European Commission
Crisis management and deposit insurance framework – European Commission launches public consultation – 25 February 2021
The European Commission has launched a public consultation on its review of its crisis management and deposit insurance (CMDI) framework, together with a consultation document.
The CMDI framework sets out the rules for handling bank failures while protecting depositors. It consists of three pieces of EU legislation working together with relevant national legislation: the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD), the Single Resolution Mechanism (SRM) Regulation (806/2014), and the Deposit Guarantee Schemes Directive (2014/49/EU) (DGSD).
The consultation aims to gather views and experience with the current CMDI framework, as well as on its possible evolution. Among other things, questions include whether:
- the CMDI framework has achieved certain objectives;
- the measures available in the current legislative framework have fulfilled the intended policy objectives and contributed effectively to the management of banks’ crises;
- any major issues relating to the depositor protection require clarification of the current rules; and
- the tools and powers in the BRRD should be made exclusively available in resolution or whether similar tools and powers should be also available for those banks for which it is considered that there is no public interest in resolution.
The consultation closes on 20 May 2021.
European Commission consultation on the CMDI framework
Consultation webpage
Questionnaire
Inception impact assessment
Roadmap webpage
European Central Bank
Cross-border payments – ECB publishes opinion on the proposal for a regulation – 25 February 2021
The European Central Bank (ECB) has published an opinion on the European Commission’s proposal for a regulation on cross-border payments in the European Union.
The proposed regulation aims to codify the existing Regulation on cross-border payments, Regulation (EC) 924/2009, as last amended by Regulation (EU) 2019/518. The ECB generally welcomes the codification exercise, and notes that instruments affected by the codification do not contain substantive changes.
In its opinion, the ECB makes a specific observation in relation to article 4(1) of the proposed Regulation which aims to supplement the transparency and information requirements set out in the Second Payment Services Directive (EU) 2015/2366 (PSD2) with regard to currency conversion services. Article 4(1) requires payment service providers and parties providing currency conversion services to express the total currency conversion charges as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the ECB.
The ECB notes that it has published euro foreign exchange reference rates (ECBRRs) since 1998 on the basis of a framework approved by the ECB Governing Council in 1998 and amended in 2015 (the ECBRR Framework). The aim of the ECBRR Framework is to discourage trading on the ECBRR and limit their use to reference purposes.
The ECB is concerned that the reference to ECBRRs in the proposed regulation could create incentives for some market participants to trade at the ECBRRs, and therefore recommends that the reference is removed and replaced by an appropriate reference to a foreign exchange benchmark rate which falls within the scope of the Benchmarks Regulation (EU) 2016/1011 and may be used in the context of the currency conversion charges.
ECB opinion on the proposal for a regulation on cross-border payments in the Union
European Banking Authority
CRR – EBA publishes final draft technical standards on indirect exposures arising from derivatives with an underlying a debt or equity instrument – 19 February 2021
The European Banking Authority (EBA) has published final draft regulatory technical standards specifying how institutions should determine exposures arising from derivative and credit derivative contracts not entered into directly with a client but whose underlying debt or equity instrument was issued by a client. These draft regulatory technical standards, which derive from Article 390(9) of the Capital Requirements Regulation (575/2013/EU) (CRR) as amended by the CRR II Regulation (2019/876), will ensure appropriate levels of consistency through different aspects of the regulatory framework for the calculation of large exposures.
The draft regulatory technical standards propose a methodology for the calculation of indirect exposures for different categories of derivative contracts and credit derivative contracts with a single underlying debt or equity instrument, namely:
- options on debt and equity instruments;
- credit derivative contracts; and
- other derivatives having as their underlying a debt or equity instrument.
They also provide a separate methodology for the calculation of exposures stemming from contracts with multiple underlying reference names. The proposed methodologies are expected to be easy to implement and applicable by all institutions in a standardised manner.
