Final and translated into the EU official languages
These Guidelines detail the conditions institutions should comply with when they decide to make use of the alternative treatment with regard to tri-party repurchase agreements facilitated by a tri-party agent. The Guidelines also specify the conditions and frequency for determining, monitoring and revising the limits that the institution would instruct the tri-party agent to observe.
The European Banking Authority (EBA) launched today a consultation detailing on the three conditions institutions should comply with when they decide to make use of the alternative treatment with regard to tri-party repurchase agreements facilitated by a tri-party agent. The consultation runs until 22 October 2020.
Under the alternative treatment, institutions can replace the total amount of the institution’s exposure to a collateral issuer due to tri-party repurchase agreements facilitated by a tri-party agent, with the full amount of the limits that the institution would instruct the tri-party agent to apply to securities issued by the collateral issuer.
To conduct such a replacement, institutions must verify that the tri-party agent has in place appropriate safeguards to prevent breaches of the limits instructed by the institution. Furthermore, the competent authority must not have expressed to the institution any material concerns. Another condition is that the sum of the limit instructed by the institution to the tri-party agent, and any other exposures of the institution to the collateral issuer does not exceed the limit set out in the Capital Requirements Regulation (CRR).
Finally, the Guidelines specify the conditions and frequency for determining, monitoring and revising the limits that the institution would instruct the tri-party agent to observe. The Guidelines will apply from June 2021.
Comments to this consultation 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 22 October 2020. A public hearing will take place on 08 October 2020 from 10:00 CET to 12:00 CET.
The EBA has developed the draft Guidelines pursuant to the mandate in Article 403(4) of Regulation (EU) No 575/2013 and in accordance with Article 16 of its founding Regulation, which mandates the Authority to issue guidelines and recommendations addressed to competent authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law.
The European Banking Authority (EBA) published today final guidelines specifying the conditions for the application of the alternative treatment of institutions’ exposures related to ‘tri-party repurchase agreements’ for large exposure purposes. Under the alternative treatment, institutions are allowed to replace the total amount of their exposures to a collateral issuer due to tri-party repurchase agreements facilitated by a tri-party agent, with the full amount of the limits that the institution has instructed the tri-party agent to apply to those exposures.
If institutions perform such a replacement, the Capital Requirements Regulation (CRR) requires them to comply with three conditions, which are further specified in the final guidelines, namely:
In addition, the final guidelines set the requirements on the conditions and frequency for determining, monitoring and revising the limits specified by the institution.
The final guidelines were consulted for three months during which the EBA received feedback from stakeholders, which led to some minor amendments to clarify some aspects. The guidelines will apply from 28 June 2021.
The EBA has developed the final guidelines in accordance with Article 403(4) of Regulation (EU) No 575/2013 and Article 16 of its founding Regulation, which mandatesthe Authority to issue guidelines and recommendations addressed to competent authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices within the European System of Financial Supervision, and to ensuring the common, uniform and consistent application of Union law.
The European Banking Authority (EBA) launched today a consultation detailing on the three conditions institutions should comply with when they decide to make use of the alternative treatment with regard to tri-party repurchase agreements facilitated by a tri-party agent. The consultation runs until 22 October 2020.
Under the alternative treatment, institutions can replace the total amount of the institution’s exposure to a collateral issuer due to tri-party repurchase agreements facilitated by a tri-party agent, with the full amount of the limits that the institution would instruct the tri-party agent to apply to securities issued by the collateral issuer.
To conduct such a replacement, institutions must verify that the tri-party agent has in place appropriate safeguards to prevent breaches of the limits instructed by the institution. Furthermore, the competent authority must not have expressed to the institution any material concerns. Another condition is that the sum of the limit instructed by the institution to the tri-party agent, and any other exposures of the institution to the collateral issuer does not exceed the limit set out in the Capital Requirements Regulation (CRR).
Finally, the Guidelines specify the conditions and frequency for determining, monitoring and revising the limits that the institution would instruct the tri-party agent to observe. The Guidelines will apply from June 2021.
Comments to this consultation 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 22 October 2020. A public hearing will take place on 08 October 2020 from 10:00 CET to 12:00 CET.
The EBA has developed the draft Guidelines pursuant to the mandate in Article 403(4) of Regulation (EU) No 575/2013 and in accordance with Article 16 of its founding Regulation, which mandates the Authority to issue guidelines and recommendations addressed to competent authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law.