EU & UK Reg Round Up: 30/10/2024
European Banking Authority
EBA publishes draft technical package for reporting framework 4.0 - 23 October 2024
The EBA published a draft technical package for version 4.0 of its reporting framework, marking an early step towards the final release in December 2024. This draft, which applies to reporting obligations starting in the first half of 2025, is designed to ease the transition to the new data point model (DPM) 2.0 and the enhanced semantic glossary. Following the EBA's June 2024 roadmap for implementing DPM 2.0, the version 4.0 package introduces standard specifications, including validation rules, the DPM, and XBRL taxonomies. These support key reporting requirements for: issuers of asset-referenced tokens (ARTs) and electronic money tokens (EMTs), adjustments to the supervisory reporting framework (COREP templates) per CRR3/CRDVI changes under the EU Banking Package, and minor updates to reporting obligations for class 2 investment firms. The draft package also includes a dual-format data dictionary in both DPM 1.0 and DPM 2.0 and updates to the DPM Query Tool for compatibility with this release.
EBA sets framework for supervising significant asset-referenced and e-money tokens under MiCAR - 22 October 2024
The EBA issued a Decision today outlining procedures for assessing the significance of asset-referenced tokens (ARTs) and e-money tokens (EMTs) and for transferring supervisory responsibilities as required under the Markets in Crypto Assets Regulation (MiCAR). This Decision introduces a harmonized reporting schedule for national authorities, clarifies data requirements for ART and EMT issuers, and establishes steps for setting up supervisory colleges for significant ARTs and EMTs. It also details a structured consultation process involving national authorities, the European Central Bank, and relevant central banks when the EBA issues its significance decisions. Additionally, the EBA provides templates to facilitate national authority notifications and feedback on decisions, aiming to streamline supervisory transitions under MiCAR’s framework across the EU.
ESAs raise concerns over EC’s rejection of technical standards on DORA registers - 15 October 2024
The European Supervisory Authorities (ESAs) – EBA, EIOPA, and ESMA – issued an Opinion today on the European Commission’s (EC) rejection of their draft Implementing Technical Standards (ITS) under the Digital Operational Resilience Act (DORA). The EC suggested adding the European Unique Identifier (EUID) as an alternative to the Legal Entity Identifier (LEI) for identifying EU-registered ICT third-party service providers. The ESAs expressed concerns that this addition could increase complexity and implementation challenges, impacting both the quality of data and the efficient designation of critical ICT third-party providers (CTPPs). While acknowledging the EUID's availability, the ESAs argued that its inclusion could burden financial entities with unforeseen maintenance and verification challenges, potentially complicating DORA’s application. They suggest further ITS adjustments if the EC proceeds with the EUID inclusion, including recommending a preference for LEI when both identifiers are available, to maintain consistency.
EBA launches consultation on centralised Pillar 3 Data hub - 11 October 2024
The EBA has opened a consultation on establishing a centralised Pillar 3 data hub, a project outlined in the Banking Package under the Capital Requirements Regulation (CRR3) and Directive (CRD6). This data hub will consolidate prudential disclosures from EU institutions, enabling users to download and view information on the EBA website in a standardised format. The consultation, which is open until November 11, invites feedback on draft Implementing Technical Standards (ITS) that detail the IT solutions, data formats, and validation processes required for these disclosures. The proposed IT solutions build on the EBA’s existing infrastructure, ensuring consistency and accessibility for users.
European Securities and Markets Authority
ESMA report on enhancing IFRS 17 disclosures in financial statements - 25 October 2024
The ESMA released a report titled "From Black Box to Open Book?" aimed at guiding issuers in preparing their annual financial statements. The report reviews ESMA’s and National Competent Authorities’ (NCAs) observations on the initial application of IFRS 17, focusing on its implementation by European insurance companies in their 2023 financial statements.
ESMA launches survey on alternative Legal Entity Identifiers - 18 October 2024
The ESMA has published a survey to assess the potential impacts of including alternative identifiers to the Legal Entity Identifier (LEI) in reporting and record-keeping requirements. This initiative follows recent discussions on alternative identifiers and aligns with the ESAs' opinion on the topic. The survey seeks feedback from financial market participants, including those under reporting regimes, Crypto Asset Service Providers (CASPs) subject to Markets in Crypto Assets Regulation (MiCA), and financial entities under the Digital Operational Resilience Act (DORA). ESMA aims to use this input to evaluate the feasibility and implications of integrating alternative identifiers in existing or future frameworks.
ESMA updates guidance on transparency and market structure - 16 October 2024
The ESMA has released updates to its Q&As on transparency and market structure, the Manual on Post-Trade Transparency, and the Opinion on assessing pre-trade waivers in light of the MiFIR Review Transitional Provisions. These updates provide practical guidance reflecting the changes introduced since the March statement regarding the transition for applying the MiFID II/MiFIR Review.
ESMA responds to MiCA regulatory technical standards proposal - 16 October 2024
The ESMA has addressed the European Commission's proposal to amend the Markets in Crypto-Assets Regulation (MiCA) Regulatory Technical Standards (RTS). While acknowledging the legal limitations mentioned by the Commission, ESMA emphasizes the significance of the original policy objectives. In its Opinion, ESMA notes amendments to two RTS concerning the information required for notifications from financial entities intending to provide crypto-asset services and the details necessary for authorizing crypto-asset service providers (CASPs). The overarching goal of these RTS is to establish a robust assessment process for CASP applicants and entities, enhancing the resilience of the crypto-assets market and improving investor protection.
ESMA, European Commission, and ECB announce next steps for T+1 transition - 15 October 2024
The ESMA alongside the European Commission and the European Central Bank (ECB), has outlined the next steps to facilitate the transition to a T+1 settlement cycle. In anticipation of this shift, ESMA plans to submit its final report on shortening the settlement cycle to the Council and the European Parliament in the coming weeks.
ESMA publishes first consolidated report on sanctions imposed by NCAs in 2023 - 11 October 2024
The ESMA has released its inaugural consolidated report detailing sanctions and measures enacted by National Competent Authorities (NCAs) across EU Member States in 2023. The report reveals that over 970 administrative sanctions were imposed in the financial sector, accumulating more than €71 million in fines. The majority of these fines were attributed to violations of the Market Abuse Regulation (MAR) and the Markets in Financial Instruments Directive II (MiFID II). While the report underscores the significant use of sanctions, ESMA notes that these are just one element of the supervisory toolkit employed by NCAs. The effectiveness of supervision cannot be solely evaluated by the volume or financial impact of sanctions. Additionally, the report does not encompass all national enforcement activities, such as informal actions and criminal sanctions.
Bank of England
Bank of England confirms permanent weekly indexed long-term repo operations - 16 October 2024
The Bank of England has announced the permanent continuation of Indexed Long-Term Repo (ILTR) operations on a weekly basis, effective from the week commencing 4 November 2024. This decision follows the Bank's temporary weekly offerings since March 2019, which replaced the previous monthly operations. The ILTR provides reserves for a six-month term against a broad range of eligible collateral from the Sterling Monetary Framework (SMF). This shift to a permanent weekly operation aligns with the Bank’s transition to a repo-led, demand-driven operational framework, which is essential for maintaining monetary and financial stability. With this update, the maturity structure of ILTR operations will change, ensuring that all drawings will now mature exactly six months from the date of drawing, rather than having a single maturity date for all operations in each month.