Response to consultation on RTS on methods of prudential consolidation
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In addition, Article 2 of the draft RTS gives a definition of ‘undertakings’. Following this definition, ‘undertakings’ also include ancillary service undertakings being part of the prudential consolidation. Including ancillary service undertakings according to Article 18 Paragraph 8 CRR for the prudential consolidation seems reasonable. Asset management companies are also referred to in the aforementioned paragraph but are not considered in the current draft RTS. We kindly ask EBA to validate its approach against Article 18 Paragraph 8 CRR.
Question 1: Are there undertakings which do not comply with the definition of a financial institution or ancillary services undertaking of Regulation (EU) 575/2013 which should be included in the prudential scope of consolidation? Please explain and provide examples of these entities.
CSDs shall be included explicitly in the prudential consolidation due to their custody business that corresponds to the activity listed in Annex I number 12 CRD IV. The implicit inclusion as financial institution seems not to be appropriate. In contrast, in order to ensure that several regulated financial service undertakings do not fall unintendedly under the definition of financial institution or ancillary service undertaking as a consequence of their activities, these undertakings shall be excluded explic-itly from the scope of prudential consolidation. In detail, these entities are i.a. payment systems, securities settlement systems, central counterparties, trade repositories, regulated markets, data reporting services providers, index providers, market operators and rating agencies. In case one undertaking is classified as credit institution or investment firm, any additional activity shall not lead to any such exclusion form consolidated supervision.In addition, Article 2 of the draft RTS gives a definition of ‘undertakings’. Following this definition, ‘undertakings’ also include ancillary service undertakings being part of the prudential consolidation. Including ancillary service undertakings according to Article 18 Paragraph 8 CRR for the prudential consolidation seems reasonable. Asset management companies are also referred to in the aforementioned paragraph but are not considered in the current draft RTS. We kindly ask EBA to validate its approach against Article 18 Paragraph 8 CRR.