy for the management of the default of a clearing member according to the particularities of each class of financial instrument, including its level of liquidity and the size and concentration of the positions, and the markets the CCP will use to close-out or hedge completely a clearing member position;

(c) where relevant, the period needed to cover the counterparty risk to which the CCP is exposed.’;

(2) paragraph 4, point (b) is replaced by the following:

‘(b) such time horizon is at least two business days, or one business day where the conditions laid down in paragraph 1(c) are met.’ ”

Comments Due Date: N/A Effective Date: June 15, 2016 First Reporting Date: N/A Link: CDR 2016/822 Keywords: CDR 2016/822, CDR 153/2013, EMIR

10 MAY 2016

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R0822&from=EN


Regulation on Technical Standards on the Content and Format of the Description of Functioning of Multilateral Trading Facilities and Organized Trading Facilities

- EC

May 26, 2016



The EC published the Commission Implementing Regulation (CIR) 2016/824 on implementing technical standards (ITS) regarding the content and format of the description of the functioning of multilateral trading facilities (MTFs) and organized trading facilities (OTFs). The CIR also includes the notification to ESMA according to markets in financial instruments Directive (MiFID).

The regulation states that it is important to recognize the need for competent authorities to receive complete information about the purpose, structure, and organization of Multilateral Trading Facilities (MTFs) and Organized Trading Facilities (OTFs) that they will be required to supervise—this will help ensure the efficient and orderly functioning of financial markets. This information should build upon the information an investment firm or market operator would be required to provide as part of the general authorization requirements under Directive 2014/65/EU. It should focus on the specific functionality of the trading system, which will enable competent authorities to assess whether the system satisfies the definition of an MTF or OTF, and to assess its compliance with the particular, venue-orientated requirements.

The CIR 2016/824 contains several articles, which cover information to be provided on MTFs and OTFs, including information to be provided on MTFs already in operation (Article 4), and additional information to be provided on MTFs for registration as an SME growth market (Article 5. It also includes articles on asset class-specific information (Article 7), material changes, and format for providing the description.

Comments Due Date: N/A Effective Date: June 15, 2016 First Reporting Date: N/A Link: CIR 2016/824 Keywords: CIR 2016/824, MTF, MiFID II, OTF

Regulation Amending Implementing Technical Standards on Uniform Formats and Date for Disclosure of the Values Used to Identify Global Systemically Important Institutions

- EC

May 25, 2016



The EC published the Commission Implementing Regulation (CIR 2016/818) amending Regulation 1030/2014, regarding the uniform formats and date for the disclosure of values used to identify Global Systemically Important Institutions (G-SIIs) according to Regulation No 575/2013 of the European Parliament and the Council.

» Article 1 is replaced by the following: “G-SIIs shall report the information used to identify G-SIIs (indicators, ancillary data and memorandum items) to the relevant authority in electronic format using the template in the Annex to this Regulation, taking into consideration the further specifications of the underlying data and the instructions issued by the relevant authority each year. By using that template and taking into consideration these specifications and instructions, G-SIIs shall publicly disclose the values of the indicators used for determining the score of the institutions in accordance with the identification methodology set out in Regulation (EU) No 1222/2014 G-SIIs shall not be bound to disclose publicly the ancillary data and memorandum item.”

» The third subparagraph of Article 3 is replaced by the following: “Without undue delay, following the disclosure of that information by the G-SIIs, relevant authorities shall send those completed templates, including the ancillary data and the memorandum items, to the EBA. The EBA shall disclose the completed template, excluding the ancillary data and the memorandum items, on its website for centralization purposes.”

» The Annex is replaced by the text set out in the Annex to this regulation.

Comments Due Date: N/A Effective Date: May 26, 2016 First Reporting Date: N/A Link: CIR 2016/818 Keywords: CRR, G-SII, ITS

11 MAY 2016




Final Guidelines on Stress Tests for Deposit Guarantee Schemes

- EBA

May 24, 2016

Type of Information: Guideline

The EBA published the final guidelines on stress tests for Deposit Guarantee Schemes (DGSs).

The guidelines lay down basic methodological principles for all stress tests run by DGSs in the EU, including the various stages to be completed, the scenarios simulated, and the areas and indicators to be measured. In addition, they establish a small core of harmonized priority tests to be run by DGSs and reported to the EBA with a view to running a comparable EU-wide peer review. The first stress test should take place by July 03, 2017.

In line with the Deposit Guarantee Schemes Directive (DGSD), these guidelines will promote quality and consistency of these stress tests. The resulting data will facilitate EBA’s peer reviews in the future, thus contributing to a safe and sound EU framework for the benefit of depositors and financial stability. To move toward the first EBA peer review, which is foreseen in 2020, DGSs should test a broad range of operational and funding capabilities, which will cover key areas and main functions activated when a DGS intervenes.

DGSs will be requested to report their results on these priority tests by July 03, 2019. The results should provide information for a first meaningful EU-wide overview of the resilience of DGSs.

Link: Press Release Keywords: DGS, Stress Testing

Updates on Level 2 Measures

- EC

May 24, 2016


The EC published an updated document listing the Level 2 legislative measures in the area of financial services. This list contains Level 2 Legislative measures that are either being planned or have been adopted, also providing an overview of the existing empowerments in basic acts for level 2. The table is expected to be regularly updated.

Numerous acts of EU legislation in the area of financial services (basic acts) contain empowerments for the “Level 2” measures to be adopted by the Commission through Delegated Acts, Implementing Acts, or measures under the former comitology Regulatory Procedure with Scrutiny (RPS measures). These measures are endorsed in accordance with different procedures set out in the relevant basic act and may be subject to formal committee decisions or provide for certain control rights of the European Parliament and the Council.

For cases where the level 2 measures concern purely technical matters and require the expertise of supervisory experts, it can be determined in the basic act that these measures are technical standards based on drafts developed by the ESAs. A distinction can be made between regulatory technical standards (RTS), which are adopted by the Commission through a Delegated Act, and ITS, which are adopted through an Implementing Act.

Links: Notification, Updated Table on Level 2 Legislative Measures Keywords: ITS, Level 2 Measures, RTS

Criteria for Banks to Hold Easily “Bail-inable” Instruments in Case of Resolution

- EC

May 23, 2016



The EC’s recent Delegated Regulation specifies the criteria that authorities responsible for resolving banks will need to consider, when setting the Minimum Requirements for own funds and Eligible Liabilities (MREL)—or easily “bail-inable” instruments—for the purpose of loss absorption and recapitalization of banks. The Delegated Regulation will further clarify a key provision of the Bank Recovery and Resolution Directive (BRRD) and support the overall objective of having a robust MREL. This recently adopted regulation is based on EBA’s draft RTS, which the Commission amended to ensure compliance with the BRRD.

The draft regulation has been passed on to the Council and the European Parliament for their consideration. They are entitled to an objection period of three months. Moreover, Article 45 of the BRRD mandates the Commission to perform an MREL review by the end of 2016. This work will also consider the international Total Loss-Absorbing Capacity (TLAC) standard for global systemically important banks (G-SIBs), which was recently adopted by the G-20. The Commission intends to make a proposal to introduce this standard into EU law in 2016, well in time before its entry into force in 2019.

Comments Due Date: N/A Effective Date: N/A First Reporting Date: N/A Link: Press Release, The Delegated Regulation Keywords: BRRD, Delegated Regulation, MREL

12 MAY 2016

http://www.eba.europa.eu/-/eba-publishes-final-guidelines-on-stress-tests-for-deposit-guarantee-schemes

http://ec.europa.eu/finance/general-policy/level-2-measures/index_en.htm

http://ec.europa.eu/finance/general-policy/docs/level-2-measures/level2-measures_en.pdf

http://europa.eu/rapid/press-release_IP-16-1752_en.htm?locale=en

http://ec.europa.eu/finance/bank/crisis_management/index_en.htm


Regulation Amending Organization of Preparatory Measures for Granular Credit Data Collection by European System of Central Banks (ECB/2016/14); Regulation on the Collection of Granular Credit and Credit Risk Data (ECB/2016/13)

- ECB

May 20, 2016



The European Central Bank (ECB) recently finalized the following two regulations related to the collection of granular credit data:

» Decision ECB/2016/14 amending Decision ECB/2014/6 on the preparatory measures that the European central banks should take to prepare for the collection of granular credit data by the ESCB. The timeline for implementation set out in Decision ECB/2014/6 needs to be extended, to allow sufficient time for the ESCB to properly prepare for the collection of granular credit data. A number of articles and annex with reporting templates and attributes have been amended.

» Decision ECB/2016/13 on the collection of granular credit and credit risk data. The multi-purpose shared analytical credit data set according to this regulation shall be established in stages. The first stage shall start on September 01, 2018. The first monthly and quarterly transmission under this stage and pursuant to this regulation shall start with data for September 30, 2018. National central banks shall transmit to the ECB a first set of the counterparty reference data (in accordance with Template 1 of Annex I) six months prior to the first transmission. To allow for the necessary organizational and technical preparations for the transmission of the counterparty reference data, the national central banks may require reporting agents to provide partial or complete counterparties reference data and credit data from December 31, 2017 onward.

The ECB also published an explanatory note to the regulation on collection of granular credit and credit risk data. The explanatory provides background information on the collection of granular credit data by the European System of Central Banks (ESCB), as set out in the regulation. The reporting specifications of AnaCredit, as laid down in the regulation, are built on a wide range of requirements for granular data and the outcome of a comprehensive merits and costs procedure carried out in 2014. Based on the outcome of the matching of the essential user needs with the costs, the broad requirements were streamlined or reprioritized. Specifically, the regulation focuses on the collection of granular credit data on credits granted by credit institutions to legal entities on a “solo” basis to address the main data needs of the ESCB. No specific requirements pertaining to the ECB’s Banking Supervision function are currently included in the regulation.

