Consultation on the Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance under PSD2

The European Banking Authority (EBA) launched today a consultation on its draft Guidelines on the criteria Competent Authorities should consider when stipulating the minimum monetary amount of the professional indemnity insurance (PII) or comparable guarantee for payment initiation and account information service providers under the revised Payment Service Directive (PSD2).
The consultation runs until 30 November 2016.
 
The PSD2 recognises new types of payment services that have emerged in the area of internet payments, such as payment initiation (PIS) and account information (AIS).  
 
The draft Guidelines set out criteria, indicators, calculation methods and a formula Competent Authorities should use when granting authorisation to undertakings applying for the provision of (PIS) and/or approving the registration of undertakings applying for the provision of AIS. 

Consultation process

 
Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the website.
 
All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 30 November 2016 and that no attachments can be submitted.

Legal basis and background

 
These Guidelines have been drafted in accordance with Article 5(4) of Directive (EU) 2015/2366 on payment services in the internal market (PSD2), which mandates the EBA to issue guidelines, addressed to Competent Authorities, on the criteria they should follow when stipulating the minimum monetary amount of the PII or comparable guarantee for undertakings that apply for provision of PIS or AIS. 
 
The draft Guidelines are one of the 11 mandates conferred onto the EBA by the PSD2, which entered into force on 12 January 2016 and which will apply as of 13 January 2018. 
 
The PSD2 brings into the scope of EU law two new types of services: PIS and AIS. PIS establish a software bridge between the website of the merchant and the online banking platform of the payer’s account servicing payment service provider, in order to initiate internet payments on the basis of a credit transfer. 
 
AIS, in turn, provide the payment service user with aggregated online information on one or more payment accounts held with one or more other payment service providers and accessed via online interfaces of the account servicing payment service provider. The payment service user is thus able to have an overall view of its financial situation across all of his/her accounts. 

Consultation on RTS specifying the requirements on strong customer authentication and common and secure communication under PSD2

The European Banking Authority (EBA) published today a Consultation Paper on draft technical standards on strong customer authentication and common and secure communication under the revised Payment Services Directive (PSD2). These technical standards will ensure appropriate levels of security, while at the same time maintaining fair competition between all payment service providers and allowing for the development of user-friendly, accessible and innovative means of payment.
 
Directive (EU) 2015/2366 on payment services in the internal market (PSD2) entered into force in the European Union on 12 January 2016 and will apply as of 13 January 2018. The PSD2 has conferred 11 mandates on the EBA, one of which relates to the development, in close cooperation with the European Central Bank (ECB), of draft Regulatory Technical Standards (RTS) on strong customer authentication and secure and common communications (Article 98 of the PSD2).
 
In order to receive early input into this work, the EBA published a Discussion Paper in December 2015, which received 118 responses. The resulting RTS set out a harmonised framework aimed at ensuring an appropriate level of security for consumers, as well as Payment Service Providers (PSP). The RTS propose the adoption of effective and risk-based requirements, which will secure and maintain fair competition among all PSPs, and allow for the development of user-friendly, accessible and innovative means of payment. 
 
The requirements cover strengthened customer authentication, enhanced protection of user’s security credentials and common and secure open standards for communications between the various types of providers in the payments sector.

Consultation process

Responses to this Consultation Paper can be sent to the EBA by clicking on the "send your comments" button on the website. Due to the large number of responses to be expected, and because of the limited time available for the EBA to review the responses, the EBA is unfortunately not in a position to accept submissions of documents or electronic files.
All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 12 October 2016.
A public hearing will take place at the EBA premises on Friday 23 September 2016, from 14.00 to 17.00 UK time. In case the number of attendees exceeds capacity, the EBA may impose a restriction on the number of individuals that can attend from each organisation. Individuals are therefore requested to await confirmation of their registration, which the EBA expects to send two weeks prior to the hearing.

Legal basis

The EBA has developed these RTS in accordance with Article 98 of Directive (EU) 2015/2366 on payment services in the internal market (PSD2), which requires the EBA to issue RTS ensuring an appropriate level of security for payment service users and payment service providers.
 

