HM Treasury and HM Revenue and Customs have launched a consultation on the implementation of rules governing the registration of trusts under the EU Fifth Anti Money Laundering Directive. Responses to the consultation should be submitted by February 21, 2020.

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The European Union (Withdrawal Agreement) Act 2020 has received Royal Assent and has been published by the U.K. Government. The EUWA Act 2020 implements the revised Withdrawal Agreement agreed between the EU and the U.K. last October and provides for that Agreement to have direct legal effect in the U.K. Subject to final EU sign-off, the U.K. is scheduled to leave the EU with this deal on January 31, 2020.

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Christopher Woolard has been appointed Interim Chief Executive of the U.K. Financial Conduct Authority from March 16, 2020. Mr. Woolard is currently the Executive Director of Strategy and Competition and an Executive member of the FCA's Board. He will take on the role when the current FCA Chief Executive Andrew Bailey becomes Governor of the Bank of England. HM Treasury will be running an open process for the role of permanent CEO in due course.

View the announcement.

The U.K. Financial Conduct Authority has written to the CEOs of benchmark administrators that it supervises. In the letter, the FCA sets out its supervisory strategy as well as the potential harms that benchmark administrators pose to their customers and to the financial markets. The FCA is asking all benchmark administrators to consider the harm that their firm may present and to consider how those could be mitigated. The FCA intends to focus over the next two years on the following areas to ensure that its supervision of benchmark administrators mitigates the identified risks:

• Quality of standards: the quality of an administrator's governance and controls, the information provided in their Benchmark Statement, their recalculation and cessation policies, their outsourcing arrangements and their approach to operational resilience; and
• Excessive fees and costs: the FCA is concerned that competition may not be working well in the provision of benchmarks following the feedback received to its Wholesale Sector Competition Review and Asset Management Market Study. The FCA intends to carry out a Call for Input on access to data in wholesale markets so that it can gain a better understanding of the issues and determine whether any action is needed.

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The U.K. Prudential Regulation Authority has published a Policy Statement following its consultation last year on changes to the Pillar 2 capital requirements for banks and large investment firms. The amendments will apply from January 23, 2020. The PRA has made some changes to the proposed text following feedback from respondents that further clarification would be helpful, in particular on the setting of the PRA buffer using the hurdle rate in stress, buffer interactions and usability. The amendments are implemented in:

• Statement of Policy, "The PRA's methodologies for setting Pillar 2 capital";
• Supervisory Statement, "The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)" (SS31/15); and
• Supervisory Statement, "Implementing CRD IV: Capital buffers" (SS6/14).

View the Policy Statement.

View the updated Statements.

View details of the PRA's consultation.

The Bank of England and the U.K. Financial Conduct Authority are establishing the Financial Services AI Public Private Forum that Governor Mark Carney announced in June 2019. The regulators are calling for expressions of interest to join the forum from a range of sectors, including, but not limited to: (i) asset and investment management; (ii) banking; (iii) financial market infrastructure; (iv) fintech; (v) insurance; (vi) non-governmental organizations; and (vii) technology service providers.

The purpose of the forum is to:

• share information and understand the practical challenges of using AI and machine learning in financial services, including obstacles to implementation and potential risks and trade-offs;
• establish the potential areas where principles, guidance, regulation or good practice might assist in the safe adoption of AI and machine learning; and
• assess whether ongoing industry input would be useful and what form that could take, such as through industry codes of conduct or an industry standard board.

View the FCA's announcement.

View the BoE's webpage.

View the terms of reference.

The European Banking Authority has published amendments to the 2018 Guidelines on fraud reporting under the revised Payment Services Directive (known as PSD2). The Regulatory Technical Standards on "strong customer authentication" requirements for payments services providers, setting out the process by which service providers authenticate the identity of customers have applied directly across the EU since September 14, 2019. Following clarifications by the European Commission on the application of SCA to certain transaction types, the EBA has amended the reporting templates linked to the guidelines to cater for reporting of transactions where SCA is not applied for reasons other than an exemption under the SCA RTS. The amendments will apply to the reporting of payment transactions initiated and executed from July 1, 2020.

View the EBA's announcement and the consolidated Guidelines.

View details of the SCA RTS.

The European Banking Authority has commenced a consultation on proposed changes to the EU-wide stress test framework for banks. The EU-wide stress test contributes to improving the financial resilience of banks. Responses to the consultation may be submitted until June 30, 2020. The EBA is holding a public hearing on the proposals on February 21, 2020.

