EBF advisor: Simon Pettinger
Publication date: 16 May 2017
The European Banking Federation today responded to the European Commission’s review of the operations of the European Supervisory Authorities, known as the ESAs, for the financial sector in the European Union. The three ESAs are the European Banking Authority (EBA), the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIPOA). EBF regards this consultation as a key step towards developing and maintaining a consistent supervisory framework with a high level of investor protection.
The EBF’s response highlights the following aspects, among others:
- Calling for a European financial sector ‘no-action’ relief
‘No-action’ powers enjoyed by supervisors outside the EU, such as the US, provide valuable stability and clarity in certain situations. Our industry recently witnessed uncertainty regarding the requirement to exchange variation margin for uncleared derivatives. A clear mechanism for ‘no-action’ could improve certainty and minimise disruption at the EU level.
- No putting ‘the cart in front of the horse’ when making rules
Whenever ESAs are working on Level 2 ahead of the adoption of the Level 1 text by the European legislators, they need to ensure that the rules are not finalised before the law. This is true for legislation originating in the EU as well as legislation that is implementing international standards. For example, at present we are concerned that EBA will rush through implementation of some elements of the Basel standard on interest rate risk in the banking book while it is still subject of discussion by the European institutions within the Risk Reduction Package.
- ESAs’ Questions and Answers to benefit from consultation with stakeholders
The Q&As are a potentially useful instrument to regulate. Although not technically binding, they provide widely-accepted interpretations. They should benefit from systematic and appropriate consultation.
- More consultation, more time for implementation
The ESAs should strengthen their capability in impact assessment and in particular develop their own impact assessment frameworks to enable them to analyse the implementation costs and effectiveness of secondary legislation. Timetables should allow for better implementation and must be better coordinated. Adjusting internal processes and procedures to new Level 2 requirements is difficult if the latter are published shortly before becoming applicable (as was the case with the Level 2 measures under MAR). Timetables also need to be coordinated across sectors to ensure optimal stakeholder input. Finally, ESAs should seek to make a greater and more systematically organised use of the various stakeholder groups for knowledge and industry representation.
Find the EBF response in this consultation by clicking the ‘full document’ link below: