Question ID:
2020_5201
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Supervisory reporting - FINREP (incl. FB&NPE)
Article:
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
Article/Paragraph:
4
Disclose name of institution / entity:
No
Type of submitter:
Credit institution
Subject Matter:
Reporting Entry & Exit Criteria
Question:

How should Article 4 (entry/exit criteria) of the ITS on Supervisory Reporting be applied for new reporting requirements (e.g. Taxonomy 2.9, new NPE threshold reports)?

Background on the question:

The requirement to report according to article 4 entry/exit criteria appears to be open to a number of points of interpretation and outcomes as set out below. Can you clarify, in particular given it’s applicability for the new FinRep NPE threshold templates 23-26 and 47 under Taxonomy 2.9 & EU 2020/429 for which it is stated "The entry and exit criteria referred to in Article 4 shall apply.

Point 2 references “dates on which institutions have to comply with the requirements”. Q&A 2013_337 refers to this as a commencement provision and it explains it in the context of the very first reporting dates in 2014.
The first key question then is around the applicability of point 2 - Is it literally only the 2014 dates for which this provision applied or should it be read as applying to any scenario where requirements are to be complied with for the first time eg: new threshold templates or say a new reporting entity.
Even with that question answered there are further interpretations required leading to the numerous possible outcomes below.
We would appreciate clarification as to how Article 4 operates, particularly as this impacts for Taxonomy 2.9 given the introduction of new Non-Performing Exposures threshold templates.

I)If Article 4 Point 2 is for all scenarios (ie: not just 2014 implementation)
If point 2 is for all scenarios then the Q&A seems clear that the first two reporting reference dates are assessed individually as to whether they require reporting.
However how shall the third reporting reference date be assessed:
a) Is the third date considered a fresh start ie: the requirement is assessed essentially ignoring whether any reporting was actually done in the first two periods and therefore under point 1 need only consider if the first two reporting dates were both above the threshold in order to determine if reporting should “start” eg: if it was below the threshold for the first reporting reference date (no reporting for that date) but above it for the second (reporting required for that date) then reporting is not required for the third reporting date as under point 1 there were not two preceding consecutive reporting dates above threshold.
Or
b) Is the third date not considered a fresh start ie: the requirement must take account of whether any reporting was actually done in the first two periods and therefore is now under para 3 such that three consecutive reporting periods below threshold are required in order to stop reporting eg: (same scenario as above) if it was below the threshold for the first reporting reference date (no reporting for that date) but above it for the second (reporting required for that date) then reporting must continue on the third reporting date as under point 3 there were not three preceding consecutive reporting dates below threshold.
Example: new NPE threshold templates taxonomy 2.9
June2020 - if below threshold then no reporting is required per Art 4(2)
Sep2020 - if above threshold then reporting is required per Art 4(2)
Dec2020 - assume below threshold then no reporting required ( assuming Art 4(1) takes precedence) or reporting is required ( assuming Art4(3) takes precedence) ?

II) If Article 4 Point 2 was only for initial dates in 2014.
If point 2 was only for the 2014 implementation then a number of interpretations appear possible:
c) Is it the case that point 1 applies to determine commencement ie: there would have to be two reporting dates above threshold – thus for the new NPE templates the earliest possible reporting would be Dec2020 (assuming the threshold is exceed for Jun2020 & Sep2020). This should provide sufficient time for the reporting institutions (Recital (8) of EU 2020/429) and recognises the six month implementation period referred to in the Final Draft ITS pg 40 Summary of Responses).
d) Interpretation c) assumes that only reporting reference dates after the application date for the requirement ( eg: for NPE reporting, after 1 June 2020 per the amended ITS) are relevant for determining commencement of reporting. If earlier reporting reference dates (eg: here Dec2019 & Mar2020) are to be taken into account then that would impact the first assessment although that would seem to be impracticable as a general rule eg: if a particular metric was not previously measured
e) Or does reporting automatically commence on the first reporting date ( here June 2020) if above the threshold, so subsequent reporting is subject to point 3(cessation) and point 1(recommencement). This does not seem to be catered for in the wording of the ITS and presents a seemingly odd situation whereby a reporting entity exceeding the threshold on 30 June would be required to report straight away without any lead time whereas a reporting entity exceeding the threshold on 1 July would then have to also exceed the threshold at Sep2020 and Dec2020 before reporting at earliest for March 2021.
f) Another interpretation?

Date of submission:
07/04/2020
Published as Rejected Q&A
28/10/2022
Rationale for rejection:

This question has been rejected because the matter it refers to is related to an EBA Standard on Supervisory Reporting (specifically Regulation (EU) No 680/2014) no longer in force.

Status:
Rejected question
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