The feedback statement to the regulation on collection of this data consists of responses to observations on the draft ECB regulation on the collection of granular credit and credit risk data. It covers in detail how ECB analyzed and gave due consideration to all the comments received and subsequently amended draft regulation.

Comments Due Date: N/A Effective Date: N/A First Reporting Date: N/A Links: Amendments to ECB/2016/14, ECB/2014/6, ECB/2016/13, Explanatory Note to ECB/2016/13, Feedback Statement: Regulation on the Collection of Granular Credit and Credit Risk Data Keywords: AnaCredit, ECB/2016/13, ECB/2016/14

Second Public Consultation on Harmonizing Options and Discretions Available in the European Union Law

- ECB

May 18, 2016



The ECB launched its second public consultation in the form of a draft Addendum to the ECB guide on Options and Discretions (O&Ds) available in the EU law. The aim is to further harmonize supervision of significant banks in the Euro area. This document addresses eight O&Ds, complementing the existing guide and regulation, which were published on March 24, 2016 and deal with 115 O&Ds.

The consultation documents, comprising the draft addendum to the guide and an explanatory memorandum, are available on ECB’s banking supervision website. The policies submitted for this consultation do not affect the content of ECB regulation on the exercise of O&Ds available in Union law (Regulation (EU) 2016/445). The regulation has been published in the Official Journal of the European Union and will enter into force on October 01, 2016, in accordance with Article 25 of the regulation.

Following the public consultation, ECB will publish the comments received, along with the responses and an assessment of the comments. Subsequently, a consolidated version of the ECB Guide on options and discretions available in Union law, including the approach for the recognition of institutional protection schemes, will be published on the ECB’s website.

Comments Due Date: June 21, 2016 Effective Date: N/A First Reporting Date: N/A Links: Press Release, Consultation on Draft Addendum to the ECB Guide on O&Ds, Consultation on the Exercise of O&Ds, Regulation (EU) 2016/445, ECB Guide on O&Ds, Explanatory Memorandum Keywords: Hearing, O&Ds, Regulation 2016/445

13 MAY 2016

https://www.ecb.europa.eu/ecb/legal/pdf/en_2016_14_f_sign.pdf

https://www.ecb.europa.eu/ecb/legal/pdf/en_dec_2014_6.pdf

https://www.ecb.europa.eu/ecb/legal/pdf/en_2016_13_f_sign.pdf

https://www.ecb.europa.eu/stats/money/aggregates/anacredit/shared/pdf/explanatorynoteanacreditregulation.en.pdf

http://www.ecb.europa.eu/stats/money/aggregates/anacredit/shared/pdf/feedback_statement_201605.en.pdf

http://www.ecb.europa.eu/stats/money/aggregates/anacredit/shared/pdf/feedback_statement_201605.en.pdf

https://www.bankingsupervision.europa.eu/press/pr/date/2016/html/sr160518.en.html

https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/reporting_p2/pub_con_addendum_options_discretions_guide.en.pdf

https://www.bankingsupervision.europa.eu/legalframework/publiccons/html/reporting_options_part2.en.html

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32016R0445&qid=1462265428108

https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ecb_guide_options_discretions.en.pdf

https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/reporting_p2/explanatory_memorandum.en.pdf


Amendments to Regulatory Technical Standards for the Specification of Methodology for Identification as well as Definition of Subcategories of Global Systemically Important Institutions

- EC

May 18, 2016



The EC amended the Commission Delegated Regulation (CDR) No 1222/2014 on RTS for the specification of methodology for identification of G-SIIs and for the definition of subcategories of G-SIIs.

This amendment aims at ensuring consistency between the methodology specified in the regulation and the Basel Committee on Banking Supervision framework, as updated from time to time. The amended regulation contains the complete methodology, including the indicators to identify G-SIIs. However, the annex with the detailed technical specifications of the indicator values has been deleted from this regulation. Article 6 of CDR No 1222/2014, as amended, sets out the indicators in a general manner.

In the same vein, Commission Implementing Regulation (CIR) No 1030/2014 on the uniform formats and date for the disclosure of the values used to identify G-SIIs, which contains a data template, will be amended. After the amendment it will still contain a template with the indicators but without the technical specifications of the underlying data points.

Comments Due Date: N/A Effective Date: OJ Date + 1 Day First Reporting Date: N/A Link: Explanatory Memorandum on CDR Keywords: CDR 1222/2014, G-SII

Decision Confirming the Use of Unsolicited Credit Ratings for Determining Institutions’ Capital Requirements

- EBA

May 17, 2016


The EBA published a decision confirming the use of unsolicited credit assessments assigned by certain External Credit Assessment Institutions (ECAIs) for calculating the capital requirements of institutions. The decision will ensure regulatory harmonization across the EU on the use of unsolicited credit ratings for determining institutions' own funds requirements.

Institutions may use unsolicited credit assessments of an ECAI for determining their capital requirements only if the EBA has confirmed that those unsolicited ratings do not differ in quality from solicited ratings of that same ECAI. Going forward, the use of unsolicited ratings assigned by 22 ECAIs will be allowed, which will also support the intention of EU legislators to open the market to all registered and certified credit rating agencies. EBA’s conclusions are based on a quantitative and qualitative analysis of both solicited and unsolicited credit assessments of ECAIs.

The analysis that has been published has not identified any evidence of differences in the quality of solicited and unsolicited credit ratings for a given ECAI. In addition, the analysis has not revealed any use of unsolicited ratings by ECAIs to put pressure on rated entities to place an order for a credit assessment or other services— which are the conditions set out in the CRR for allowing the use of unsolicited ratings.

Links: Press Release, EBA Decision, Report on Unsolicited Credit Assessments Keywords: CRR, ECAI, Unsolicited Ratings

Summary of Responses for the Public Consultation Entitled “Call for Evidence on the European Union Regulatory Framework for Financial Services”

- EC

May 17, 2016


The EC published the results of the public consultation entitled “Call for Evidence: EU regulatory framework for financial services.” The consultation was launched on September 30, 2015 and closed on January 31, 2016.

The purpose of the Call for Evidence, which is part of the Commission's 2016 work program as a Regulatory Fitness and Performance Programme (REFIT) item, was to consult all interested stakeholders on the benefits, unintended effects, consistency, gaps, and coherence of the EU regulatory framework for financial services. It also aimed to gauge the impact of the regulatory framework on the ability of the economy to finance itself and grow. In particular, the consultation sought feedback, concrete examples, and empirical evidence on the impact of rules adopted to date.

The Commission received 288 responses to the consultation. The feedback statement summarizes the issues raised and seeks to provide a factual overview of the contributions received and examples provided. It is not an exhaustive list of all contributions and does not assess the validity of the respective claims. The contents of this document therefore cannot be regarded as reflecting the position of the Commission.

Overall, stakeholders did not dispute the reforms of recent years and many expressed support, highlighting the benefits of the new rules. But the Call for Evidence was also welcomed as giving all interested parties the opportunity to assess the potential interactions, overlaps, and inconsistencies between different pieces of legislation.

Links: Responses to the Consultation, REFIT Initiatives, Summary Statement Keywords: CMU, REFIT

14 MAY 2016

http://data.consilium.europa.eu/doc/document/ST-9042-2016-INIT/en/pdf

http://www.eba.europa.eu/-/eba-confirms-the-use-of-unsolicited-credit-ratings-for-determining-institutions-capital-requirements

http://www.eba.europa.eu/documents/10180/1466166/EBA-DC-2016-151+Decision+on+the+Use+of+Unsolicited+Credit+Assessments.pdf

http://www.eba.europa.eu/documents/10180/1466166/EBA+Report+on+Unsolicited+Credit+Assessments+%28Article+138+CRR%29.pdf

http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/index_en.htm

http://ec.europa.eu/atwork/pdf/cwp_2016_annex_ii_en.pdf

http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/docs/summary-of-responses_en.pdf


Review of Macro-Prudential Policy in the European Union in 2015

- ESRB

May 13, 2016


The European Systemic Risk Board (ESRB) published its review of the EU’s macro-prudential policy for 2015.

The report highlighted a substantial increase in the number of macro-prudential measures in the EU in 2015, compared to the previous year. This was partly due to the mandatory measures under CRD/CRR, namely the designation of systemically important institutions (SIIs) and the implementation of the regime of the countercyclical capital buffer (CCB). All member states are required to set the CCB on a quarterly basis, as of January 01, 2016.

Additionally, most member states identified the G-SIIs and other systemically important institutions (O-SIIs) in their jurisdiction and set additional capital buffer requirements. G-SII and O-SII buffers are instruments specifically designed to address the risk from SIIs; however, some member states also use the systemic risk buffer because of its greater flexibility. Nearly 150 G-SIIs and O-SIIs have been identified in the EU up to now. In the EU, SIIs account for almost the entire banking sector (and multiples of GDP) in some countries while their importance is much smaller in other countries. The additional capital buffer requirements for such institutions vary from 0% to 3%. Eighteen banking groups are especially important because they include SIIs in several member states, are often controlling a substantial share of the local market.

The review reveals that the real estate sector remains another key priority for many macro-prudential authorities. Although fewer new measures were taken in the area of residential real estate in 2015, in terms of active measures the sector remains one where vulnerabilities are most frequently addressed by macro-prudential authorities. Caps on loan-to-value (LTV), debt-service-to-income (DSTI) and loan-to-income (LTI) ratios are very commonly used instruments. However, the challenges for authorities are much greater in the area of commercial real estate. The experience of three countries (Hungary, Ireland, and the Netherlands) sheds light on the substantial differences in the nature of the vulnerabilities originating from this sector and how they are monitored and addressed. To date, only Hungary has activated an instrument (the systemic risk buffer) to address risks related to the stock of commercial real estate exposures.