Consultation on Guidelines on Connected Clients

The European Banking Authority (EBA) launched today a consultation on its draft Guidelines on the treatment of connected clients for large exposures. These draft Guidelines review and update the ‘Guidelines on the implementation of the revised large exposures regime’ issued by the Committee of European Banking Supervisors (CEBS) on 11 December 2009. Their focus is exclusively on the issue of connected clients as defined in the Capital Requirements Regulation (CRR) and they reflect the developments in the area of shadow banking and large exposures both at EU and international level. The consultation runs until 26 October 2016.
 
In these draft Guidelines, the EBA clarifies that institutions in the EU should make use of their clients’ consolidated financial statements in order to assess connections based on control. The draft guidelines also provide a non-exhaustive list of indicators of control that should be used by institutions for assessing those clients to which EU accounting rules do not apply (e.g. natural persons, central governments, and clients which prepare consolidated financial statements in accordance with the accounting rules of a third country).
Guidance is also provided on the use of an alternative approach for assessing the existence of groups of connected clients of entities directly controlled by or directly interconnected with central governments.
Regarding the assessment of economic dependency, the draft guidelines develop further the non-exhaustive list of situations of economic dependency which was included in the 2009 CEBS Guidelines and reinforce this definition to make clear that if the failure of a client leads to ‘repayment difficulties’ of another client, an institution is to consider these clients as connected.
Situations where control and economic dependency are interlinked are also clarified, as they can lead to the existence of one group of connected clients, as opposed to two separate groups of connected clients. The overarching indicator is the existence of a ‘single risk’ between two or more clients (‘domino effect’), regardless of the type of connection the single risk is based upon. The chain of contagion leading to possible default of all entities concerned is the relevant factor for the grouping.
 

Consultation process

‎Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 26 October 2016.
 
A public hearing will take place at the EBA premises on 5 September 2016 from 2pm to 4pm UK time.

Legal basis and background

In light of the new provisions laid down in the CRR as well as in the- EBA technical standards and guidelines in the area of large exposures, the EBA decided to review the 2009 CEBS ‘Guidelines on the implementation of the revised large exposures regime’ and to focus exclusively on the issue of connected clients under Article 4(1)(39) of the CRR. In addition, these Guidelines take into account the developments in the area of shadow banking and large exposures at both EU and international level.
 
 

Consultation on Report on the appropriate target level basis for resolution financing arrangements under BRRD

The European Banking Authority (EBA) launched a consultation on its report on the reference point for the target level of national resolution financing arrangements. The appropriateness of the basis for the target level is assessed on the basis of a number of qualitative criteria and historical data. The draft report recommends changing the basis from covered deposits to a total liabilities based measure. The consultation will run until 2 September 2016.
 
The Bank Recovery and Resolution Directive (BRRD) requires the EBA to submit to the European Commission a report with recommendations on the appropriate reference point for setting the target level for resolution financing arrangements, and in particular, whether ‘total liabilities’ constitute a more appropriate basis than ‘covered deposits’.
 
Based on preliminary analysis and results, the EBA recommends in its report to change the base for the target level of the resolution financing arrangements to one of the options: ‘total liabilities (excluding own funds) less covered deposits’ or ‘total liabilities (including own funds)’ or ‘total liabilities (excluding own funds). The key arguments in favour of these options are their consistency with the regulatory framework and contributions methodology, and simplicity and transparency. 
 
The EBA also believes it is crucial for the target level basis (based on total liabilities - with or without further exclusions) to capture all the institutions in the scope of the BRRD. In the case of total liabilities (excluding own funds) less covered deposits, the target level basis should accurately reflect the potential call on the resolution financing arrangements in case of a given failure.
 