Report
Press release
-
PSD2 – EBA opinion on obstacles to provision of third party services – 19 February 2021
The European Banking Authority (EBA) has published an Opinion on supervisory actions national competent authorities (NCAs) should take to ensure banks remove any remaining obstacles that prevent third party providers from accessing payment accounts, which restrict EU consumers’ choice of payment services.
The EBA states that the Opinion will contribute to a level playing field across the EU and to a consistent application and supervision of relevant requirements under the Payment Services Directive (2015/2366) (PSD2) and the EBA Regulatory Technical Standards on strong customer authentication and common and secure communication.
The Opinion sets out the EBA’s expectations on the actions NCAs should take to ensure that remaining obstacles are removed from the interfaces of account servicing payment service providers (ASPSPs). National authorities should first assess the progress made by ASPSPs in their respective jurisdictions and, in cases where obstacles have not been removed, they should take supervisory actions by 30 April 2021.
The EBA also expects that, in cases where obstacles continue to exist following this deadline, NCAs should take more effective supervisory measures to ensure compliance with the applicable law, including, but not limited to, by revoking exemptions from the contingency mechanism already granted to ASPSPs and/or by imposing fines.
Opinion
Press release
IFD – EBA consults on technical standards on supervisory co-operation – 24 February 2021
The European Banking Authority (EBA) has published the following consultation papers on technical standards supplementing the Investment Firms Directive ((EU) 2019/2034) (IFD):
- Consultation paper on draft regulatory technical standards (RTS) and implementing technical standards (ITS) on information exchange between competent authorities of home and host member states. The RTS specify which information concerning investment firms should be provided by the competent authorities of a home member state to the competent authorities of a host member state. The ITS establish standard forms, templates and procedures for the information-sharing requirements set out in the RTS.
- Consultation paper on draft RTS on colleges of supervisors for investment firm groups. These RTS specify the conditions under which colleges of supervisors should exercise their tasks in accordance with Article 48 of the IFD. The RTS cover the establishment and functioning of colleges, the planning and co-ordination of supervisory activities in going-concern situations and the planning and co-ordination of supervisory activities in preparation for and during emergency situations.
The consultations close on 23 April 2021, and the EBA intends to finalise the technical standards by the end of June 2021.
Consultation paper on draft RTS on information exchange between competent authorities of home and host member states
Consultation paper on draft RTS on colleges of supervisors for investment firms
Press release
Bank of England
Resolvability Assessment Framework – BoE publishes Dear CEO letter – 24 February 2021
The Bank of England (BoE) has published a letter sent by Dave Ramsden (BoE Deputy Governor for Markets and Banking) to CEOs of the eight UK banks in the scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle. The letter sets out the BoE’s expectations of banks in their preparations for submitting their RAF in October 2021.
The letter reminds banks that a key principle of the RAF is that firms are responsible for their own resolvability and that they must be able to achieve the three resolvability outcomes specified in the BoE’s statement of policy on the RAF by January 2022. The letter also sets out examples of good practice concerning: (i) firms’ governance over and testing of their resolvability arrangements; and (ii) firms’ approach to designing resolving capabilities.
The BoE intends to engage with firms later in 2021 on the operational arrangements for the first RAF cycle.
BoE Dear CEO letter on firms’ RAF preparations
Press release
European Payments Council
SEPA Direct Debit Schemes – EPC publishes guidelines on the appearance of mandates– 23 February 2021
The EPC has published version 7 of its guidelines on the appearance of mandates for the Single Euro Payments Area (SEPA) Direct Debit (SDD) Core Scheme and the SDD Business-to-Business Scheme.
The guidelines provide guidance on the visual presentation of mandates issued by creditors as part of their offer to debtors for the use of SDD as a way of making payments. They seek to illustrate several ways to reduce the mandate size without losing any essential content and remaining compliant with the relevant scheme rulebook.
The guidelines supplement section 4.7.2 of the SDD Core and SDD B2B Scheme Rulebooks, which define the rules for the content of SDD Core and SDD B2B mandates respectively.
EPC Guidelines
Webpage