Link: Report Keywords: G-SII, O-SII, Systemic Risk

Regulatory Technical Standards on the Conditions for Application of Derogations Related to Currencies with Constraints on the Availability of Liquid Assets

- EC

May 13, 2016



The EC published, in the Official Journal of the European Union, the Commission Delegated Regulation (CDR) 2016/709 on RTS specifying the conditions for application of the derogations (referred to in Article 419(2) of CRR) concerning currencies with constraints on the availability of liquid assets.

A credit institution shall notify the competent authority that it intends to apply one or both of the derogations in Article 419(2). The notification shall be provided in writing 30 days prior to the date of the first application of the derogation. When applying the derogations institutions shall not exceed the relevant percentage set in respect of a currency by the ITS adopted pursuant to Article 419(4) of CRR. Institutions shall calculate the percentage as the percentage that X represents of Y where:

» X is the sum of the value of all liquid assets to which the derogation provided for in Article 419(2)(a) of CRR applies, after application of any haircuts and the maximum amount that may be drawn on a credit line to which the derogation applies

» Y is the amount of liquid assets required to be held by an institution to meet its liquidity coverage requirement, pursuant to Article 412 of the CRR.

Comments Due Date: N/A Effective Date: June 02, 2016 First Reporting Date: N/A Links: Final Rule, Article 419 of CRR, ITS Regulation 2015/2344 Keywords: CDR 2016/709, CRR, LCR

15 MAY 2016

http://www.esrb.europa.eu/pub/pdf/other/20160513_esrb_review_of_macroprudential_policy.en.pdf


https://www.eba.europa.eu/regulation-and-policy/single-rulebook/interactive-single-rulebook/-/interactive-single-rulebook/toc/504/article-id/919



Inter-Institutional Agreement on Better Law-Making

- EC

May 12, 2016



The final inter-institutional agreement on better law-making was published in the Official Journal of the European Union. This agreement is among the European Parliament, the Council of the EU, and the EC.

This agreement sets out a series of initiatives and procedures, through which the three institutions agree to pursue better law-making. The three institutions agree to reinforce the EU’s annual and multi-annual programming. The institutions agree on the positive contribution of impact assessments in improving the quality of Union legislation. The principles of subsidiarity and proportionality should be fully respected, as should fundamental rights. Impact assessments should also address, whenever possible, the "cost of non-Europe" and the impact on competitiveness and the administrative burdens of the different options, having particular regard to SMEs ("Think Small First"), digital aspects, and territorial impact. Impact assessments should be based on accurate, objective, and complete information and should be proportionate regarding their scope and focus.

The EC assesses the impact of its legislative and non-legislative initiatives, delegated acts, and implementing measures, which are expected to have significant economic, environmental, or social impacts. The initiatives included in the Commission Work Program or in the joint declaration will, as a general rule, be accompanied by an impact assessment. With regard to the legislative instruments, the Commission shall provide, in relation to each proposal, an explanation and justification to the European Parliament and to the Council regarding its choice of legal basis and type of legal act in the explanatory memorandum accompanying the proposal. The Commission should take due account of the difference in nature and effects between regulations and directives.

Additionally, with regard to the delegated and implementing acts, the three institutions underline the important role played by delegated and implementing acts in Union law. Used in an efficient, transparent manner and in justified cases, they are an integral tool for better law-making, contributing to simple, up-to-date legislation and its efficient, swift implementation. It is the competence of the legislator to decide whether and to what extent to use delegated or implementing acts, within the limits of the treaties. The Annex to this regulation documents the common understanding between the European Parliament, the Council, and the Commission on delegated acts. The three institutions:

» Commit to set up, by the end of 2017 and in close cooperation, a joint functional register of delegated acts, providing information in a well-structured and user-friendly way

» Confirm their commitment to using the legislative technique of recasting for the modification of existing legislation more frequently

» Commit to promoting the most efficient regulatory instruments, such as harmonization and mutual recognition, to avoid overregulation and administrative burdens and fulfil the objectives of the Treaties

» Agree to cooperate to update and simplify legislation and to avoid overregulation and administrative burdens for citizens, administrations, and businesses, including SMEs, while ensuring that the objectives of the legislation are met. In this context, the three institutions agree to exchange views on this matter prior to finalization of the Commission Work Program.

» Undertake, by way of contribution to its Regulatory Fitness and Performance Program (REFIT), to present annually an overview, including an annual burden survey, of the results of the Union's efforts to simplify legislation and to avoid overregulation and reduce administrative burdens.

To facilitate traceability of the various steps in the legislative process, the three institutions undertake to identify, by December 31, 2016, ways to further develop platforms and tools to that end, with a view to establishing a dedicated joint database on the state of play of legislative files. Furthermore, the three institutions stress the need for swift and correct application of Union legislation in the member states. The time limit for transposition of directives will be as short as possible and, generally, will not exceed two years.

Comments Due Date: N/A Effective Date: N/A First Reporting Date: N/A Link: Inter-Institutional Agreement Keywords: Better Law-Making, Delegated and Implementing Acts, REFIT

16 MAY 2016

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016Q0512(01)&from=EN


Opinion on the Proposed Amendments to Implementing Technical Standards on Benchmarking of Internal Approaches

- EBA

May 12, 2016


The European Banking Authority (EBA) issued an opinion (to the EC) expressing agreement with the proposed amendments to the EBA Implementing Technical Standards (ITS) on benchmarking of internal approaches.

These amendments were agreed with the EBA and build on the experience of the 2014-15 benchmarking exercise. The aim of these amendments is to ensure a better quality of the submitted data and to strengthen the benchmarking analysis performed by EBA and the competent authorities. EBA plans to update the ITS annually to ensure the success and quality of future benchmarking exercises. Changes to the ITS will be applied annually since some features of the instruments or counterparties included in the benchmarking portfolios require regular updating as they may become obsolete or cease to exist.

The amended ITS on benchmarking of internal approaches will allow the EBA to run its 2016 exercise based on the data requirements specified in the amended standards. The 2016 exercise will cover credit risk for the so-called high-default portfolios (small and medium enterprises and retail) and market risk portfolios, along with some information about the models used to produce the results. All EU institutions using internal approaches to calculate capital requirements will be subject to an assessment of their internal approaches and are required to submit, to their competent authorities, the data on those portfolios by the close of business on June 30, 2016.

Moreover, the EBA is taking into consideration the changes to the portfolios relevant for the 2017 exercise. These too will be transmitted to the EC and published after adoption by the EBA Board of Supervisors.

Link: Press Release Keywords: Benchmarking Internal Models, ITS

Clarification of Position on Technical Standards on the Credit Quality Steps for External Credit Assessment Institutions' Credit Assessments

- ESAs

May 12, 2016


The Joint Committee of the European Supervisory Authorities (EBA, EIOPA, ESMA – together referred to as ESAs) published today its Opinion on the European Commission's (EC) intention to amend the draft Implementing Technical Standards (ITS) on the mapping of External Credit Assessment Institutions' (ECAIs) credit assessments under the Capital Requirements Regulation (CRR) and Solvency II Directive.

The ESAs prepared the draft ITS and submitted them to the EC via the Joint Committee in November 2015. In these ITS, the ESAs had proposed "less conservative" quantitative requirements to apply for a phase-in period of three years. Thus, the ECAIs could receive the best mapping based on their past performance, irrespective of how many ratings they have already produced. On expiry of the phase-in period, from 2019 onward, the Joint Committee intended to apply a "more conservative" approach, requiring ECAIs to issue a minimum number of ratings to receive the best mapping.

On March 30, 2016, the EC informed the Joint Committee of its intention to amend the draft ITS by extending the "less conservative" approach to the mapping of ECAIs. The ESAs, in their opinion, express their disagreement with the EC's proposal, as favoring competition aspects over prudential considerations increases the risk to financial stability and is not in line with the mandate given to the ESAs. The Joint Committee believes that the initial draft ITS represent a good balance of prudential objectives while sufficiently promoting market competition in the credit rating industry.

Link: Press Release Keywords: CRA, Credit Quality Steps, ITS

Adverse Macro-Financial Scenario for Stress Testing

- ESRB

May 11, 2016

Type of Information: Guidance

The European Securities and Markets Authority (ESMA), in cooperation with the European Systemic Risk Board (ESRB), initiates and coordinates EU-wide stress tests to assess the resilience of financial institutions to adverse market developments. It plans to conduct a stress test this year for central counterparties (CCPs). ESRB, on ESMA’s request, has developed and published the adverse macro-financial scenario for this stress test.

For the ESMA CCP stress test, the ESRB adverse scenario was formally approved at the March 17, 2016 meeting of the ESRB General Board. The Appendix documents the methodology and scenarios for the EU-wide CCP stress test while the Annex documents the computation of credit default swaps (CDS)-implied probability of defaults (PDs).

Link: Scenario for EU-Wide CCP Stress Test Keywords: Adverse Macro-Financial Scenario, CCP, Stress Testing

17 MAY 2016

http://www.eba.europa.eu/-/eba-agrees-with-the-commission-on-changes-to-the-amended-technical-standards-on-benchmarking-of-internal-approaches

http://www.eba.europa.eu/-/esas-clarify-their-position-on-technical-standards-on-the-credit-quality-steps-for-ecais-credit-assessments

http://www.esrb.europa.eu/pub/pdf/other/160502_adverse_scenario_stress_test.en.pdf


Guidance for Computing Financial Soundness Indicators

- EBA

May 11, 2016

Type of Information: Guidance

The EBA published its guidance to assist competent authorities in compiling IMF Financial Soundness Indicators (FSI) for deposit takers, using the statistical input (derived from the EBA ITS) on supervisory reporting.

