Question ID:
2015_1828
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Supervisory reporting - Other
Article:
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)
Article/Paragraph:
1
Disclose name of institution / entity:
No
Type of submitter:
Competent authority
Subject Matter:
Scope of uniform reporting requirements, Integrated Reporting Framework
Question:

Regarding the scope of the uniform reporting requirements specified in the ITS we would like to raise the question, whether these reporting requirements, also needed for other reporting purposes, can be fulfilled in a more efficient way as part of a broader reporting framework beyond the CRR by (a) increasing the level of granularity, (b) adding additional attributes and/or (c) require the combination of different attributes. For instance: (a) If the ITS requires the maximum-harmonised ‘Total Exposures’ (see Annex I, C 07.00, row 010, column 010) only on an aggregated level, is the competent authority allowed to increase the granularity and collect this information on a more detailed level, if this information is required for other reporting purposes? If yes, may the aggregates required by the ITS be derived out of these granular data by the NCAs/NCBs themselves? (b) Is it further allowed for the competent authority to add additional attributes, e.g. ISO country code, if this information is required for other reporting purposes? (c) Is it allowed to make non-material additions regarding the reporting requirements specified in the ITS, by the combination of detailed ‘Total Exposures’ with its ISO country code and a third attribute, for instance the residual maturity, if needed for other reporting purposes, in order to enable a ‘technical data model’? Please note: It is not intended to add new attributes, which are not legally required. Rather, by the combination of the above mentioned attributes, the quality of the information increases while the requirements by the ITS are met.

Background on the question:

Pursuant to Art. 1 of the ITS, this standard lays down uniform requirements in relation to supervisory reporting for some specific areas of the CRR, such as own funds requirements (in COREP), financial information according to Art. 99 CRR (in FINREP), large exposures, etc. However, according to Recital 9 of the ITS, any rules on the common supervisory reporting established by the CRR can only be part of an overall reporting framework, as there is a multitude of different reporting requirements at national and Union level for other purposes. In order to ensure an overall consistency by applying an integrated approach, which aims to minimise the reporting burden for institutions, competent authorities should be allowed under the principle of maximum-harmonisation, to continue to define alternative presentations and data exchange formats currently also used for other reporting purposes, provided that the necessary requirements are fully met. Indeed, current supervisory, monetary and other reporting standards require data which are collected in several reports, such as European Banking Authority’s Implementing Technical Standards on Supervisory Reporting (‘FINREP’, ‘COREP’), national supervisory statistics, Monetary Financial Institutions (MFI) balance sheet items (BSI) and interest rates (MIR) statistics, Securities issues (SEC) and Securities holdings (SHS) statistics, national credit registers/Analytical Credit datasets, and many more. This means, reporting credit institutions and recipients are faced with a large number of reports with different frequencies and different levels of aggregation. However, in view of the number of different reports, they are not free of redundancy. The background of the question is whether it is legally sound to collect all the various data required within one integrated reporting framework that serves supervisory as well as statistical purposes. Finally, the competent authority has the exact ITS report at its disposal, even if it would be collected as part of an integrated more granular reporting framework. This would mean to organise reporting requirements in the form of a comprehensive reporting framework for regular data transmissions from reporting agents to NCAs/NCBs. The overall objective is to ensure a precise, simple, and unambiguous definition of information relevant for different reports. Hence, the quality will improve by using harmonised concepts and business-friendly definitions as well as a collection method that is, in part or in full, free of redundancy and eliminates the need to cross-check individual reports from one and the same reporting institution. Starting with integration and harmonisation at the beginning of data production, burdensome ex-post reconciliation, comparisons and hence the overall costs will be reduced. Please note that this question is not only relevant for one or two NCAs/NCBs, but for all countries in Europe in light of the envisaged developments towards a ‘European-wide Reporting Framework’ (ERF).

Date of submission:
13/02/2015
Published as Final Q&A:
26/02/2016
Final Answer:

In accordance with European Union (EU) law, as confirmed by the jurisprudence of the Court of Justice of the EU, EU Regulations are characterised by three aspects: firstly, they are of general application, i.e. they apply to all. Secondly, they are binding in their entirety, i.e. they are binding both to the objectives to be achieved and to the actual means and ways for achieving those objectives, which is their main difference from Directives (binding only as to their objectives). Thirdly, they are directly applicable which means that they automatically become part of the national law of Union states, overriding any pre-existing national law on the same matter from their date of entry into force, without the need for any further ‘implementation’/adaptation at the national level. Such national implementation is in fact prohibited as a rule, as it would ‘‘jeopardis[e the regulation’s] simultaneous and uniform application in the whole of the Community’. (Court of Justice of the European Union Case 39/72 Commission of the European Communities v Italian Republic. [1973]). National implementation is only allowed to the extent that the regulation is ‘incomplete’ and expressly requires Member States to adopt necessary measures (and even then, such national ‘implementing’ measures must neither alter the Regulation nor hinder its uniform application throughout the Union (Case C-290/91 Johannes Peter v Hauptzollamt Regensburg [1993] ECR I-2981.)).

The Commission Implementing Regulation on supervisory reporting (EU) No 680/2014 (‘the Implementing Regulation’) lays down the ‘uniform supervisory reporting requirements for institutions established in the European Union’, as set out in the legal basis for its adoption, which is in Articles 99(5) and (6) Article 101(4); Article 394(4); Article 415(3) and Article 430(2) thereof, of Regulation (EU) No 575/2013 (‘CRR’). Therefore, the Implementing Regulation constitutes the sole Union-wide legal framework for supervisory reporting and a maximum harmonisation instrument.

This means that, with regard to the scope of application of the Implementing Regulation, competent authorities cannot add nor delete data to be reported, nor can they require the reporting of that data in a different format nor in a different (less or more granular) breakdown, nor in a combination, other than in accordance with the CRR and with Directive 2013/36/EU (‘CRD’). The opposite would lead to different ways of application of the Implementing Regulation across the Union, thus leading to ‘less than maximum harmonisation’ and would defeat the purposes of the Regulation as a legal instrument (as opposed to a Directive), and would be contrary to the will of the EU legislators as explicitly provided in Article 99 CRR. The Implementing Regulation shall only be modified by adopting amendments by the European Banking Authority and endorsement of the Commission. In other areas of reporting, not covered by the scope of the Implementing Regulation as defined in Article 1 of the Implementing Regulation, competent authorities and/or central banks may be in a position to require further reporting by institutions in these other areas, as the case may be and depending on the legal basis available.

Recital 9 of the Implementing Regulation provides a rationale for the rules contained in the Implementing Regulation regarding IT solutions: it explains that because of the existence of potential reporting which is other than supervisory in nature (statistical, monetary etc.), IT solutions provided by the Implementing Regulation should be allowed to be adapted to fit neatly with the IT solutions of that other reporting. Nowhere does recital 9 expressly provide for a ‘delegation’ to competent authorities to further complete/add to the supervisory reporting requirements provided in the Implementing Regulation, as this would result in those requirements not being uniform.

If the supervisory data required by the Implementing Regulation were to be gathered via an IT solution which efficiently combines other reporting requirements (such as statistical or monetary), also that system would have to comply fully with the IT solutions provided in the Implementing Regulation.

In line with Article 99(7) of the CRR, which relates only to the financial reporting aspects of the Implementing Regulation, should a competent authority consider additional information to be necessary for the purpose of obtaining a comprehensive view of the risk profile of institutions and the systemic risks posed, it is obliged to notify EBA and the ESRB that it considers that additional information regarding financial reporting needs to be included in the Implementing Regulation.

DISCLAIMER

This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Status:
Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Image CAPTCHA