EBA consults to establish common goals and tools
During May 2016 a 3-month consultation period was opened by the European Banking Authority (EBA) potentially developing further the existing capital ‘CRD/CRR’ requirements provisions (see EBA/CP/2016/06). In particular, this is in respect of the liquidity related disclosures expected of institutions, seeking to create a common and more uniform approach to the level and quality of information concerning the Liquidity Coverage Ratio (LCR) deemed important to the proper awareness and decision-making of market participants in respect of any reasonable and effective assessment of associated liquidity risk-management. The expected new guidelines around the overall composition and disclosure of the LCR, which will build on the standards established back in early 2014, are not expected to come into force until after mid-2017. However interestingly, in the UK the lead prudential regulator (PRA) is already consulting itself (see CP21/16) to update and ratify its overall approach concerning aspects of ‘Pillar 2’ (CRD) liquidity and funding risk-management, and this does include the nature and scope of disclosures in respect of the Liquidity Coverage Ratio (LCR) too!
In May 2016 the EBA also issued a Discussion Paper (see EBA/DP/2016/01) as part of its supervisory role in monitoring financial innovation. This looks broadly at the perceived risk and benefits for firms and consumers around the collation and use of consumer data by financial institutions, and how this might impact or support the overall financial integrity and levels of trust and confidence necessary across the industry and its related market(s). For example, this looks and considers how institutions may be obtaining and using consumer data on such matters as spending habits and preferences as they use financial systems to purchase and pay for an ever wider range of consumer products and services. This looks to understand and balance the commercial and even potential competitive benefits to participating institutions, with the likely needs and risks to consumers in terms of exposures to data misuse and data security, and of course the reputational consequence to firms whose arrangements are compromised or simply fail to meet legal and regulatory standards and obligations. Interested parties have until early August to provide any input or contribution to any eventual change proposals and outcome(s) on this generically important and relevant matter.
Finally, in another recent development in June 2016 cross-sector work and initiatives involving other European Supervisory Authorities (ESMA & EIOPA) can also now be found on a newly launched website managed by the strategic and operational ‘joint committee’ of these ESA’s. This should provide a source for firms to remain alert to common and emerging issues such as the introduction of standardised ‘key information documents’ (KIDs) for EU investors.