The BRRD requires Member States to create industry funded resolution financing arrangements (informally called ‘resolution funds’). The resolution financing arrangements can be used to support the orderly resolution of an institution under the rules of the BRRD, once losses have been absorbed by creditors and shareholders. The BRRD requires a certain minimum target level for the resolution financing arrangement to be funded from the ex-ante contributions within ten years, by 31 December 2024. Currently, the target level is defined as 1% of the covered deposits in the Member State concerned. The overall level of the resolution financing arrangement is assumed to be constant irrespective of a change to the basis for calculating the target level. Given this assumption, the report further recommends that if the European Commission proposes to change the target level basis, it should also consider an appropriate ratio depending on that target level basis.

Consultation process

‎Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 2 September 2016.
 
A public hearing will take place at the EBA premises on 16 August 2016 from 2pm to 4pm UK time.

Next steps

The final report, including public feedback, will then be submitted to the European Commission for it to assess the recommendations and decide whether to submit a legislative proposal on the basis for the target level for resolution financing arrangements by 31 December 2016.
 

Consultation on Guidelines on disclosure requirements under Part Eight of Regulation (EU)

The European Banking Authority (EBA) launched today a consultation on a set of Guidelines on regulatory disclosure requirements following an update of the Pillar 3 requirements by the Basel Committee in January 2015. These Guidelines are part of the EBA’s work to improve and enhance the consistency and comparability of institutions’ disclosures and aim to ensure market discipline. The consultation runs until 29 September 2016.

The revised Pillar 3 framework, which applies as of 31 December 2016, provides for common format and harmonised frequencies for the disclosure of existing requirements as well as adds certain new requirements.

The incorporation of the revised Pillar 3 into the CRR would requires an update of the disclosure requirements laid down in the Capital Requirements Regulation (CRR), which will only take place as part of a comprehensive review process of the regulation. In the meantime, EU banks will face market pressure to provide disclosures in line with the revised Pillar 3 when it becomes applicable.

The aim of these Guidelines is, therefore, to provide guidance to institutions to enable them to comply with the CRR provisions while implementing the revised Basel Pillar 3 requirements. The Guidelines apply to Globally and Other Systemically Important Institutions (G-SII and O-SII) and do not waive the requirements for these and other institutions to comply with the other CRR disclosure requirements for which the Guidelines offer no guidance.

The Guidelines will apply for the year-end 2017 disclosures. However, G-SII are recommended to implement a limited subset of disclosures relating to risk-weighted assets (RWA) and capital requirements as soon as year-end 2016 so as to provide users with information suitable for comparison with international peers.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 29 September 2016.

A public hearing will take place at the EBA premises on 6 September 2016 from 10.00am to 12.00pm UK time.

Legal basis

The EBA has developed these Guidelines on its own initiative according to Article 16 of its founding Regulation to allow institutions to implement the revised Pillar 3 framework in a way that is consistent with the existing disclosure requirements in the CRR.

Adopted and published on the Official Journal

Decision on specifying the benchmark rate under the Mortgage Credit Directive

The Mortgage Credit Directive (MCD) requires creditors to create two illustrative examples in the European Standardised Information Sheet (ESIS) for variable rate mortgages, including a warning that the variability could affect the actual level of the Annual Percentage Rate of Charge (APRC). The MCD provides that in certain circumstances the two illustrative examples are to be calculated by creditors using a benchmark rate specified by the EBA. In this Consultation Paper, the EBA sets out its proposal for calculating the EBA benchmark rate to be used on those circumstances. To that end, the EBA has developed a formula to calculate the rate and would now like to hear the views from consumer and industry stakeholders on the approach it is proposing.

Documents

Links

Consultation on separation of payment card schemes and processing entities under the IFR

The European Banking Authority (EBA) launched today a consultation on its draft technical standards on the separation of payment card schemes and processing entities under Article 7(6) of the Interchange Fee Regulation (IFR). The technical standards introduce specific requirements related to the independence of payment card schemes and processing entities. The consultation runs until 8 March 2016.

