EU & UK Reg Round Up: 18/06/2024

European Banking Authority

EBA issues Opinion on adjusting the risk weight for commercial immovable properties - 7 June 2024

The Norwegian Ministry of Finance notified the EBA about their intention to amend the risk weights for exposures secured by mortgages on commercial immovable property. The EBA acknowledges the concerns raised by the Ministry of Finance of Norway regarding the financial stability risks arising from commercial immovable property, specifically agricultural immovable properties, and related collateralised loans. The agriculture, forestries, and fisheries (excl. fish farming) is among the sectors with the lowest historical losses, so the risk weight of 100% may not be needed.

EBA consults on new framework for the operational risk loss - 6 June 2024

EBA have launched a consultation on three sets of RTS aiming to standardise the collection and the recording of operational risk losses. The draft RTS provides a list of operational risk-event types and the attributes that institutions must use when recording operational risk loss events. They also provide a temporary waiver from calculating the annual operational risk loss due to the unduly burdensome some institutions face in certain circumstances. Lastly, the RTS will provide the risk taxonomy to be used when incorporating the loss data set of merged entities or activities.

EBA publishes its plan for the implementation of DPM 2.0 - 5 June 2024

The EBA published its plan for the implementation of the DPM 2.0 related to its 4.0 framework release, with the main objective of moving towards a more integrated regulatory reporting. DPM 2.0 will bring several benefits: enhanced integration with more granular reporting, improved versioning of data definitions, and better definition of data relationships. To help allow the transition to go smoothly, the transitional period for DPM 2.0 will run until December 2025.

EBA and ESMA invite comments on the review of the investment firms prudential framework - 3 June 2024

The EBA and ESMA published today a discussion paper on the potential review of the investment firms’ prudential framework. This discussion paper aims to gather information from early stakeholders to help inform the response to the European Commission’s call for advice (CfA). The paper also discusses the impact of the adoption of the new EU banking package (CRD VI and CRR3), and primarily concerning the trading book, the Fundamental Review of the Trading Book (FRTB) and Credit Valuation Adjustments (CVA). Lastly, the discussion paper also covers aspects related to the remuneration in relation to investment firms and includes a short section on the treatment of firms currently non-prudentially regulated and active in the commodity markets.

European Securities and Markets Authority

ESAs call for enhanced supervision and improved market practices on sustainability related claims - 7 June 2024

The European Supervisory Authorities (ESAs) are sounding the alarm on greenwashing, where sustainability claims don't match reality, potentially misleading consumers and investors As institutions are expanding their offering of sustainable financial products, addressing greenwashing is key to provide confidence in the market and maintain trust of investors and consumers. ESMA indicates priority actions to enable supervisors to better address this risk, namely NCAs are expected to deepen their critical scrutiny of sustainability-related claims, ESMA will prompt Common Supervisory Actions where needed, and the European Commission shall reinforce NCA’s and ESMA’s mandates in certain areas.

ESAs publish templates for voluntary dry run exercise to support the DORA implementation - 31 May 2024

ESAs have released essential documents and tools to help aid participating institutions in partaking in the dry run exercise concerning the reporting of registers of information under the Digital Operation Resilience Act (DORA). These materials are designed to assist entities in understanding supervisory expectations for reporting such registers from 2025 onwards, and are accessible on the dry run exercise webpage.

ESAs and ENISA formalise cooperation to enhance cybersecurity in financial sector - 5 June 2024

The European Supervisory Authorities (EBA, EIOPA, and ESMA) have signed a multilateral Memorandum of Understanding (MoU) with the European Union Agency for Cybersecurity (ENISA). This MoU formalizes their cooperation and information exchange to bolster cybersecurity measures, as mandated by the NIS2 Directive and the Digital Operational Resilience Act (DORA). The agreement outlines a framework for collaboration on policy implementation, incident reporting, and oversight of critical ICT third-party providers. It aims to promote regulatory convergence, cross-sectoral learning, and capacity building. 

Bank of England

Banknotes featuring King Charles III to enter circulation - 5 June 2024

The Bank of England will issue banknotes with the portrait of King Charles III for the first time on June 5, 2024. These new notes will include the existing designs for all denominations (£5, £10, £20, and £50), with the only change being the portrait of the King. The current polymer banknotes featuring Queen Elizabeth II will remain legal tender and will co-circulate with the new ones. The King Charles III notes will be introduced gradually, primarily to replace worn notes and meet any increased demand, following the Royal Household's guidelines to minimize environmental and financial impacts.

Deutsche Bundesbank

Survey Reveals German Public's Mixed Awareness and Openness Toward Digital Euro - 4 June 2024

A recent survey by forsa, commissioned by the Deutsche Bundesbank, reveals that while many Germans are open to the idea of a digital euro, significant gaps in public knowledge remain. Conducted in April 2024 with 2,012 participants, the survey found that 50% of respondents could imagine using a digital euro as an additional payment option, even among those previously unaware of it. However, only 41% had heard of the digital euro. Privacy concerns were paramount, with over 75% of respondents considering privacy protection important, and 59% valuing an offline version for enhanced privacy.