Authorities are encouraged to use this guidance and the comprehensive mapping between the FSI forms and the EBA ITS templates to foster harmonized FSI reporting by the EEA authorities. The IMF FSIs are aggregated statistical measures for monitoring the current financial health and soundness of a country's financial sector, along with its corporate and household counterparts. They also intend to support economic and financial stability analysis. FSIs for deposit takers are computed for most of the EEA countries, based on raw aggregated data reported in three standardized forms (FSI forms), capturing information on Income and expense statement; Balance sheet; and Memorandum series.

Links: EBA Press Release, IMF FSI Overview, IMF FSI Statistical Data Keywords: Statistics, FSI

Consultation on Draft Guidelines on the Liquidity Coverage Ratio Disclosure

- EBA

May 11, 2016



The EBA launched a consultation on its draft guidelines on the Liquidity Coverage Ratio (LCR) disclosure.

The guidelines harmonize and specify both the qualitative and quantitative information that institutions are required to disclose on liquidity and namely on the LCR. LCR disclosure is crucial for the assessment of liquidity risk management and for the decision making process of market participants. The draft guidelines, which the EBA is developing under its own initiative, provide uniform tools for the liquidity disclosure framework. In particular, they include:

» A qualitative and quantitative harmonized table for the disclosure of general information on liquidity risk management—already laid down in the CRR

» Qualitative and quantitative templates and relative instructions for the disclosure of information on the LCR composition. In addition, they specify the key figures and metrics in the context of liquidity risk.

The application of these guidelines is expected to take place not earlier than June 30, 2017.

Comments Due Date: August 11, 2016 Effective Date: N/A First Reporting Date: N/A Links: Press Release, Consultation on LCR Disclosure Keywords: Disclosure, LCR

18 MAY 2016

http://www.eba.europa.eu/-/eba-provides-guidance-for-computing-financial-soundness-indicators-fsis-

https://www.imf.org/external/np/sta/fsi/eng/fsi.htm

http://data.imf.org/?sk=9F855EAE-C765-405E-9C9A-A9DC2C1FEE47

http://www.eba.europa.eu/-/eba-consults-on-lcr-disclosure

http://www.eba.europa.eu/documents/10180/1460976/EBA-CP-2016-06+%28CP+on+GL+on+LCR+disclosure%29.pdf


Innovative Uses of Consumer Data by Financial Institutions

- EBA

May 04, 2016



The EBA published a discussion paper on innovative uses of consumer data by financial institutions, in line with its mandate to monitor financial innovation.

The paper identifies risks and benefits consumers and financial institutions as well as for financial integrity. Feedback received on this paper will inform the EBA's decision on the actions that may be required to mitigate the risks arising from this innovation, while also allowing market participants to harness its benefits. The EBA has identified a preliminary list of risks and potential benefits that the innovative uses of consumer data may bring for consumers, financial institutions, and financial stability:

» Institutions may obtain continuous insight into purchasing habits and preferences, as consumers engage in payment transactions through their accounts or cards. EBA’s work focuses on the use of consumer data in the banking sector, including retail payments. According to the discussion paper, potential benefits to consumers include cost reductions and improved product quality, while financial institutions can benefit from new sources of revenue and reductions in costs.

» Risks for consumers, mostly in the form of information asymmetries, data misuse, and security are highlighted. This is particularly the case when data usage is not properly described or updated in the contractual documentation provided by financial institutions, or when consumers simply may not understand the information on how their data may be used.

» Risks to financial institutions are also identified in the paper. The questionable use of consumer data may expose institutions to reputational risks, while competitive distortions may emerge, as institutions which are not in a position to process consumer data may not be able to compete with new market entrants specialized in using consumer data. Issues related to data security are also valid for financial institutions, since they may become exposed to legal risks too if their IT and storage systems are compromised.

Comments Due Date: August 04, 2016 Effective Date: N/A First Reporting Date: N/A Link: Press Release Keywords: Consumer Data, Legal Risk, Reputational Risk

Corrective Updates for XBRL Taxonomies for Supervisory Reporting

- EBA

May 04, 2016


The EBA published corrective updates to two versions of its XBRL taxonomies for supervisory reporting, correcting technical errors in the implementation of some validation rules. After the EC published the relevant amendments to the ITS on supervisory reporting, EBA also confirmed the first applicable reference date for the 2.4 version of the taxonomy as September 30, 2016.

Link: Press Release Keywords: Taxonomy V2.4, XBRL

Proposal to Amend Draft Markets in Financial Instruments Regulation Standard on Transaction Reporting

- ESMA

May 04, 2016



The ESMA published a request for amending its draft regulatory technical standards on transaction reporting (RTS 22) under the Markets in Financial Instruments Regulation (MiFIR). ESMA acknowledged the need to amend RTS 22 due to an unintended omission in the final stage of drafting the RTS. ESMA submitted RTS 22 to the EC on September 28, 2015.

The amendment relates to the list of instances that are not considered to be reportable transactions for the purpose of Article 26 of MiFIR. In particular, the amendment ensures that investment firms do not submit transaction reports for transfers of collateral, which would be costly and bring no supervisory benefit. The necessary amendment has been submitted to the EC. ESMA anticipates that the amendment will be taken into account in the context of the EC’s endorsement of the draft RTS 22.

Comments Due Date: N/A Effective Date: N/A First Reporting Date: N/A Link: News Release Keywords: MiFIR, Reporting, RTS 22

19 MAY 2016

http://www.eba.europa.eu/-/eba-seeks-views-on-the-use-of-consumer-data-by-financial-institutions

http://www.eba.europa.eu/-/eba-publishes-corrections-to-xbrl-reporting-taxonomies-and-confirms-reference-dates

https://www.esma.europa.eu/press-news/esma-news/esma-proposes-amend-draft-mifir-standard-transaction-reporting


Report on European Union Crowdfunding Sector

- EC

May 03, 2016


The EC published its report on the EU crowdfunding sector, which is a part of the Capital Markets Union (CMU) Action Plan.

The report finds that crowdfunding remains relatively small but is developing rapidly. If appropriately regulated, it has the potential to be a key source of financing for small and medium enterprises (SMEs) over the long term. This is important because supporting innovative ways of connecting savings to growth and diversifying the funding sources for European businesses is crucial to improving growth and job creation in Europe.

EU member states have begun to put in place national frameworks to support the growth of the sector and ensure investors are appropriately protected. These national frameworks are broadly consistent in terms of the objectives and outcomes they seek to achieve, but are tailored to local markets and domestic regulatory approaches. As crowdfunding remains largely local and the sector is changing rapidly, there is no strong case for an EU level framework at this juncture.

EC will keep developments in the sector under review and meet twice per year with regulators and the sector. This will ensure the EC is able to respond in a timely manner if further steps to support regulatory convergence are needed, both to promote the development of the sector and to ensure appropriate investor protection.

Links: Press Release, Report Keywords: CMU, Crowdfunding

Opinion on Proposed Amendments to Historical Look-Back Approach Calculation Method

- EBA

May 03, 2016


The EBA issued an opinion to the EC, supporting its proposed amendment to the draft RTS on additional collateral outflows with regard to the historical look-back approach (HLBA) calculation method.

The amendment follows the EC's request to amend the draft RTS using the specifications provided by the Basel Committee on Banking Supervision. In December 2015, the Commission had raised concerns that the EBA's Historic Look-Back Approach (HLBA) approach could have a significant impact on credit institutions and international derivative markets and, therefore, decided not to adopt the draft RTS as it had been submitted by the EBA. The Commission, at that time, had also signaled its willingness to endorse an amended version based on the Basel Committee's HLBA approach.

The draft RTS on additional collateral outflows were amended to include the Basel Committee's HLBA approach, which had been clarified through an FAQ in April 2014. The Basel Committee approach focuses on the largest net difference in collateral posted, instead of the largest gross difference. The Commission's assessment of the draft RTS was delayed, pending its adoption of a delegated act on the LCR of October 2014.

Links: Press Release, FAQs on Basel III LCR Framework Keywords: CRR, HLBA, LCR

Responses for the Discussion Paper on Implementing Standards under the Securities Financing Transaction Regulation

- ESMA

May 03, 2016


ESMA published the responses received to the discussion paper on draft RTS and ITS under the Securities Financing Transaction Regulation (SFTR). The paper sets out proposals for implementing the reporting framework under the SFTR, including tables of the fields with the proposed data to be reported and the registration requirements for the trade repositories that want to accept reports on security financing transactions (SFTs).

The discussion paper was published in March 2016 as part of ESMA’s consultations on level 2 measures under the SFTR. The consultation closed on April 22, 2016 and comments were sought from financial and non-financial counterparties to SFTs, tri-party agents, agent lenders, CCPs, trade repositories, and all the authorities with access to the trade repository data.

