Response to consultation for institutions and resolution authorities on improving resolvability
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In our perspective, there is not a direct mapping between the information used for the scope of establishing certain liabilities excluded from bail-in and the operational continuity as part of the minimum requirements relating to Structure and operations as per article 27 DR 2016/1075 as the latter (defined as "relevant services") may contain only certain arrangements identified for resolution reporting purposes.
From our experience there is still a regulatory gap between legislation in the resolution planning area and legislation applicable in other areas (financial authorities and FMIs) involved in different stages of resolution timeline, with this mismatch being able to create the premises for the resolution "weekend" process to take much longer than estimated by the authority mainly as the write down and conversion of eligible instruments are currently not covered within the rules of operation of the intermediaries involved (securities depository, financial supervisory authority). We see this gap to be closed with efforts both from the resolution authorities and banks.
Q1. Do you have any comments on the scope of application of these guidelines?
-Q2. Do you have any comments with the proposed requirements to improve resolvability with regard to operational continuity in resolution?
With regard to point 4.1.1 Operational continuity, specifically operational arrangements to ensure the continuity of services supporting critical functions (designated as “critical services”) and core business lines needed for the effective execution of the resolution strategy and any consequent restructuring (designated as “essential services”) – together “relevant services”, does the authority see a direct linkage between these essential services and Liabilities critical to operational daily functioning defined in Article 44 (2) point g (ii) of Directive 2014/59/EU as Liabilities to a commercial or trade creditor arising from the provision to the institution or entity referred to in point (b), (c) or (d) of Article 1 (1) of Directive 2014/59/EU of goods or services that are critical to the daily functioning of its operations, including IT services, utilities and the rental, servicing and upkeep of premises?In our perspective, there is not a direct mapping between the information used for the scope of establishing certain liabilities excluded from bail-in and the operational continuity as part of the minimum requirements relating to Structure and operations as per article 27 DR 2016/1075 as the latter (defined as "relevant services") may contain only certain arrangements identified for resolution reporting purposes.
Q3. Do you have any comments on the proposed requirements to improve resolvability with regard to access to FMIs in case of resolution?
-Q4. Do you have any comments on the proposed requirements to improve resolvability with regard to management information systems and information system testing?
-Q5. Do you have any comments on the proposed requirements to improve resolvability with regard to funding and liquidity in resolution?
-Q6. Do you have any comments on the proposed requirements to improve resolution implementation?
With regard to point 131 included in Annex 1 where the resolution “weekend” is defined as the phase (preferably taking place when markets are closed, as the name suggests) starting with the determination that an entity is failing or likely to fail and encompassing all internal processes needed for the adoption of the resolution scheme by the relevant competent authority, which is the maximum number of days estimated by the authority for this stage to take place?From our experience there is still a regulatory gap between legislation in the resolution planning area and legislation applicable in other areas (financial authorities and FMIs) involved in different stages of resolution timeline, with this mismatch being able to create the premises for the resolution "weekend" process to take much longer than estimated by the authority mainly as the write down and conversion of eligible instruments are currently not covered within the rules of operation of the intermediaries involved (securities depository, financial supervisory authority). We see this gap to be closed with efforts both from the resolution authorities and banks.