Response to consultation on draft ITS amending ITS on supervisory reporting on Leverage Ratio
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Firms currently report their leverage ratio data through the COREP reporting templates currently in place and which have been previously published in the Official Journal of the European Union.
Until the revised leverage ratio reporting templates and instructions, as proposed in this consultation, are adopted in the Official Journal, institutions are required to continue using the current leverage ratio reporting templates and instructions. This will result in institutions submitting templates / cells that are soon to become redundant. Firms would have to devote resources to do so, when the focus of banks has already started to move to the new leverage ratio framework, introduced by Basel in January 2014 and which now is published in the Official Journal of the European Union. Also, certain UK based banks, as requested by their national supervisor, are already publishing their leverage ratio on the revised EU leverage ratio basis and therefore it would seem appropriate that their supervisory reporting is aligned to their external disclosures.
We recommend that national supervisors take measures to ensure there is no need to report data on the soon to become redundant requirements / instructions i.e. requesting institutions to submit the current templates on the basis of the leverage ratio delegated act. In addition, we recommend switching off the relevant validations in the current reporting templates where such validations / cells will be discontinued based on the delegated act. For example, template C46.00 (LR6), which collects information on entities that are consolidated for accounting purposes but are not within the scope of prudential consolidation, will be fully removed and also any cells referencing month end data points given that going forward only end of quarter data points will be used following the delegated act revisions.
Where necessary, there could also be an arrangement between institutions and their respective national supervisory authorities to submit data offline to ensure they still have the information needed to assess firms’ stability and leverage ratios.
While not covered in this consultation, the publication of the delegated act in the Official Journal of the European Union, raises the question, what should firms do regards the CRR requirement to disclose their leverage ratio from 1 January 2015. The disclosure templates submitted by the EBA to the European Commission were not adopted. In addition it seems unlikely that adoption of revised disclosure templates based on the delegated act will occur soon. Therefore we propose that in the absence of adopted disclosure templates firms should disclose their CRR leverage ratio based on instructions from their national supervisor.
The paper also recommends a 'blended' transition into the new template whereby validations in the DPM are changed to reflect the new templates. Further details on the timeframe for this would be appreciated. We would also suggest the industry should be consulted to ensure the transition is a smooth one.
Question 2: Would respondents have substantiated arguments for an implementation period different from the abovementioned?
The leverage ratio delegated act was published in the Official Journal of the European Union on 17 January 2015. This regulation entered into force on the day following that of its publication. Therefore, the delegated act is now in force.Firms currently report their leverage ratio data through the COREP reporting templates currently in place and which have been previously published in the Official Journal of the European Union.
Until the revised leverage ratio reporting templates and instructions, as proposed in this consultation, are adopted in the Official Journal, institutions are required to continue using the current leverage ratio reporting templates and instructions. This will result in institutions submitting templates / cells that are soon to become redundant. Firms would have to devote resources to do so, when the focus of banks has already started to move to the new leverage ratio framework, introduced by Basel in January 2014 and which now is published in the Official Journal of the European Union. Also, certain UK based banks, as requested by their national supervisor, are already publishing their leverage ratio on the revised EU leverage ratio basis and therefore it would seem appropriate that their supervisory reporting is aligned to their external disclosures.
We recommend that national supervisors take measures to ensure there is no need to report data on the soon to become redundant requirements / instructions i.e. requesting institutions to submit the current templates on the basis of the leverage ratio delegated act. In addition, we recommend switching off the relevant validations in the current reporting templates where such validations / cells will be discontinued based on the delegated act. For example, template C46.00 (LR6), which collects information on entities that are consolidated for accounting purposes but are not within the scope of prudential consolidation, will be fully removed and also any cells referencing month end data points given that going forward only end of quarter data points will be used following the delegated act revisions.
Where necessary, there could also be an arrangement between institutions and their respective national supervisory authorities to submit data offline to ensure they still have the information needed to assess firms’ stability and leverage ratios.
While not covered in this consultation, the publication of the delegated act in the Official Journal of the European Union, raises the question, what should firms do regards the CRR requirement to disclose their leverage ratio from 1 January 2015. The disclosure templates submitted by the EBA to the European Commission were not adopted. In addition it seems unlikely that adoption of revised disclosure templates based on the delegated act will occur soon. Therefore we propose that in the absence of adopted disclosure templates firms should disclose their CRR leverage ratio based on instructions from their national supervisor.
The paper also recommends a 'blended' transition into the new template whereby validations in the DPM are changed to reflect the new templates. Further details on the timeframe for this would be appreciated. We would also suggest the industry should be consulted to ensure the transition is a smooth one.