Links: Press Release, Discussion Paper Keywords: ITS, RTS, SFTR

20 MAY 2016

http://europa.eu/rapid/press-release_IP-16-1647_en.htm?locale=en

http://ec.europa.eu/finance/general-policy/docs/crowdfunding/160428-crowdfunding-study_en.pdf

http://www.eba.europa.eu/-/eba-amends-historical-look-back-approach-hlba-method-for-calculating-additional-collateral-outflows

http://www.bis.org/publ/bcbs284.pdf

https://www.esma.europa.eu/press-news/esma-news/esma-publishes-responses-dp-draft-rts-and-its-under-sftr

https://www.esma.europa.eu/press-news/consultations/discussion-paper-draft-rts-and-its-under-securities-financing-transaction


Amendments to MiFID II Standards on Non-Equity Transparency and Position Limits

- ESMA

May 02, 2016



ESMA issued two opinions proposing amendments to its draft RTS under the Markets in Financial Instruments Directive (MiFID II) and MiFIR.

One proposal is to revise the RTS on non-equity transparency, which includes requirements in respect of bonds, structured finance products, emission allowances, and derivatives. The second proposal concerns the revision of RTS on the methodology for the calculation and application of position limits for commodity derivatives. The opinions were produced in response to proposed amendments by the EC to these draft RTS.

The Commission will now decide whether or not to endorse the proposed changes. Additionally, an opinion on the third RTS on ancillary activities is being finalized by ESMA and is expected to be issued later this month.

Comments Due Date: N/A Effective Date: N/A First Reporting Date: N/A Links: Press Release, Opinions: Non-Equity Transparency and Position Limits Keywords: MiFID II, MiFIR, RTS

Studies on Credit Rating Agencies Regulation No. 462/2013

- EC

April 29, 2016


The EC published reports on two studies related to the credit rating agencies (CRA) Regulation No. 462/2013:

» December 2015: Study on the Feasibility of Alternatives to Credit Ratings

» January 2016: Study on the State of the Credit Rating Market

Links: Notification, Regulation No 462/2013 Keywords: CRA, Credit Risk Market, Alternatives to Credit Ratings

European Union Central Counterparties Stress Test Results

- ESMA

April 29, 2016


ESMA published the results of its first EU-wide stress test exercise on Central Counterparties (CCPs). The exercise is aimed at assessing the resilience and safety of the European CCP sector as well as to identify possible vulnerabilities.

ESMA tested the resilience of 17 European CCPs. These CCPs held over EUR 150 billion worth of default resources, with more than 900 clearing members union-wide. ESMA tested CCPs resources using combinations of clearing member default and market stress scenarios. The results show that CCP resources were sufficient to cover losses resulting from the default of the top-two EU-wide clearing member groups, combined with historical and hypothetical market stress scenarios.

However, under more severe stress scenarios, CCPs faced small amounts of total (that is, across all CCPs) residual uncovered losses varying from EUR 0.1 billion up to EUR 4 billion. This was especially the case for scenarios assuming the default of the top-two clearing members per CCP due to assumed clearing member defaults across CCPs. This is a scenario where a clearing member defaulting in one CCP would also be considered to be in default in all CCPs, in which it is a member, leading to more than 25 clearing members defaulting EU-wide.

Link: Results of EU CCP Stress Test Keywords: CCP, Stress Testing

21 MAY 2016

https://www.esma.europa.eu/press-news/esma-news/esma-amends-mifid-ii-standards-non-equity-transparency-and-position-limits

https://www.esma.europa.eu/databases-library/esma-library/?f%5b0%5d=im_esma_sections%3A20&f%5b1%5d=im_field_document_type%3A48

http://ec.europa.eu/finance/rating-agencies/index_en.htm


https://www.esma.europa.eu/press-news/esma-news/esma-publishes-results-eu-central-counterparties-stress-test


Key Information Documents for Packaged Retail and Insurance-Based Investment Products

- ESAs

April 07, 2016


The Joint Committee of the ESAs has finalized its proposal for RTS on Key Information Documents (KIDs) for Packaged Retail and Insurance-based Investment Products (PRIIPs).

The proposed KIDs provide retail investors across the EU with simple and comparable information on investment products in the banking, insurance, and securities sectors. The three-page document increases the transparency and comparability of information about the risks, performance, and costs of these products. The new rules will contribute to enhancing the confidence and strengthening the protection of EU consumers of banking, insurance, and securities products. The new rules address the content and presentation of the KIDs and include:

» A common mandatory three-page template for the KID, covering the texts and layouts to be used

» A summary risk indicator of seven classes for the risk and reward section of the KID

» A methodology to assign each PRIIP to one of the seven classes contained in the summary risk indicator and for the inclusion of additional warnings and narrative explanations for certain PRIIPs

» Details on performance scenarios and a format for their presentation, including possible performance for different time periods and at least three scenarios

» Costs presentation, including the figures that must be calculated and the format to be used for these, that is, in both cash and percentage terms

» Specific layouts and contents for the KID for products offering multiple options that cannot effectively be covered in three pages

» Rules on revision and republication of the KID, to be done at least each year

» Rules on providing the KID sufficiently early for a retail investor to be able to take its contents into account when making an investment decision

Links: Press Release, Final Draft RTS Keywords: KID, PRIIPs, RTS

Netherlands

Key Developments

European Union Capital Requirements Directive IV Alert for April 2016

- DNB

May 03, 2016


DNB published the EU CRD IV alert comprising the Annex, which lists the main changes and amendments to the upcoming reports on:

» New and changed CRD IV reports from the EBA: Additional liquidity monitoring metrics (ALMM), including liquidity coverage requirement and funding plans of significant banks established in the Netherlands

» EBA's Data Point Model (DPM) (along with the new versions made available, that is, DPM 2.4.1 and 2.5 from the EBA)

» FINREP extensions resulting from the ECB regulation

» Report validation process and resubmission

» Certificering 2015: certification of the CRD IV reports, which all banks established in the Netherlands customarily do with their December reports.

Link: News Release Keywords: CRD IV, Regulatory Reporting

22 MAY 2016

https://www.esma.europa.eu/sites/default/files/library/jc_2016_21_pr_joint_press_release_draft_rts_on_priips.pdf

https://www.esma.europa.eu/sites/default/files/library/jc_2016_21_final_draft_rts_priips_kid_report.pdf

http://www.toezicht.dnb.nl/en/7/51-235493.jsp


United Kingdom

Key Developments

Consultation on Three Aspects of Pillar 2 Liquidity: Intraday Risk, Debt Buyback, and Non-Margined Derivatives

- PRA

May 12, 2016



In June 2015, the PRA had restated its overall approach to liquidity and funding risks, taking into account the EC’s delegated act under EU regulation on the Liquidity Coverage requirement (LCR) for credit institutions. That policy is available in Policy Statement PS11/15 “CRD IV Liquidity” and Supervisory Statement SS24/15 “The PRA’s approach to supervising liquidity and funding risks.” The LCR, which is a Pillar 1 standard applicable across the EU, took effect on October 01, 2015. In SS24/15, the PRA had outlined an interim Pillar 2 approach and indicated that it would further review its assessment framework at a later date.

The PRA has now launched a consultation (CP21/16) on its approach to three aspects of Pillar 2 liquidity—intraday risk, debt buyback, and non-margined derivatives. This paper not only outlines the PRA’s Pillar 2 objectives and scope, but also provides an early overview of the planned future work to develop the Pillar 2 approach, for which the PRA is not yet setting out proposals. The paper is intended to seek feedback from firms on elements where its thinking is advanced enough to make specific proposals and to invite early views from industry on key future elements of the regime. The proposals on which the PRA seeks feedback from firms are:

» The level of application for setting requirements under Pillar 2 will be aligned to the Pillar 1 approach

» That in disclosing information about their liquidity position, firms should note that their publically disclosed LCRs include high-quality liquid assets (HQLA) required to cover Pillar 2 risks, with no further disclosure on their Pillar 2 requirements unless required by law

» The PRA’s approach to assessing liquidity risk associated with debt buyback and non-margined derivatives will be based on supervisory discretion guided by the firm’s outstanding debt or exposures

» The PRA’s approach to assessing intraday liquidity risk will be based on the firm’s maximum net debits, the firm’s stress testing framework, the firm’s key characteristics such as whether it is a direct or indirect participant in payment and settlement systems, and the markets in which it operates

This is one of the two planned consultations on Pillar 2. The implementation of the entire Pillar 2 regime will only take place once all individual elements have been consulted on and the PRA has published its final approach, following the second consultation on Pillar 2.

Comments Due Date: August 12, 2016 Effective Date: N/A First Reporting Date: N/A Links: CP21/16, PS11/15, SS24/15 Keywords: CRD IV, LCR, Pillar 2

23 MAY 2016

http://www.bankofengland.co.uk/pra/Documents/publications/cp/2016/cp2116.pdf

http://www.bankofengland.co.uk/pra/Pages/publications/ps/2015/ps1115.aspx

http://www.bankofengland.co.uk/pra/Pages/publications/ss/2015/ss2415.aspx


Middle East & Africa

Algeria

Key Developments

Staff Report and Selected Issues Report for the 2016 Article IV Consultation

- IMF

May 18, 2016


The IMF published its staff report and selected issues report in the context of the 2016 Article IV consultation with Algeria.

The staff report highlights that the technical assistance mission supported the recent improvements to regulatory and supervisory frameworks, which strengthen the resilience of the banking sector. In 2014, the Banque d'Algérie (the Bank) strengthened its regulatory and supervisory frameworks in response to the 2013 Financial Sector Assessment Program (FSAP) recommendations. It introduced new regulations on capital adequacy, increasing the minimum capital adequacy requirements (from 8% to 9.5%, including a capital conservation buffer of 2.5%). The Bank also tightened prudential limits on large exposures, reducing both the threshold of the aggregate large exposure limit to 8 (from 10) times the regulatory capital and the threshold of individual exposures to be included in the aggregate limit to 10 (from 15)% of regulatory capital.