The EBA is proposing to amend the framework to have two parts. The first would be the supervisory element, based on a common EU methodology. It would include the current constrained bottom-up approach, but also have an option for national regulators to adjust or replace banks' estimates based on top-down models and other tools. The second part would be the bank element and would be based on the same common methodology applied in the supervisory part. However, banks would be given more discretion to calculate their projections, provided an explanation and disclosure of the rational and impact of any deviations is possible. The quality of disclosure of the results would remain high, with only the supervisory leg being amended to limit the quantity of disclosure. Feedback is also sought on the approach to scenario designs.

View the consultation paper and other details.

The U.K. Financial Conduct Authority has published two letters addressed to the CEOs of firms in the asset management and funds sectors. The first letter is addressed to CEOs of FCA-authorized firms directly managing mainstream investment vehicles or advising on mainstream investments, excluding wealth managers and financial advisers. The second letter is addressed to CEOs of FCA-authorized firms managing alternative investment vehicles, such as hedge funds or private equity funds, or managing alternative assets directly or advising on these types of investments. The letters follow the FCA's report on its review of how firms in the asset management sector selected and used risk modeling and other portfolio management tools.

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The U.K. Financial Conduct Authority has announced the focus of its second review assessing suitability - advice received by consumers on retirement income. The FCA intends to publish a report on the outcome of the review in 2020. Alongside the announcement, the FCA has published a letter addressed to the CEOs of financial advice firms describing its approach to tackling key areas of concern with financial advice firms and setting out the action it expects these firms to undertake. The letter covers assessing suitability of advice, defined benefit pension transfer advice, pensions and investment scams, adequate financial resources and professional indemnity insurance, the FCA's recently imposed ban on the promotion of speculative mini-bonds to retail consumers, the Senior Managers and Certification Regime and preparing for the end of the Brexit implementation period.

View the FCA's statement.

View the Dear CEO letter.

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements have announced that they have created a group to share experience as they assess the potential cases for central bank digital currency. The group will assess CBDC use cases, economic, functional and technical design choices, including cross-border interoperability and the sharing of knowledge on emerging technologies.

View the announcement.

The Banking Supervision arm of the European Central Bank has set out its expectations of Eurozone banks regarding their dividend distribution and variable remuneration policies. The ECB is responsible for direct prudential supervision of certain significant banks based in the Eurozone as part of the Single Supervisory Mechanism and has certain powers relating to the supervision by national Eurozone regulators of smaller banks. The ECB has published a letter addressed to significant banks warning them to take a "prudent, forward-looking stance" when setting the banks' remuneration policy and has also published a Recommendation (dated January 17, 2020) on requiring significant banks to "establish dividend policies using conservative and prudent assumptions". The Recommendation will apply directly to significant Eurozone banks. The ECB expects national Eurozone regulators to consider how it might be applied proportionally to the smaller banks. The ECB expects Eurozone banks to consider how their variable remuneration policies and dividend distribution policies will impact their ability to continue to meet their regulatory capital requirements, particularly taking into account the transitional provisions of the Capital Requirements Directive (version IV) and the transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds.

View the ECB's letter.

View the ECB's Recommendation.

The U.K. Financial Conduct Authority has responded to a request from the International Swaps and Derivatives Association for clarification on the expected timeframes for publication of a non-representative LIBOR. The FCA (in conjunction with the Financial Stability Board) had previously requested ISDA to introduce “pre-cessation” triggers in its derivative contracts, causing LIBOR-based contracts to fall back to an alternative reference rate in the event that the FCA deemed LIBOR to no longer be representative. ISDA requested clarity about the length of the period during which such a non-representative LIBOR might be published prior to its total cessation.

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The European Central Bank has opened a consultation on proposed guidelines on the materiality threshold for credit obligations past due for less significant institutions based in the Eurozone. The EU Capital Requirements Regulation risk quantification provisions set out that a default occurs when an obligor is past due more than 90 days on any material credit obligation to a firm, its parent or any of its subsidiaries. The materiality of the credit obligation is to be assessed against a threshold set by the national regulator according to its view of a reasonable level of risk. The ECB is responsible for direct prudential supervision of certain significant banks based in the Eurozone as part of the Single Supervisory Mechanism and has set the materiality threshold for these firms. The proposed guidelines are addressed to national Eurozone regulators within the SSM responsible for setting the threshold for less significant institutions. The ECB is proposing a single materiality threshold for all less significant institutions, both for retail and non-retail exposures.