The EBA draft RTS requires payment card schemes and processing entities to have accounting processes in place to produce annual audited information related to separated balance sheets, and profit & loss accounts; to separate workspaces; and to ensure the independence of senior management, management bodies and staff. It also sets out requirements related to the use of shared services and a shared information management system; the treatment of sensitive information; a code of conduct; and the separation of annual operating plans.

The IFR aims at facilitating the creation of a single market for card payments across the European Union, by ensuring a level playing field that will facilitate greater competition. In order to contribute to this objective, and to ensure effective and sustainable competition among processing services providers, the IFR confers on the EBA the mandate to develop regulatory technical standards (RTS) to separate payment card schemes and processing entities in terms of accounting, organisation and decision making process.

The CP also provides some clarity to market participants as regards supervisory expectations during the period between the application date of Article 7 IFR on 8 June 2016 and the possibly later application date of the RTS.

Next steps

Responses to this Consultation Paper can be sent to the EBA until 8 March 2016, by clicking on the "send your comments" button on the website. The EBA will assess the responses received and use them as input for the development of the final draft RTS, which it will publish in Q2 of 2016.

Legal basis

The Interchange Fees for Card-Based Payment Transactions Regulation (EU) 2015/751 (IFR) entered into force in the European Union on 8 June 2015 and applies from 8 June 2016.

Consultation on RTS on criteria for a preferential treatment in cross-border intragroup financial support under LCR

The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) related to liquidity requirements for cross-border intragroup financial support under stress conditions. The purpose of these RTS is to specify the additional objective criteria listed in the Delegated Act (Commission Delegated Regulation EU No 2015/61 of 10 October 2014), for the application of a preferential treatment in the calculation of the liquidity coverage requirement (LCR) for cross-border intragroup liquidity flows. The consultation runs until 13 January 2016.
 
The proposed draft RTS set out in more detail the additional criteria to those envisaged at domestic level that institutions within a group or within an institutional protection scheme (IPS) need to meet in order to be able to apply higher inflows and/or lower outflows on liquidity and credit facilities on cross-border transactions. These criteria, as already specified in the LCR Delegated Act, aim at ensuring the effectiveness of the liquidity support.
 
In particular, these draft RTS specify how the liquidity provider and receiver shall present a low liquidity risk profile. The liquidity provider shall monitor and oversee the liquidity position of the receiver at least on a daily basis and its contingency funding plan shall ensure through this monitoring that the support to the receiver is guaranteed even in times of stress.  In addition, the draft standards detail the necessary legally binding agreements and commitments between group entities regarding the credit or liquidity line. 

Consultation process

Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page of the consultation. Please note that the deadline for the submission of comments is 13 January 2016.
 
All contributions received will be published following the close of the consultation, unless requested otherwise.
 
A public hearing for the consultation will take place at the EBA premises on 18 December 2015 from 10:00 to 12:00 UK time.

Legal basis

The proposed draft RTS have been developed on the basis of Regulation 575/2013 (Capital Requirements Regulation – CRR) of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms. These draft RTS are also based on the EBA’s report on the LCR calibration published in December 2013.
 
The original CRR deadline for the submission of these draft RTS to the European Commission, 1 January 2015, was delayed as the LCR Delegated Act listing the criteria to be developed by the RTS was finally published in the Official Journal only on 17 January 2015. The launch of the EBA’s consultation was further postponed to November 2015, due to some legal formalities to be completed with the European Commission for the final development of the draft RTS. 
 

Consultation on Guidelines on the treatment of CVA risk under SREP

The European Banking Authority (EBA) launched today a public consultation on Guidelines on the treatment of credit value adjustment (CVA) risk under the supervisory review and evaluation process (SREP), as well as a data collection exercise for the Quantitative Impact Study (QIS) to calibrate the threshold values. These Guidelines are based on a policy recommendation contained in the EBA’s CVA report and aim to provide a common European approach to the assessment of CVA risk under SREP, including adequacy of capital to cover for this risk, and the determination of any potential  additional own funds requirements. The public consultation runs until 12 February 2016 and the data collection exercise should be completed on 28 January 2016. 
 