Although the new Basel III net stable funding ratio (NSFR) has not been implemented yet, the Bank introduced a number of liquidity instruments to help reduce risk-taking behaviors; these instruments include a minimum liquidity ratio requiring banks to hold highly liquid assets to meet short-term obligations and a limit to the ratio of long-term liabilities to long-term assets. In addition, loan classification requirements were strengthened to cover the treatment of overdraft and restructured loans. The Bank continues rolling out its CAMELS-based bank risk-rating methodology to cover all banks, along with introduction of the new and improved offsite prudential indicators. The ongoing bank stress tests and crisis simulation exercise conducted by the Bank were also welcomed.

The Bank is encouraged to continue its efforts to strengthen the prudential framework. Further efforts are needed to improve the surveillance of the build-up of risks in individual banks and in the system as a whole. Currently, important data gaps limit the Bank’s ability to monitor systemic risks, particularly with respect to common exposures and corporate and household leverage. The Bank should also pursue its efforts to strengthen liquidity forecasting capabilities and conduct more frequent liquidity and solvency stress testing of the banking sector. Loan classification rules should be further tightened and existing regulations should be amended to include more detailed governance requirements for public banks. Currently, banks are not required to classify as non-performing an impaired loan that carries a government guarantee.

One of the recommendations is for the bank to strengthen its macroprudential framework, including by better defining the objectives of the financial stability committee, implementing a framework for systemic risk analysis, and improving data quality. It should also implement a comprehensive macroprudential toolkit to address the buildup of systemic risks. Time-varying reserve requirements and dynamic provisioning could be envisaged. The authorities agreed with staff’s recommendations and are seeking further technical assistance to implement them.

Links: Selected Issues Report Keywords: Article IV Consultation, Basel III, FSAP, Stress Testing

24 MAY 2016

http://www.imf.org/external/pubs/ft/scr/2016/cr16128.pdf


Arab Region

Key Developments

Macro-Prudential Policy and Financial Stability in the Arab Region

- IMF

May 20, 2016


The IMF published a working paper on Macroprudential Policy and Financial Stability in the Arab Region. This paper discusses the experience of Arab countries in implementing macroprudential policies and contains recommendations to strengthen their macro-prudential framework.

Arab countries have made important strides toward strengthening the stability of their financial systems. They have sharpened prudential regulation by tightening capital and liquidity requirements and are in the process of implementing Basel III standards on capital, liquidity, and leverage. A number of central banks have established a separate financial stability office/unit and set up an early warning system, in addition to conducting periodic stress testing of banks. Many countries in the Arab region, particularly the Gulf Cooperation Council, were ahead of others around the world in implementing measures now widely accepted as macro-prudential tools.

Macroprudential policy is a particularly relevant tool considering the several characteristics of the structure of the Arab economies, their economic policy framework, and their banking systems. For most oil exporters, heavy reliance on the extractive sector for generating fiscal revenues and exports earnings also translates into increased vulnerability to oil price shocks. Moreover, in the case of oil importers, relatively small external and fiscal buffers make them highly vulnerable to shocks.

Link: Working Paper Keywords: Arab Region, Macro-Prudential Policy, Stress Testing

25 MAY 2016

http://www.imf.org/external/pubs/ft/wp/2016/wp1698.pdf


Americas

United States of America

Key Developments

Proposed Information Collection, and Comment Request: Final Rule on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants—Cross-Border Application of the Margin Requirements

- CFTC

May 31, 2016



The Commodity Futures Trading Commission (CFTC) published a notice to announce public consultation on the proposed collection of certain information by the agency. This notice is being published concurrently with the publication and adoption of the final rule titled ‘‘Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants—Cross-Border Application of the Margin Requirements,’’ which addresses the cross-border application of the Commission’s margin requirements for uncleared swaps of Covered Swap Entities (CSEs). This notice solicits comments on a new information collection that applies to CSEs that rely on a special provision of the final rule applicable to certain foreign jurisdictions where CSEs are unable to conclude, with a well-founded basis, that the netting agreement with a counterparty in that foreign jurisdiction meets the definition of an ‘‘eligible master netting agreement’’ set forth in the Commission’s final margin rule.

This notice also solicits comments on a new information collection that applies to foreign consolidated subsidiaries and foreign branches of U.S. CSEs that rely on a special provision of the final rule applicable to certain foreign jurisdictions, where limitations in the legal or operational infrastructure of the jurisdiction make it impracticable for the CSE and its counterparty to post initial margin, pursuant to custodial arrangements that comply with the final margin rule (‘‘non-segregation jurisdictions’’).

The new information collection covered by this notice require CSEs that avail themselves of the special provisions for non-netting jurisdictions and non-segregation jurisdictions, respectively, to maintain books and records properly documenting that all of the requirements of the special provisions upon which they rely are satisfied (including policies and procedures ensuring that they are in compliance with any applicable requirements). The estimated number of respondents per year for information collection for non-netting jurisdictions is 54, and for information collection for non-segregation jurisdictions is 12.

Under the Paperwork Reduction Act, federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including proposed extension of an existing collection of information, and to allow 60 days for public comment.

Comments Due Date: August 01, 2016 Effective Date: N/A First Reporting Date: N/A Link: Proposed Rule Keywords: Dodd-Frank Act, Margin Requirements, Swaps

Adoption of Rule to Address the Cross-Border Application of the Commission’s Margin Requirements for Covered Swap Entities’ Uncleared Swaps

- CFTC

May 31, 2016



The Commission is adopting a rule to address the cross-border application of the Commission’s margin requirements for Covered Swap Entities’ (CSEs) uncleared swaps. On January 06, 2016, CFTC had published final regulations to implement section 4s(e) of the Commodity Exchange Act, which requires the Commission to adopt initial and variation margin requirements for uncleared swaps of swap dealers and major swap participants that do not have a prudential regulator.

Foreign jurisdictions are at various stages of implementing margin reforms. To the extent that other jurisdictions adopt requirements with different coverage or timelines, the Commission’s margin requirements may lead to competitive burdens for U.S. entities and deter non-U.S. persons from transacting with U.S. CSEs and their affiliates overseas. The Commission’s substituted compliance regime (a central element of the Final Rule) is intended to address these concerns.

Comments Due Date: N/A Effective Date: August 01, 2016 First Reporting Date: N/A Links: Final Rule, January 2016 Final Rule on Margin Requirements for Uncleared Swaps Keywords: Dodd-Frank Act, Margin Requirements, Swaps

26 MAY 2016

https://www.gpo.gov/fdsys/pkg/FR-2016-05-31/pdf/2016-12613.pdf




Map of Collateral Uses and Flows

- OFR

May 26, 2016


The Office of Financial Research (OFR) published a working paper presenting a map of collateral flows in the financial system. This paper provides insights into the increased demand for collateral and the reduced capacity for banks to act as collateral intermediaries, along with examples of risks and vulnerabilities in collateral flows.

All flows of secured funding in the financial system are met by flows of collateral in the opposite direction. A network depicting secured funding flows thus implicitly reveals a network of collateral flows. Collateral can also be presented as its own network to show collateral arrangements with bilateral counterparties, triparty banks, and central counterparties; the purpose and incentives of collateral exchanges; and participants involved.

The authors create a collateral map to show how this function of the financial system works, especially with secured funding and derivatives activity. The collateral map offers understanding of the sources of collateral and how collateral moves through the financial system. To assess systemic risk from potential failures within the collateral network, data are needed to track collateral flows through different market participants linked to a bank/dealer. Once populated with the needed data, the collateral map can show collateral-related vulnerabilities, possible paths of contagion, and alternative paths for critical collateral flows if one path becomes congested. The map can also be used to detect areas of increased volume and speed of flows, showing where capacity constraints are becoming problematic.

Link: Working Paper Keywords: Collateral Map

A Brief Examining Living Wills Prepared by Eight U.S. G-SIBs

- OFR

May 25, 2016


The Office of Financial Research (OFR) published a brief analyzing the public portions of the 2014 and 2015 resolution plans, or “living wills” of eight global systemically important banks (G-SIBs) based in the United States.

The authors find that the public information does not provide enough detail to determine if a failing bank could be unwound without government aid. The brief cites three areas in the public portions of resolution plans that could be improved:

» Organizational complexity is a big issue for the largest banks. The simpler the structure of a G-SIB, the easier it is to resolve. G-SIBs have done little to streamline their core businesses since 2013, according to the OFR analysis. However, the living wills’ public sections offer only a rough idea of how these banks would manage this complexity in a failure.

» Data on corporate structures could be more transparent. The brief compares information about those structures in the living wills with the information in another regulatory database, the Fed’s National Information Center (NIC). The NIC database counts many more legal entities within each G-SIB than the public living wills do. However, the NIC information about what those entities do is largely generic. The information does not provide enough detail to understand the thousands of entities and the challenges of unraveling these companies. The public sections of living wills offer little additional information.

» Cross-border operations present challenges. A G-SIB’s home country and host country may have competing interests. Host countries may protect local interests by shielding local subsidiaries from foreign claims and thus making resolution harder. More public information on G-SIBs’ cross-border operations would be helpful.

The brief calls for more standardization and consistency in reporting when the G-SIBs submit their next living wills on July 01, 2017. The findings of OFR researchers also support the recent conclusion of the Government Accountability Office, which noted a lack of transparency in the public portions of the living wills. The Dodd-Frank Act of 2010 requires the largest U.S. banks to submit plans to regulators on how they could be wound down after a potential failure without disrupting the financial system.