The consultation closes on February 17, 2020.

View the consultation paper.

The U.K. Financial Conduct Authority has updated its webpage and statement on the operation of the transparency regime under the Markets in Financial Instruments Directive post-Brexit. The U.K. Government has stated that it is committed to leaving the EU with a deal on January 31, 2020, followed by an implementation period. As a result, the FCA confirms that during the implementation period, all MiFID systems will remain connected to the European Securities and Markets Authority. A further update will be provided in due course.

View the FCA's updated statement.

The U.K. Payment Systems Regulator has opened a consultation on proposals to vary its Specific Direction 10 on Confirmation of Payee. Confirmation of Payee is a system that ensures that certain identifiers (including name, sort code and account number) of a payee are verified against the records of a payment services provider before a payment is made. On August 1, 2019, the PSR issued Specific Direction 10 to certain institutions within the six largest U.K. payment service providers - Lloyds Group, Barclays Group, HSBC Group, Royal Bank of Scotland Group, Santander Group and Nationwide Building Society - requiring them to implement "Confirmation of Payee" by March 31, 2020. The PSR is consulting on amending the Direction to introduce a new basis for a payment service provider to request an exemption from the requirements. The existing text of the Direction only allows exemptions in exceptional circumstances. The PSR also intends to include a limited exemption for HSBC UK Bank plc in the revised Direction. Responses to the consultation can be submitted until January 29, 2020.

View the consultation.

The European Securities and Markets Authority has launched a consultation on proposed guidelines on securitization repository data completeness and consistency thresholds. The proposed guidelines would apply to EU securitization repositories that are registered with and supervised by ESMA. The consultation closes on March 16, 2020.

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A U.K. court has granted an interim proprietary injunction over Bitcoin held in an account of a cryptocurrency exchange after it had been transferred there as part of a cyber attack on a Canadian insurance company. The judgment in AA v Persons Unknown & Ors, Re Bitcoin [2019] EWHC 3556 (Comm) was given on December 13, 2019, and following the lifting of reporting restrictions, was released for publication on January 17, 2020. In coming to its decision, the High Court adopted the analysis as to the proprietary status of crypto assets set out in the recent legal statement by the UK Jurisdiction Taskforce. Although each case will depend on the relevant facts and issues, the decision confirms that crypto assets are a form of property capable of being the subject of a proprietary injunction.

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The Bank of England, U.K. Prudential Regulation Authority, U.K. Financial Conduct Authority and the Working Group on Sterling Risk-Free Reference Rates have published a set of documents outlining priorities and milestones for 2020 on LIBOR transition.

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The Global Financial Innovation Network has published a report on lessons learned during the cross-border testing of innovative firms and their products. The GFIN was launched at the start of 2019 and is a network of organizations committed to supporting financial innovation in the interests of consumers. One of GFIN's priorities is to facilitate cross-border trials of emerging technologies across global jurisdictions (a global sandbox). The GFIN began a pilot with eight firms in April 2019, which aimed to develop testing plans for their cross-border trials. However, as none of the firms developed a testing plan that satisfied each jurisdiction's requirements, the GFIN could not progress things further. The GFIN has since met to consider how to take things forward and will further develop the framework of cross-border testing.

The report describes the accomplishments and the challenges that arose during the pilot and sets out the proposed next steps and solutions to improve cross-border testing for the next phase. The solutions include establishing a central website for GFIN and creating a single application form for applicants, both of which should make it easier for prospective firms to find relevant information and submit an application. In the first half of 2020, the GFIN will open applications for the first formal cohort of participants.

View the report.

The International Organization of Securities Commissions has published a report in which it recommends that where jurisdictions require clock synchronization for trading purposes, clocks should be synchronized to Coordinated Universal Time (UTC). In its 2013 report - Technological Challenges to Effective Market Surveillance – Issues and Regulatory Tools (FR04/13) – IOSCO recommended the introduction of a requirement for trading venues and their participants to synchronize the business clocks used to record the date and time of a reportable event. The practice assists regulators in monitoring the markets for market abuse and identifying market abuse. Certain jurisdictions have already implemented clock synchronization according to UTC, including Australia, Canada and the EU.

