With regard to the definition of payment activity, it is unclear as to whether this definition includes what capital has yet to be settled. It should also be noted that many institutions do not tend to keep payment data for this purpose, which could lead to potential problems in providing the data.
The definition for data collection has also now changed; it is no longer data used internally. It is unclear exactly what information is being requested here. We would ask the EBA to provide more information on what firms need to provide.
We are concerned that the indicators themselves place too much emphasis on size. As they focus on the quantitative aspect, they do not account for key aspects such as a firms risk governance, stress testing frameworks etc. As a result, these indicators will not be a true reflection of the potential impact the bank may have on the market.
By entirely focusing on quantitative components, the G-SII assessment omits key aspects of a firm’s Recovery and Resolution Plan, and therefore, does not accurately reflect the potential impact a G-SII may have on the financial system. It is very important that the efforts a bank makes to have a sound Recovery and Resolution Plan are incorporated into these assessments, as these will have a material mitigating influence on any future market impact.
The cross-jurisdictional activity indicators are designed to capture a bank’s global footprint, as measured by its activities outside its home jurisdiction. The idea being the greater the global reach of a bank, the more difficult it is to coordinate its resolution. We suggest that ‘domestic’ exposures and liabilities of a group’s subsidiaries in countries other than the EU home country of the group should also be defined as not cross-jurisdictional, ‘domestic’ being exposures and liabilities to local persons/entities in local currency. These are no more likely to give rise to cross-border resolution co-ordination difficulties than the currently exempted domestic exposures and liabilities in the EU home country of the group are. We therefore see no reasonable grounds for penalising the one while allowing the other.
We are satisfied that the timelines are adequate.
Yes, but we need further clarity on leverage exposures, as detailed above.