Links: Press Release, OFR Brief Keyword: Dodd-Frank Act, Living Wills, RRP

27 MAY 2016

https://financialresearch.gov/working-papers/files/OFRwp-2016-06_Map-of-Collateral-Uses.pdf

https://financialresearch.gov/from-the-management-team/2016/05/25/ofr-brief-examines-living-wills-prepared-by-eight-us-g-sibs/

https://financialresearch.gov/briefs/files/OFRbr_2016-05_Living-Wills.pdf


Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants

- SEC

May 13, 2016



The Securities and Exchange Commission (SEC) published the final rule (17 CFR Part 240) on business conduct standards and the designation of a chief compliance officer for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs).

This is in accordance with Section 764 of Title VII of the Dodd-Frank Act, under the Securities Exchange Act of 1934. The rule also specifies the compliance dates and addresses the cross-border application of the rules and the availability of substituted compliance.

Comments Due Date: N/A Effective Date: July 12, 2016 First Reporting Date: N/A Link: Final Rule Keywords: Business Conduct, MSBSP, SBSD

Restrictions on Qualified Financial Contracts of Systemically Important U.S. Banking Organizations and the U.S. Operations of Systemically Important Foreign Banking Organizations; Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions

- FED

May 11, 2016



The Board of Governors of the Federal Reserve System (Board) issued a rule (12 CFR Parts 217, 249, and 252; Regulations Q, WW, and YY) proposing restrictions on the terms of non-cleared qualified financial contracts (QFCs) for certain financial institutions. The institutions that are subject to these restrictions include any U.S. top-tier bank holding company identified by the FED as a global systemically important banking organization (G-SIB), the subsidiaries of any U.S. G-SIB (other than national banks and federal savings associations), and the U.S. operations of any foreign G-SIB (other than national banks and federal savings associations). Under this rule:

» A covered entity would generally be required to ensure that QFCs to which it is party, including QFCs entered into outside the United States, provide that any default rights and restrictions on the transfer of the QFCs are limited to the same extent as they would be under the Dodd-Frank Act and the Federal Deposit Insurance Act.

» A covered entity would generally be prohibited from being party to QFCs that would allow a QFC counterparty to exercise default rights against the covered entity based on the entry into a resolution proceeding under the Dodd-Frank Act, Federal Deposit Insurance Act, or any other resolution proceeding of an affiliate of the covered entity.

The proposal would also amend certain definitions in the FED’s capital and liquidity rules; these amendments are intended to ensure that the regulatory capital and liquidity treatment of QFCs to which a covered entity is party is not affected by the proposed restrictions on such QFCs. The proposed rule is intended to promote U.S. financial stability by improving the resolvability and resilience of domestic and foreign G-SIBs, pursuant to the Dodd- Frank Act.

The Office of the Comptroller of the Currency (OCC) is also expected to issue a proposed rule subjecting national banks and federal savings associations that are G-SIB subsidiaries to requirements substantively identical to those proposed in this rule.

Comments Due Date: August 05, 2016 Effective Date: N/A First Reporting Date: N/A Link: Proposed Rule Keywords: Dodd-Frank Act, G-SIB, QFC

28 MAY 2016




Developing Best Practices for Financial Regulatory Data Collection

- OFR

May 10, 2016


The Office of Financial Research (OFR) released a paper, which is the first in a new Viewpoint Series, discussing the best practices and pitfalls for financial regulatory data collections. In addition to other issues, the paper covers the:

» Thoughtful preparation required for an effective data collection

» Importance of designing a clear, well-specified collection template

» Best ways to securely transmit data

The authors highlight that a particularly important best practice is to run a pilot data collection to engage with market participants and obtain input from them. This practice helps assure the success of the final collection, especially when the data involve new products or activities, new data reporters, or new technologies.

The OFR believes that its mission includes the efforts to develop and promote such best practices. Observing these best practices can help financial regulators align their interests with those of the industry and improve quality of the data collected. This will in turn make the process of data collection smoother, more efficient, and less costly for the regulators as well as the reporters of such data. Thus, best practices can help assure better data and a reduction in the regulatory reporting burden.

Links: News, Report Keywords: Data Collections, Viewpoint Series

29 MAY 2016

https://financialresearch.gov/from-the-director/2016/05/10/how-best-to-collect-data-from-financial-companies/

https://financialresearch.gov/viewpoint-papers/files/OFRvp-2016-01_Best-Practices-Data-Collection.pdf


Revision to the Proposed Rule Implementing Incentive-Based Compensation Arrangements of All Covered Institutions

- US Agencies

May 02, 2016



US regulatory agencies—namely OCC (12 CFR Part 42), FED (12 CFR Part 236), FDIC (12 CFR Part 372), FHFA (12 CFR Part 1232), NCUA (12 CFR Parts 741 and 751), and SEC (17 CFR Part 303)—issued a joint proposed rule to revise the proposed rule the agencies published in the Federal Register on April 14, 2011 and to implement section 956 of the Dodd-Frank Act. Section 956 requires the agencies to jointly issue the regulations or guidelines:

» Prohibiting incentive-based payment arrangements that the agencies determine encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss

» Requiring the financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal regulator

Under the Dodd-Frank Act, “covered financial institutions” include the following institution types with USD 1 billion or more in assets:

» A depository institution or depository institution holding company, as such terms are defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)

» A broker-dealer registered under section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)

» A credit union, as described in section 19(b)(1)(A)(iv) of the Federal Reserve Act

» An investment adviser, as such term is defined in section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11))

» The Federal National Mortgage Association or Fannie Mae

» The Federal Home Loan Mortgage Corporation or Freddie Mac

» Any other financial institution that the appropriate federal regulators jointly, by rule, determine should be treated as a covered financial institution for these purposes

The agencies are now proposing to group the covered institutions into three levels:

» Level 1—Institutions with average consolidated assets of greater than USD 250 billion and subsidiaries of such institutions that are covered institutions

» Level 2—Institutions with average consolidated assets between USD 50 billion and USD 250 billion and subsidiaries of such institutions that are covered institutions

» Level 3—Institutions with average consolidated assets between USD 1 and USD 50 billion

The information will be collected annually under the title “Recordkeeping Requirements Associated with Incentive-Based Compensation Arrangements.” The affected public comprises businesses or other for-profit institutions. The estimated number of respondents is 229 for OCC (Level 1: 18, Level 2: 17, and Level 3: 194), 829 for FED (Level 1: 15, Level 2: 51, and Level 3: 763), 353 for FDIC (Level 1: 0, Level 2: 13, and Level 3: 340), 258 for NCUA (Level 1: 0, Level 2: 1, and Level 3: 257) and 806 for SEC (Level 1: 58, Level 2: 36, and Level 3: 712).

Comments Due Date: July 22, 2016 Effective Date: N/A First Reporting Date: N/A Links: Press Release, FED Re-Proposal, Joint Notice of Proposed Rulemaking Keywords: Dodd-Frank Act, Incentive Based Compensation, Reporting

30 MAY 2016

http://www.federalreserve.gov/newsevents/press/bcreg/20160502a.htm

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20160502a1.pdf

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20160502a2.pdf


Canada

Key Developments

Consultation on Updates to the Capital Requirements for Loans Secured by Residential Real Estate

- OSFI

April 29, 2016



The Office of the Superintendent of Financial Institutions Canada (OSFI) launched a consultation on the proposed updates to the regulatory capital requirements for loans secured by residential real estate (RRE).

The updates include the introduction of a risk-sensitive floor on internal ratings-based (IRB) capital requirements, to consider periods in which the value of properties pledged as collateral is less certain. The proposed floor would be included in banks’ estimates of loss given default (LGD). The updates provide a measured and forward- looking response to the changing risks in the Canadian mortgage market. The updates will ensure that capital requirements remain prudent in periods when house prices are high relative to household income and/or house prices are increasing rapidly in nominal terms.

The proposed updates apply to the federally regulated deposit-taking institutions (DTIs) approved by OSFI to use the IRB approach to credit risk.

Comments Due Date: June 10, 2016 Effective Date: November 01, 2016 First Reporting Date: N/A Link: Press Release Keywords: Basel III, IRB, RRE Floor

Colombia

Key Developments

Staff Report for the 2016 Article IV Consultation

- IMF

May 20, 2016


The IMF published its staff report in the context of the 2016 Article IV consultation with Columbia.

The staff report reveals that the financial system has been resilient to changing global and local conditions, but there is a need for continued vigilance. As noted in previous consultations, Colombian banks' expansion into Central America in recent years continues to pose risks, including in terms of the exposure of systemically important financial conglomerates. However, the supervisory authority, Superintendencia Financiera de Colombia (SFC), has undertaken actions for banks and other financial institutions to strengthen their liquidity planning, management, and stress testing capabilities. The staff welcomes the authorities’ continued efforts to intensify the supervision of all entities including of their liquidity models and contingency plans.

Additionally, the authorities noted that while work on addressing the identification of systemic financial conglomerates has progressed, assessing risks from mixed conglomerates remains challenging, given the complex ownership and offshore structures where SFC regulatory reach is limited. The authorities plan to further embed Basel III elements in their regulatory framework and enhance their resolution frameworks— measures that would bring Colombia closer to international best practices.

Link: Staff Report Keywords: Article IV Consultation, Basel III, FSAP, Stress Testing

31 MAY 2016

http://www.osfi-bsif.gc.ca/eng/osfi-bsif/med/Pages/CAR_nr20160429.aspx



Paraguay

Key Developments

Staff Report and Selected Issues Report for the 2016 Article IV Consultation

- IMF

May 11, 2016


The IMF published its staff report (cr16116) and selected issues report (cr16117) in the context of the 2016 Article IV consultation with Paraguay.

