Asset Management

Asset Management update - January 2018

Central Bank of Ireland Updates

On 19 January 2018 the Central Bank issued a letter outlining new procedures relating to submission of risk management process (RMP) documents by UCITS investment funds. With immediate effect, draft RMPs are no longer required by the Central Bank. Ad-hoc reviews of individual RMPs will be carried out periodically by the Central Bank to assess quality and compliance standards.

On 2 January 2018, the Central Bank published updates to its UCITS Q&A and AIFMD Q&A. New questions relating to prospectus disclosure in the context of Benchmarks Regulation and regarding the PRIIPS Regulation are included.

 

EBA Publishes Guidelines on Disclosure Requirements of IFRS 9

The European Banking Authority (EBA) published its final Guidelines on disclosure requirements of IFRS 9 or analogous expected credit losses (ECLs) transitional arrangements. The guidelines specify a uniform disclosure template institutions shall use when disclosing the information on own funds, capital and leverage ratios, with and without the application of transitional arrangements for IFRS 9 or ECLs. The aim of these Guidelines is to ensure consistency and comparability of the data disclosed by institutions during the transition to the full implementation of the new accounting standard and to foster market discipline.

 

EBA and ESMA Consultations on Securitisation Requirements

The EBA has launched a public consultation on its draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors and original lenders related to risk retention as laid down in the new EU securitisation framework (STS Regulation). The RTS aim to provide clarity on the requirements relating to risk retention, thus reducing the risk of moral hazard and aligning interests.

The EBA has also issued a public consultation on draft Regulatory Technical Standards (RTS) specifying a set of criteria for the underlying exposures in securitisation to be deemed homogeneous, as part of the requirements under the new EU securitisation framework. The homogeneity requirement aims to facilitate the assessment of underlying risks by investors and to enable them to perform robust due diligence. Its application is, therefore, one of prerequisites for a more risk sensitive regulatory treatment of the securitisation. The RTS are applicable to both asset-backed commercial paper (ABCP) and non-ABCP securitisations. The EBA consultations run until 15 March 2018.

The European Securities and Markets Authority (ESMA) has published three consultation papers on draft technical standards implementing the Securitisation Regulation (SR). ESMA’s consultation papers seek stakeholder views on:

  1. The contents and format of underlying exposures and investor report templates, which aim to meet the Securitisation Regulation’s reporting requirements;
  2. The operational standards for providing these reports to securitisation repositories, and the operational standards for accessing this information from securitisation repositories. Moreover, the specific conditions for the entities specified in the Regulation to access information from securitisation repositories;
  3. The contents and format of the notification to ESMA of a securitisation’s STS status; and
  4. The application requirements for third party entities seeking to be authorised as providers of STS verification services.

Feedback is requested from interested stakeholders by 19 March 2018.

 

ESMA Publishes Register of Derivatives to be Traded On-Venue under MIFIR

ESMA has published a public register of those derivative contracts that are subject to the trading obligation under the Markets in Financial Instruments Regulation (MiFIR). The register provides clarity to market participants on the application of the trading obligation under MiFIR and in particular on:

  • the classes of derivatives subject to the trading obligation;
  • the trading venues on which those derivatives can be traded; and
  • the dates on which the obligation takes effect per category of counterparties

The public register will be updated in case of changes, such as when new trading venues offer trading in the derivatives subject to the trading obligation.