View IOSCO's report.

Mark Carney, the outgoing Governor of the Bank of England, has been appointed as Finance Adviser for COP26. The role will be to assist the U.K. Government to build a sustainable financial system that supports the transition to a net zero economy. Andrew Bailey will replace Mr. Carney as the Governor of the Bank of England from March 16, 2020.

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The European Commission has published a Communication detailing the Sustainable Europe Investment Plan that will support the European Green Deal Investment Plan. The Communication is accompanied by a proposed Regulation to establish a Just Transition Fund and a Factsheet explaining the Plan. Feedback on the proposed Regulation can be submitted until March 12, 2020.

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The European Banking Authority has launched a consultation on its draft regulatory technical standards specifying how institutions should calculate their own funds requirements for market risk in respect of non-trading book positions that are subject to foreign-exchange risk or commodity risk. The draft RTS have been published for consultation in accordance with the revised Capital Requirements Regulation, which came into force on June 7, 2019 and (subject to certain exceptions) will apply directly across the EU from June 28, 2021. Responses to the consultation should be submitted by April 10, 2020. The EBA is expected to consult in 2020 on other technical standards to supplement CRR II and has published a roadmap providing the due dates for its deliverables.

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The U.K. Financial Conduct Authority has published a report on its review of how firms in the asset management sector selected and used risk modelling and other portfolio management tools. The review was undertaken to assess how firms identify and manage the risks as well as firms' ability to respond to system failures or service interruptions.

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The European Banking Authority has published a report on big data and advanced analytics in the banking sector. The report sets out the findings of the EBA's review of big data and analytics and presents key pillars and elements of trust for the development, implementation and adoption of BD&AA by banks.

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The International Swaps and Derivatives Association has published a set of Frequently Asked Questions on Interbank Offered Rate Fallback Rate adjustments. The FAQs are part of ISDA's preparations for the sweeping changes being made to global interest rate benchmarks, which may see a transition from IBORs to overnight risk free rates. Parties to derivatives contracts that currently reference IBORs are being encouraged to include contractual fallback provisions providing for adjusted RFRs that could replace IBORs if they are discontinued before a contract is concluded. RFRs are structurally different to IBORs, hence why the RFRs must be adjusted in order to be incorporated into contracts that currently reference IBORs.

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The European Systemic Risk Board has published a report on mitigating the procyclicality of margins and haircuts in derivatives markets and securities financing transactions. The report assesses the systemic risks arising from procyclicality associated with margin and haircut practices and makes recommendations for addressing the risks. 

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The European Securities and Markets Authority has published its Strategic Orientation for 2020-2022, setting out its longer-term objectives for regulating financial markets. The previous Strategic Orientation covered the period from 2016-2020 and so is coming to an end this year. Looking forward, ESMA aims to:

• develop the EU Capital Markets Union by encouraging wider retail investor participation, which would assist with the diversification of funding sources and efficiency of capital markets;
• promote sustainable finance and long-term oriented capital markets as part of the EU's commitment to meet the UN's Sustainable Development Goals by 2030;
• examine the opportunities and risks of digitalization and technology for market participants and regulators;
• guarantee the EU's voice in financial markets, aiming to maintain the openness of EU financial markets and develop EU co-operation with third-country authorities to ensure investor protection and financial stability; and
• encourage proportionality, particularly with respect to SMEs and innovative companies, where ESMA may need to tailor its initiatives to meet its objectives.

View ESMA 2020-2022 Strategic Orientation.

The European Securities and Markets Authority has published a final report on the 2018 survey it conducted on central counterparties' membership criteria and due diligence practices, together with an update to its Q&As providing guidance on the correct implementation of the European Markets Infrastructure Regulation. The survey was prompted by the default in September 2018 of an individual who was acting as a clearing member of Nasdaq Clearing AB. This triggered ESMA's investigation into CCPs' membership and due diligence practices and their compliance with participation requirements under EMIR and the joint Principles for Financial Market Infrastructures issued by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.

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The Bank of England and U.K. Financial Conduct Authority have published a series of proposals setting out their plans to enhance their data and analytics capabilities. The proposals include a revised FCA data strategy, a BoE discussion paper on transforming data collection and a viability report published by the FCA and BoE, together with seven regulated firms, on the possibilities of digital regulatory reporting. The FCA and BoE depend on data to conduct their supervisory responsibilities.  

