Financial Regulatory Developments (FReD) - 9 August 2013

HEADLINES

ESMA deals with late AIFMD transposition ICO fines BoS over data breaches PRA consults on CRD4 implementation EUROPEAN UNION AND INTERNATIONAL

Council of the European Union (Council)

Council corrects more dates in CRD4/CRR final texts: The Council has published corrigenda for the texts of the recently adopted new Capital Requirements Directive and Regulation (CRD4 and CRR). They correct a number of dates throughout the text. (Source: Corrigendum for CRD4 and Corrigendum for CRR)

Contact: Rosali Pretorius or Juan Jose Manchado

European Securities and Markets Authority (ESMA)

ESMA deals with late AIFMD transposition: ESMA is aware that several Member States have not implemented the Alternative Investment Fund Managers Directive (AIFMD) by the 22 July deadline. It says this should not be allowed to cause problems for fund managers from compliant jurisdictions. Accordingly, it says fund managers from jurisdictions which have implemented the AIFMD should be able to use their management and marketing passports when they make the required notifications regardless of whether the relevant host state has implemented the relevant provisions. (Source: ESMA Deals With Late AIFMD Transposition)

Contact: Rosali Pretorius or Kam Dhillon

ESMA updates EMIR Q&A: On 5 August ESMA updated its Q&A on the European Market Infrastructure Regulation (EMIR). In addition to changes to several existing answers, the Q&A now contains new questions on:

whether funds or their managers should be considered the counterparty to a transaction; the principal-to-principal model of OTC derivatives clearing; determining the financial or non-financial status of entities not established in the EU; portfolio reconciliation under article 13 of the Regulatory Technical Standard (RTS) on OTC derivatives; dispute resolution under article 15 of the RTS on OTC derivatives; organisational requirements under article 26 EMIR; the definition of "independent board member" of a central counterparty (CCP); allocation of additional resources under article 35 RTS on CCPs; and reporting of intragroup transactions, of transactions within the same legal entity and in respect of non-European subsidiaries of European entities. (Source: EMIR Q&A)

Contact: Rosali Pretorius or James Brennan

European Banking Authority (EBA)

EBA asks for views on unrealised gains: EBA has published a discussion paper (DP), open for comment until 27 September, on technical advice to the European Commission (Commission) covering possible treatments of unrealised gains measured at fair value. Under the Capital Requirements Regulation (CRR), and starting from 1 January 2015, unrealised gains and losses measured at fair value must count towards own funds, but the CRR also requires EBA to provide technical advice to the Commission on policy options for potential alternative treatments of unrealised gains. (Source: DP on Unrealised Gains)

Contact: Rosali Pretorius or Luca Salerno

EBA consults on retail deposits outflows: Following its February 2013 DP (see FReD 1 March), EBA is now consulting on its proposed draft guidelines on how to identify, for the purposes of liquidity reporting, less stable retail deposits that can be susceptible to higher outflows during 30 days under stress conditions. EBA continues to propose three "buckets" for allocation purposes, but has dropped the prescription of associated outflow rates, and expects institutions to provide their own estimates. The consultation also covers guidelines on how to identify retail deposits covered by a Deposit Guarantee Scheme and which are part of an "established relationship" or held in a "transactional account". These retail deposits would be subject to the lowest outflow rate assumption. Once data is collected on retail deposits outflows the Commission will calibrate the liquidity coverage requirement. EBA asks for comments by 1 October. (Source: Consultation on Draft Guidelines on Retail Deposits Subject to Different Outflows)

Contact: Rosali Pretorius or Luca Salerno

EBA reports on banking book RWAs: EBA has published its second interim report on the consistency of risk-weighted assets (RWAs) in lower default portfolios (sovereign, institutions and large corporates) of EU banks' banking books. This second analysis has involved a comparative benchmarking portfolio exercise. Some of the inconsistencies detected, driven by differing bank and supervisory practices, will be tackled through CRR-mandated technical standards, but additional efforts will be needed in terms of:

enhanced supervisory disclosure; exchange of best practice among supervisors and banks; additional guidelines and technical standards on low default portfolios; and benchmarks or constraints, such as floors or fixed values, for some Internal Ratings Based (IRB) parameters. (Source: EBA Reports on Banking Book RWAs)

Contact: Rosali Pretorius or Luca Salerno

UK GOVERNMENT AND PARLIAMENT

Legislation

Treasury makes more EMIR Regulations: Treasury has made the Financial Services and Markets Act 2000 (OTC Derivatives, CCPs and Trade Repositories) (No.2) Regulations 2013. The bulk of implementation work on EMIR was covered by Regulations in March 2013 (see FReD 15 March). These new...