Publication alert: Other weekly regulatory news
OTHER FINANCIAL PUBLICATIONS OF INTEREST
In addition to the regulatory alerts published this week, which can be consulted in the "Quarterly regulatory alerts" section, the following relevant publications have been released this week.
HIGH-COST LENDING PRODUCTS
(06/10/2022) FCA – FCA strategy for firms providing high-cost lending products
The Financial Conduct Authority (FCA) has published a letter regarding its strategy for firms providing high-cost lending products. This letter sets out FCA’s updated view on the key risks of harm that high-cost firms pose to their customers and the markets in which they operate. In addition, this firms will need to start preparing for implementation of the Consumer Duty, which becomes effective from 31 July 2023.
SUPERVISION OPERATING PLAN
(06/10/2022) EC – OCC Releases Bank Supervision Operating Plan for Fiscal Year 2023
The Office of the Comptroller of the Currency (OCC) has released its bank supervision operating plan for Fiscal Year 2023. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. The OCC staff uses this plan to guide its supervisory priorities, planning, and resource allocations.
RISK DASHBOARD
(06/10/2022) EC – EBA risk dashboard decline slightly
The European Banking Authority (EBA) has published its quarterly Risk Dashboard covering the main risks and vulnerabilities in the EU banking sector. Between the most relevant figures, the average CET1 fully loaded ratio remained unchanged at 15%. Overall, banks reported robust liquidity ratios with the average liquidity coverage ratio (LCR) reaching 164.9% and the net stable funding ratio (NSFR) standing at 126.9%Furthermore, European banks’ return on equity (RoE) stood at 7.9% (6.7% in Q1 2022).
EU TAXONOMY
(06/10/2022) EC – Commission Notice on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of eligible economic activities and assets
The European Commission (EC) has published a frequently asked questions document which seeks to clarify the content of the delegated act on disclosure of information under Article 8 of the EU Taxonomy Regulation in order to support its application by assisting financial and non-financial undertakings in applying the relevant legal provisions. The document only clarifies provisions already contained in existing legislation and does not introduce additional requirements for the operators concerned and the competent authorities.
CAPITAL BUFFERS
(05/10/2022) BCBS – Buffer usability and cyclicality in the Basel framework / Newsletter on positive cycle-neutral countercyclical capital buffer rates
The Basel Committee on Banking Supervision (BCBS) has published a second evaluation report assessing the impact of the implemented Basel reforms regarding buffers usability and cyclicality. The report found some indications of a positive relationship between lending and the capital headroom of banks. Given the evaluation findings, the longer-term impacts of the pandemic, ongoing geopolitical events and the potential for new risks to emerge, the Committee wishes to stress the importance of the prudent build-up and use of buffers at banks to smooth the impact of internal and external shocks. To facilitate this, some jurisdictions have chosen to implement positive cycle-neutral countercyclical capital buffer (CCyB) rates.
SOLO-REGULATED FIRMS
(03/10/2022) FCA – CP22/19: Creation of a baseline financial resilience regulatory return
The Financial Conduct Authority (FCA) has published a consultation paper (CP) in order to make some changes to the data collection for solo-regulated firms. The data collected give the FCA a baseline set of financial resilience information and the changes proposed would move this data collection onto RegData (platform on regulatory data), with the aim of reducing the administrative and financial burden and in order to increase the quality and consistency of financial resilience data. Comments to this document can be submitted before 2 December 2022.
CENTRAL CREDIT REGISTRY
(03/10/2022) BdE – Proyecto de Circular del Banco de España, por la que se modifica la Circular 1/2013, de 24 de mayo, del Banco de España, sobre la Central de Información de Riesgos
The Banco de España (BdE) has published the draft Circular amending the Circular on the Central Credit Register to adapt it to the changes introduced by Order EDT 600/2022. This Circular does not modify the content of the Order, but it does modify the dates on which it will enter into force. Thus, January 2023 is the date on which institutions must individually report the data of all holders, including those of their transactions, whose cumulative risk at the reporting institution is equal to or greater than 3,000 euros, and January 2027 is the date from which institutions must individually report the data of all holders, including those of their transactions, whose cumulative risk at the reporting institution is equal to or greater than 1,000 euros.
DEBIT CARD TRANSACTIONS
(03/10/2022) FED – Federal Reserve Board finalizes updates to the Board’s rule concerning debit card transactions
The Federal Reserve Board (FED) has finalized updates to rule concerning debit card transactions. The final rule underscores that debit card issuers should enable at least two unaffiliated networks to process debit card transactions and it aims to encourage competition between networks and incentivize them to improve their fraud-prevention capabilities. This final rule will be effective on 1 July 2023.
EBA’S REPORTING FRAMEWORK
(03/10/2022) EBA – EBA releases the technical package for phase 3 of its 3.2 reporting framework
The European Banking Authority (EBA) has published the technical package for phase 3 of version 3.2 of its reporting framework. The technical package supports the implementation of the updated reporting framework by providing standard specifications and includes the validation rules, the Data Point Model (DPM) and the XBRL taxonomies for version 3.2. In particular, COREP, Asset Encumbrance, G-SII, and Additional liquidity monitoring metrics (ALMM) is delayed to June 2023 with no content modifications. And as a novelty, there are new and amended reporting requirements for investment firms and credit institutions.
NON-EU ENTITIES
(03/10/2022) EBA – EBA assesses the market share of non-EU entities in the EU banking system and the dependency of EU banks on funding in foreign currencies
The European Banking Authority (EBA) has published a Report on the reliance of the EU financial sector on counterparties, operators, and financing originating from outside the Single Market. As of June 2021, 360 banks controlled by non-EU entities were operating in the EU representing 12% of the Union’s total banking assets. At the same time, EU banks had, on average, 19% of their total funding denominated in significant foreign currencies. These findings reflect the high degree of openness of the EU economy within the global financial system. While raising funding from non-EU sources brings opportunities, it may create vulnerabilities in some areas. Against this background, matching foreign currency assets with liabilities denominated in the same currency is generally considered prudent risk management.
RESOLUTION PLANS
(30/09/2022) FDIC/FRB – Agencies announce forthcoming resolution plan guidance for large banks and deliver feedback on resolution plan of Trust Financial Corporation
The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board (FRB) jointly announced they anticipate issuing guidance to help certain large banks further develop their resolution plans. The guidance from the agencies would apply to Category II and Category III banking organizations—generally those with more than $250 billion in total assets but that are not global systemically important banks—and which have not already received guidance. Larger and more complex banks are already subject to guidance from the agencies. The agencies will seek and consider public comment on the guidance before it is finalized.
SFDR
(30/09/2022) ESAs – ESAs propose disclosures for fossil gas and nuclear energy investments
The three European Supervisory Authorities (EBA, EIOPA and ESMA) have delivered to the European Commission (EC) their Final Report with draft Regulatory Technical Standards (RTS) regarding the disclosure of financial products’ exposure to investments in fossil gas and nuclear energy activities under the Sustainable Finance Disclosure Regulation (SFDR). In the amending final draft RTS, the ESAs propose to add specific disclosures to provide transparency about investments in taxonomy-aligned gas and nuclear economic activities.
OTHER TECHNOLOGY PUBLICATIONS OF INTEREST
CYBERSECURITY
(06/10/2022) FFIEC – Cybersecurity: 2022 Cybersecurity Resource Guide for Financial Institutions
The Federal Financial Institutions Examination Council (FFIEC) has issued an update to the cybersecurity resource guide for financial institutions. The guide lists voluntary programs and actionable initiatives that are designed for or are available to help financial institutions meet their security control objectives and prepare to respond to cyber incidents.