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The European Securities and Markets Authority has published a working paper setting out its findings on the market impacts of “circuit breakers”, instruments used by trading venues to interrupt excessive price movements in financial instruments. The revised Markets in Financial Instruments Directive places obligations on national regulators to require a regulated market in their jurisdiction to be able to temporarily halt or constrain trading if there is significant price movement in a financial instrument on that market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction. 

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The International Swaps and Derivatives Association has published a guide on the cross-border application of margin rules established under the U.S., EU and Japanese regimes for uncleared derivatives. While most jurisdictions base their margin rules on the framework established by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions, there is still scope for differences to arise under national regimes. The guide provides an overview of the margin rules in each of the three jurisdictions, focussing on the cross-border and substituted compliance elements. It also includes a series of charts showing the application and availability of substituted compliance under each regime.

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The European Securities and Markets Authority has published a final report and guidelines on reporting under the Securities Financing Transaction Regulations, together with amended SFTR validation rules and a statement on Legal Entity Identifiers. The SFTR requires all securities financing transactions to be reported to EU-recognized trade repositories. SFTs involve the use of securities to borrow cash or other high investment-grade securities and include repurchase transactions, securities lending and sell/buy backs.

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An EU Regulation has been published amending the European Supervisory Authorities' powers under various pieces of EU legislation. The Regulation grants ESMA additional powers to monitor market data and authorize benchmark administrators under the Markets in Financial Instruments Regulation and the Benchmarks Regulation, respectively. It also amends the legislation founding the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, granting them additional powers to facilitate their supervisory duties. The Regulation will enter into force on December 30, 2019. The provisions regarding ESMA's enhanced supervisory powers over market data and benchmarks will apply from January 1, 2022. All other provisions regarding the European Supervisory Authorities' enhanced powers will apply from January 1, 2020.

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The European Supervisory Authorities have published joint draft Regulatory Technical Standards amending the existing EU risk mitigation techniques for uncleared OTC derivatives, together with a joint statement on the introduction of fallbacks in OTC derivative contracts and the requirement to exchange collateral. The draft RTS amend existing bilateral margin requirements made under the European Market Infrastructure Regulation, in line with certain clarifications made to the related international framework by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions. The draft RTS were originally published on December 5, 2019, but have been republished with one additional amendment. The Final Report has been submitted to the European Commission for endorsement.

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An amended temporary equivalence decision on the regulatory framework applicable to central counterparties in the U.K. and Northern Ireland has been published in the Official Journal of the European Union. The decision amends the existing EU equivalence decision, which applies from the date that the U.K. leaves the EU in the event that no withdrawal agreement has been agreed, and ends on March 30, 2020. The amended decision extends the period of equivalence to one year following a U.K. no-deal exit from the EU and will apply from December 24, 2019. It would not apply in the event that the Withdrawal Agreement is ratified by both sides.

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The European Parliament has published a resolution on relationships between the EU and third countries concerning financial services regulation and supervision. The resolution follows the publication of a report in August 2018 by the European Parliament’s Committee on Economic and Monetary Affairs setting out its proposal for the European Parliament’s resolution, which comes in the wake of the U.K.’s upcoming exit from the EU. The key factors prompting the resolution include the need to mitigate risks to financial stability arising from a possible no-deal Brexit, the need for clarification of the relationship between third-country markets and the EU’s single market in the interests of broader financial stability and the fact that existing third-country equivalence rules are not currently subject to a single framework.

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The EU Technical Expert Group on Sustainable Finance has published a Handbook providing guidance on the EU’s new climate transition benchmarks (EU CTB) and Paris-aligned benchmarks (EU PAB), as well as on the environmental, social and governance disclosures that will be applicable to all investment benchmarks (other than currency and interest rate benchmarks) in the future. Conventional benchmarks do not typically reflect low-carbon considerations, but an increasing focus on sustainability has led to a proliferation in recent years of specific low-carbon benchmarks that were not subject to clear or comparable standards.

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The European Securities and Markets Authority has published a follow-up report on its 2018 Thematic Report on the fees charged by credit rating agencies and trade repositories. ESMA directly supervises all CRAs and trade repositories that are established in the EU. The 2018 Thematic Report highlighted three key areas of concern in the fee charging practices of CRAs and trade repositories, namely: (i) transparency and disclosure to clients and ESMA of fees; (ii) the process of setting fees; and (iii) how interactions with other group entities may pose challenges to the principles of non-discrimination and cost-related fees to which credit rating agencies and trade repositories are expected to adhere.