The staff report reveals that the framework for financial supervision and regulation is being strengthened. The authorities have a project to introduce risk-based financial supervision, which has entailed recent actions in a few areas:

» Legislation. A draft banking law would grant additional powers to the Central Bank of Paraguay (BCP) and facilitate the revised regulatory framework. The authorities indicated that passage was a priority and expressed optimism that congressional approval could happen this year.

» Capacity building. The Superintendence of banks has been receiving technical assistance in a number of areas to better track credit, market, and liquidity risks; assess bank risk profiles; and improve stress testing.

» Financial stability council. The authorities plan to introduce a consultative Council of Financial Stability, composed of a high-level committee with the heads of the BCP, Ministry of Finance, and INCOOP (Instituto Nacional de Cooperativismo, the regulator of cooperatives), and supporting subcommittees.

The selected issues report discusses the structure of the financial sector and focuses on the reform options for the country’s fiscal responsibility law. The report highlights that Paraguay’s credit markets, along with the rest of its financial system, are dominated by commercial banks. Financial institutions’ assets amount to 93% of the GDP. Banks are the largest players in the system, with 17 banks having 78% of the total assets. The banking system is concentrated, with four large banks—two domestic and two foreign-owned—accounting for about two-third of the total banks’ assets. Other financial institutions comprise the remaining 22% of the total financial system assets, led by financial cooperatives. For all banks, loans are the main asset, with the agriculture sector holding the largest share. Dollarization is still significant in Paraguay, with about half (53%) of all loans denominated in foreign currencies.

Links: Staff Report, Selected Issues Report Keywords: Article IV Consultation, Risk-Based Supervision, Stress Testing

32 MAY 2016




Asia Pacific

Hong Kong

Key Developments

Consultation on Updating the Current Regulations on Exposure Limits

- HKMA

March 22, 2016



The Hong Kong Monetary Authority (HKMA) launched a consultation setting out its proposals for updating the current regulations on exposure limits (that is, on large exposures and concentration risks) in Part XV of the Banking Ordinance.

In April 2014, the Basel Committee issued a supervisory framework for measuring and controlling large exposures, which is scheduled to take effect from January 01, 2019. The HKMA’s consultation paper (March 22, 2016) sets out proposals for the implementation of this new Basel Committee framework and an update of other sections of Part XV (“Limitations on Loans by and Interests of Authorized Institutions”) of the Banking Ordinance.

To better assess the impact of the proposals on the banking sector in Hong Kong, HKMA also intends to conduct a local quantitative impact study (QIS) over the summer of 2016. Authorized Institutions will be approached separately regarding their participation in the QIS. Relevant supervisory policy manual (SPM) modules will also be revised, as necessary, to reflect the new regulatory framework introduced by the rules.

Comments Due Date: May 23, 2016 Effective Date: N/A First Reporting Date: N/A Links: Consultation Paper (hkma.gov.hk/media/eng/doc/key-functions/banking-stability/other-basel-committee-standards/ CP16.01_Exposure_Limits_22March2016.pdf), Basel Committee Supervisory Framework on Large Exposures Keywords: Basel III, Large Exposures, QIS

Malaysia

Key Developments

Staff Report for the 2016 Article IV Consultation

- IMF

May 04, 2016


The IMF published its staff report in the context of the 2016 Article IV consultation with Malaysia.

The staff report reveals that banks’ strong liquidity position with Bank Negara Malaysia (BNM) has helped to cushion the impact of capital outflows. Real interest rates on deposits remain low, contributing to sluggish deposit growth which, along with banks’ adjustment to LCR requirements, has resulted in intensified competition for deposits. Malaysian banks are well-placed to meet the Basel III capital and phased-in liquidity requirements. Significant progress has also been made in implementing the key Financial Sector Assessment Program (FSAP) recommendations.

Additionally, non-bank credit intermediaries contributed significantly to the build-up of household debt, but growth in nonbank lending and the stock of debt to households have declined, following the implementation of macro-prudential measures in 2013. Direct linkages between banks and nonbanks are limited and covered by BNM’s regulation on single counterparty exposures (more details in 2014 Article IV consultation).

Links: 2016 Article IV Consultation: Staff Report, 2014 Article IV Consultation: Staff Report Keywords: Article IV Consultation, Basel III, FSAP

33 MAY 2016

http://www.bis.org/publ/bcbs283.htm




Philippines

Key Developments

Implementation of Basel III Framework on Liquidity Standards: Liquidity Coverage Ratio and Disclosure Standards

- BSP

March 10, 2016



The Central bank of the Philippines published its final rule (Circular No. 905) on the implementation of Basel III framework on liquidity standards—LCR and disclosure standards (also contains reporting templates).

During the phased introduction of the LCR standard, compliance with the LCR minimum requirement will commence on January 01, 2018. The prescribed minimum shall be set initially at 90% for 2018 and shall rise to the minimum required level of 100% on January 01, 2019. However, for monitoring purpose, the bank shall submit quarterly the LCR reports, in single currency and per significant currency, on both solo and consolidated bases. Quarterly submission shall start with quarter ended June 30, 2016 and shall conclude with the quarter- ended September 30, 2017 reports (submissions within 15 banking days from end-quarter for solo and 30 banking days for consolidated reporting).

Comments Due Date: N/A Effective Date: June 30, 2016 First Reporting Date: N/A Link: Circular Keywords: Basel III, LCR, Regulatory Reporting

Singapore

Key Developments

Proposed Legislative Amendments to Enhance the Resolution Regime for Financial Institutions in Singapore

- MAS

April 29, 2016



The Monetary Authority of Singapore (MAS) launched a consultation on the draft legislative amendments for enhancing the resolution regime for financial institutions in Singapore.

The MAS is also consulting on amendments to the MAS (Control and Resolution of Financial Institutions) Regulations 2013 and a draft notice, as well as guidelines, on recovery and resolution planning (RRP) for banks. MAS invites comments from interested parties on these proposed amendments.

Comments Due Date: May 30, 2016 Effective Date: N/A First Reporting Date: N/A Links: Notification (mas.gov.sg/News-and-Publications/Consultation-Paper/2016/Proposed-Legislative-Amendments-to-Enhance-Resolution-Regime.aspx), Consultation Paper (mas.gov.sg/~/media/MAS/News%20and%20Publications/Consultation %20Papers/Proposed%20Legislative%20Amendments%20to%20Enhance%20Resolution%20Regime%20for%20FIs%20in%20Singapore.pdf) Keyword: RRP

34 MAY 2016

http://www.bsp.gov.ph/downloads/regulations/attachments/2016/c905.pdf


Glossary AnaCredit Analytical Credit Dataset AML Anti-Money Laundering BIS Bank for International Settlements BNM Bank Negara Malaysia BRRD Bank Recovery and Resolution Directive BSP Central Bank of the Philippines (Bangko Sentral ng

Pilipinas) BCP Central Bank of Paraguay CCP Central Counterparties CDR Commission Delegated Regulation CFT Combating the Financing of Terrorism

CFTC Commodity Futures Trading Commission CIR Commission Implementing Regulation CMU Capital Markets Union CRD IV EU Capital Requirements Directive IV CRA Credit Rating Agencies CRR Capital Requirements Regulation EU DNB De Nederlandsche Bank (Central Bank of Netherlands) EBA European Banking Authority EC European Commission ECAI External Credit Assessment Institution ECB European Central Bank EDTF Enhanced Disclosure Task Force EMIR European Market Infrastructure Regulation ESAs European Supervisory Authorities ESCB European System of Central Banks ESMA European Securities and Monetary Authority ESRB European Systemic Risk Board EU European Union FDIC Federal Deposit Insurance Corporation FED Board of Governors of the Federal Reserve System FHFA Federal Housing Finance Agency FINREP Financial Reports EU FSAP Financial Sector Assessment Program FSB Financial Stability Board FSI Financial Soundness Indicators FXWG Foreign Exchange Working Group G-SII Global Systemically Important Institution G-SIB Global Systemically Important Bank HKMA Hong Kong Monetary Authority HLBA Historical Look-Back Approach IASB International Accounting Standards Board IFRS International Financial Reporting Standards IFSB Islamic Financial Services Board

IFSI Islamic Financial Services Industry IIFS Institutions Offering Islamic Financial Services IMF International Monetary Fund IOSCO International Organization of Securities Commissions IRB Internal Ratings-Based ITS Implementing Technical Standards KID Key Information Document LCR Liquidity Coverage Ratio MAS Monetary Authority of Singapore MiFIR Markets in Financial Instruments Regulation MiFID Markets in Financial Instruments Directive MMoU Multilateral Memorandum of Understanding MREL Minimum Requirements for Own Funds and Eligible

Liabilities MSBSP Major Security-Based Swap Participant MTF Multilateral Trading Facility NCUA National Credit Union Administration NSFR Net Stable Funding Ratio OCC Office of the Comptroller of the Currency OFR Office of Financial Research O&D Options and National Discretions O-SII Other Systemically Important Institution OSFI Office of the Superintendent of Financial Institutions OTF Organized Trading Facilities PRA Prudential Regulation Authority PRIIP Packaged Retail and Insurance-Based Investment

Product Q&A Questions and Answers QFC Qualified Financial Contracts QIS Quantitative Impact Study REFIT Regulatory Fitness and Performance Programme RRE Residential Real Estate RRP Recovery and Resolution Plan RTS Regulatory Technical Standards RWA Risk-Weighted Asset SA-CCR Standardised Approach for Measuring Counterparty

Credit Risk SBSD Security-Based Swap Dealer SEC U.S. Securities and Exchange Commission SFTR Securities Financing Transaction Regulation TCFD Task Force on Climate-related Financial Disclosures XBRL eXtensible Business Reporting Language

35 MAY 2016


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36 MAY 2016