In particular, these draft Guidelines implement a policy recommendation of the CVA report and provide a common European approach that would allow competent authorities to: (1) determine the relevance and materiality of CVA risk for an institution, (2) assess any material CVA risk under SREP, (3) assess the adequacy of own funds to cover material CVA risk, and (4) determine additional own funds requirements, where the risk is not adequately covered by the minimum own funds requirements, in particular due to the exemptions in the EU legislative framework.
 
The common approach to the assessment of CVA risk under SREP is built around the re-inclusion of certain exempted transactions in the calculation of own funds requirements, as well as on the comparison of such hypothetical own funds requirements for CVA risk with actual minimum own funds requirements for CVA risk. By introducing a common approach to the assessment of material CVA risk, the draft Guidelines complement the EBA Guidelines on common procedures and methodologies for SREP.
 
As clearly stated in the CVA Report, the additional own funds requirements imposed following the SREP assessment of material CVA risk should not replicate in full or in substantive part the international standards that have not been implemented into EU legislation. 
 
In order to ensure appropriate calibration of the threshold values, the EBA is launching a data collection exercise for the related Quantitative Impact Study (QIS) in parallel with the public consultation. Relevant institutions will be contacted by their competent authorities and will be asked to provide data required in the accompanying template by 28 January 2016. In order to help banks fill in the template, instructions are also available on the website.
 
The draft Guidelines will be finalised following the completion of the public consultation and the accompanying QIS. The final Guidelines will be supplemented by the EBA recommendation issued pursuant to Article 16 of Regulation (EU) 1093/2010, which will provide the threshold values for the formulas provided in the draft Guidelines, which will apply together with the Guidelines.

Consultation process

Comments to these draft Guidelines can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 12 February 2016.
 
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will then take place at the EBA premises on 27 January 2016 from 10.00 to 13.00 UK time.

Legal basis

Article 456(2) of Regulation (EU) No 575/2013 mandates the EBA to monitor the own funds requirements for credit value adjustment risk. In the CVA Report published in February 2015, the EBA identified a number of possible improvements to the CVA framework that should be introduced at European level and should be taken into account in the revision of the Basel CVA framework. Furthermore, the EBA committed to developing guidance addressed to competent authorities and institutions on how to treat CVA risk under the supervisory review and evaluation process (SREP) in a coordinated manner, as a short-term solution until the Basel and European CVA frameworks have been revised. 
 

Consultation on draft Guidelines on passport notifications for credit intermediaries under the Mortgage Credit Directive

The European Banking Authority (EBA) launched a consultation on the draft Guidelines for passport notifications for mortgage credit intermediaries under the Mortgage Credit Directive (MCD). The Guidelines will ensure that information about credit intermediaries that carry out business in one or more Member States is exchanged consistently between the national authorities of the home and host Member States respectively. This public consultation runs until 4 July 2015.

The Guidelines follow on from the Discussion Paper that the EBA had issued in December 2014 to gather stakeholders' views on a preliminary proposal for formalising passport notifications for mortgage credit intermediaries. In line with the MCD, passport notifications will need to be exchanged between national authorities competent for the registration and/or supervision of mortgage credit intermediaries across the EU Member States. This will ensure that information on the provision of services and the establishment of branches, as well as on the transmission of notifications, the registrations, and the notifications of changes is shared consistently across the EU.

Respondents to the 2014 Discussion Paper broadly supported the draft requirements. The feedback received from respondents has been taken into account in the draft Guidelines for passport notifications that are being launched for public consultation today. These also include template notification forms for exercising the freedom to provide services and freedom of establishment, as foreseen in Article 32 of the MCD.

The EBA expects to be able to deliver the final Guidelines in Q3 2015. They would apply from 21 March 2016, the transposition date of the MCD.

Consultation process

Comments to this Consultation Paper can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 4 July 2015.

Legal basis

The Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (Mortgage Credit Directive - MCD) was published in the Official Journal of the Commission on 28 February 2014, with a transposition date of 21 March 2016.