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The U.K. Chancellor of the Exchequer, Sajid Javid, has announced the appointment of Andrew Bailey as the new Governor of the Bank of England. 

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The Financial Stability Board has published a statement summarizing the feedback it received to its June 2019 consultation on firms’ public disclosures on resolution planning and resolvability. The consultation sought feedback on a series of questions regarding general and firm-specific disclosures made by systemically important banks and other firms subject to resolution planning requirements.

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The Financial Stability Board has published a statement summarizing the feedback it received to its June 2019 consultation on the solvent wind-down of derivatives and trading portfolios. The consultation sought feedback on a series of questions regarding existing wind-down practices that may be used as a recovery option for global systemically important institutions that find themselves under stress. The FSB intended to consider publishing guidance on solvent wind-down planning depending on the responses elicited by the consultation.

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The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 have been published, amending the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The amending Regulations incorporate changes made to EU legislation under the EU’s Fifth Anti-Money Laundering Directive. The majority of the amending Regulations provisions will come into force on January 10, 2020, with the exception of those governing: (i) customer due diligence on anonymous prepaid cards; and (ii) requests for information about accounts and safe-deposit boxes, which will come into force on July 10, 2020 and September 10, 2020 respectively.

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The EU legislative bodies have announced that political agreement has been reached on the proposed Regulation on European Crowdfunding Service Providers for Business. The proposed ECSP Regulation is part of the EU Capital Markets Union initiative and the Commission's FinTech Action Plan. It aims to increase access to finance through crowdfunding for innovative companies, start-ups and SMEs. The European Commission published the original legislative proposal on March 8, 2018. Since then, the text of the proposed ECSP Regulation has been amended.

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The Working Group on Sterling Risk-Free Reference Rates has opened a consultation on credit adjustment spread methodologies for fallbacks in cash products referencing GBP LIBOR. The consultation focuses on cash products, including, but not limited to, syndicated loans, floating rate notes, retail loans, bilateral corporate loans and securitizations.  It only covers GBP LIBOR and credit adjustment spreads to be applied to a SONIA-derived rate. Responses to the consultation can be submitted until February 6, 2020.

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The Financial Stability Board has published a report on the vulnerabilities associated with leveraged loans and collateralized loan obligations. In the report, the FSB assesses how the leveraged loan and CLO markets have developed and analyzes the potential implications for global financial stability.

Noting that there are data gaps, the FSB makes the following conclusions:

• there are indications that weaknesses in the leveraged loan and CLO markets have increased since the 2008-09 global financial crisis;
• banks have the largest direct exposures to leveraged loans and CLOs. These exposures are concentrated among a limited number of large global banks and have a significant cross-border dimension; and
• non-bank investors, such as investment funds, insurance companies, pension funds, broker-dealers and holding companies, also have exposures to leveraged loans and CLOs.

The FSB intends to consider whether there is scope to close data gaps, but will continue to analyze the financial stability risks and will examine the regulatory and supervisory implications related to leveraged loans and CLOs.

View the report.

The European Banking Authority has launched a consultation on its draft Regulatory Technical Standards setting out the criteria for identifying staff whose professional activities have a material impact on credit institutions’ risk profiles. The EBA is required to produce the RTS under the revised Capital Requirements Directive (CRD V), in support of the CRD requirement that remuneration policies for staff whose professional activities have a material impact on the credit institution’s risk profile are appropriate to the size, nature and complexity of the credit institution in question. 

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The European Commission has launched two consultations on digitalization in the financial sector. They form part of the EU’s new Digital Finance Strategy which aims to deepen the Single Market for digital financial services, promote a data-driven EU financial sector while addressing the risks inherent in that and enhance the digital operational resilience of the financial system. 

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The European Banking Authority has published final draft Regulatory Technical Standards governing the standardized approach to counterparty credit risk in derivatives transactions. The final draft SA-CCR RTS will supplement the requirements set out in the EU's Capital Requirements Regulation, as amended by CRR 2. The SA-CCR requirements aim to address the shortcomings of existing calculation methods to ensure parties are adequately protected in the event of default by a counterparty to a derivatives transaction and these final draft RTS aim to ensure a more harmonized calculation of own funds requirements for counterparty credit risk than has been the case under CRR.

Read more.