Financial Services Regulation and Compliance Bulletin - Banking May 2019

DOMESTIC

Speech by Deputy Governor of Prudential Regulation, Ed Sibley on Monetary and financial stability: the implications for prudential supervision

On 2 May 2019, Ed Sibley, the Deputy Governor of Central Banking spoke at the 46th OeNB Economics Conference in Vienna on the topic of "European Economic and Monetary Union: the first and the next 20 years" and focussed on the changes in supervision including:

  1. macro assessments (including stress testing) and how these are a fundamental component of micro-prudential supervision
  2. cooperating with macro-prudential authorities in relation to capital requirements
  3. the introduction of borrowing based measures
  4. increased coordination at a European level

Future priority areas include: risk reduction in the level of non-performing loans, liquidity resolution and a European Deposit Interest Scheme.

Speech by Colm Kincaid, Director of Securities and Markets Supervision on Greater Transparency in Securities Lending

On 14 May 2019, Colm Kincaid the Director of Securities and Markets Supervision of the CBI delivered remarks to the Irish Securities Lending Association on the CBI's view of an effectively supervised securities market as one which:

  1. provides a high level of protection for investors and market participants
  2. is transparent as to the features of products and their market price
  3. is well governed (and comprises of firms that are well governed)
  4. is trusted, by both those using the market to raise funds and those seeking to invest
  5. is resilient enough to continue to operate its core functions in stressed conditions and to innovate appropriately as markets evolve

The Director also discussed the supervisory initiatives in the sector, including:

  1. a systematic risk-based supervision of wholesale activities
  2. assertive risk-based supervision of the funds sector
  3. effective gatekeeping
  4. improving the harnessing of data
  5. operationalising new legislation
  6. enforcing securities market legislation

EUROPEAN

The European Banking Authority (EBA) launches consultation on four technical standards on the standardised approach for counterparty credit risk (SA-CCR)

On 2 May 2019, the EBA proposed draft Regulatory Technical Standards with regards to the SA-CCR. These standards set out the new formula for calculating the exposure value of derivative exposures, specify "mapping" methods for risk categories of derivative transactions, and introduce a method for determining whether derivative transactions are long or short with regards to their risk drivers. The consultation will end 2 August 2019.

Joint Committee of the three European Supervisory Authorities (ESAs) publish amended technical standards on the mapping of External Credit Assessment Institutions (ECAIs) under the Capital Requirements Regulation (CRR)

On 20 May 2019, the ESAs published a second amendment to the Implementing Technical Standards on the mapping of credit assessments of ECAIs for credit risk under the CRR. This amendment reflects the result of a monitoring exercise on the adequacy of mappings, based on additional qualitative and quantitative information collected after the initial Regulation entered in to force.

ESMA consults on indices and recognised exchanges under the CRR

On 24 May 2019, ESMA published a consultation paper proposing amendments to the main indices and recognised exchanges under the CRR which involves using a new methodology that can be homogeneously applied to both EU and non-EU indices. Under this methodology, an index can qualify as a main index if it satisfies one of two tests: the medium and large cap stocks test; or the small cap stocks which are sufficiently liquid test. This consultation closes on 5 July 2019.

For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.

Date published: 7 June 2019