FRENCH BANKING FEDERATION

We agree with the proposed mechanism of notification as it ensures a level playing field. However, the timing of notification may not be appropriate because of market changes. The updating of the notification should not be done annually, but be at a shorter interval.

It should be noted that the calculation of the commitment fee according to the pricing formula envisaged by the EBA is potentially challenging from an operational point of view, especially when the assets kept to secure the credit lines are non-marketable assets. Depending on the hypothesis and the quality of the data retained for the analysis, the results of the fee valuation may differ significantly between the banks; which will not provide a level playing field. Therefore, we favour a fee that could be valued based on management data provided by the banks, but that would be identical for all institutions using the derogation B.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
Yes, we agree.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
Yes, we agree.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
For currencies not actively traded in global foreign exchange markets we find 10 years is a very long period, 5 years would be more appropriate.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
Yes, we agree.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
We agree that the use of waiver should not be advantageous; however we are worried that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate. These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. Moreover, depending on the hypothesis and the quality of the data retained for the analysis, the results of the commitment fee valuation may differ significantly between the banks; which is not participating to assure a level playing field.
We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.


If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
The use of waivers is already strictly framed since firstly the banks have to demonstrate they have made all the possible efforts to reduce their need for these waivers and moreover there are specific haircut and pricing conditions to offset any economic incentive to use these derogations. Consequently, there is no need to add another constraint such as this quantitative cap. If this cap is retained, the percentage of use of the derogations should also take into account a LCR target at 110% in order to be consistent with the methodology used to define the shortage percentage of liquid assets.

We have concerns on the CP39 “derogations for currencies with constraints on the availability of liquid assets”:
• The identification of these currencies is based on the Basel definition of the liquid assets (HQLA level1, level 2a and 2b) until an established definition in the context of CRR. As a matter of fact, we see the EBA analysis as a useful preliminary study. However we consider that the shortage percentage resulting from this preliminary analysis should not be used at this stage to constraint the use of waivers by the institutions ;
• Regarding the conditions of the application of waivers, we fully agree that the use of waiver should not be advantageous for the banks that resort to it. However we are concerned that the EBA specifies the price conditions of Central Bank facilities to banks, as well as the haircuts to be applied by the Central Bank to the collateral. This seems beyond its mandate.

These credit facilities will be part of the tools available for the Central Bank to implement the monetary policy; hence the pricing conditions should remain its prerogative. If the EBA retains a pricing formula of these credit lines in its final RTS, we draw its attention on the fact that the resulting commitment fee should not be too high, or else the banks will not resort to these facilities, favouring an arbitrage between the fee of these credit lines and the cost of term borrowings from the Central Bank placed on an overnight basis at the Central Bank.
We do not agree with point 14 in the cost-benefit analysis.
NA
David Labella
F