• Service: Advisory, Regulatory Advisory Services
  • Industry: Financial Services
  • Type: Business and industry issue, KPMG information, Regulatory update
  • Date: 23/09/2014

Financial Services Regulatory Update 

February 2014 Regulatory Update

Anyone returning from summer holidays hoping for a period of calm was sadly mistaken. With the new European Parliament in place, and European Commission being proposed, and the G20 Brisbane Summit on the horizon – it is not business as usual. We continue to deal with the now, and I wonder if there is too much going on? How do we keep it in proportion?


The new European Commission has an exceptional opportunity, but also an obligation, to make a fresh start and to strengthen economic recovery and to build a Europe that delivers jobs and growth for its citizens. This is an opportune moment for policy-makers to reflect upon two key questions for regulatory reform: how can we maximise the contribution of the financial sector to jobs and growth, and has the regulatory reform agenda gone too far? In our most recent reports we argue for greater certainty about the end-point of regulatory reform to enable financial institutions and their customers to plan more effectively for the long term.


The answers to these questions will be of critical importance to the strength of the world economy, to financial institutions and to their customers. We need an informed debate here between policy-makers and the financial sector. The world economy may have stabilised, but it remains fragile and could all too easily slide back into a downward spiral if the wrong steps are taken. Brisbane could be very significant.


I hope you find the articles below interesting. If you would like further information on any topic or have any questions, please do not hesitate to contact me or your usual KPMG contact.


Regards, Darina Barrett
Head of FS Markets
KPMG Ireland


This month's insights

The road to Brisbane – what hope for GLAC?

We now have a greater appreciation for the number of moving parts involved in solving the “too big to fail” issue. While progress continues to be made across a number of fronts, none has yet landed e.g. key attributes have still to be incorporated into statutory frameworks, resolution planning remains incomplete and the legal, financial and operating structures of global banks are not yet aligned to a preferred resolution strategy. Therefore, more work is needed for meaningful resolvability assessments and institution specific cooperation agreements to be on the table by the G20 summit in Brisbane.


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Comprehensive assessment – preparing for the ‘join-up’ results

Further details of how the results of the comprehensive assessment will be disclosed were published by the ECB and EBA in August. The details published included the structure of disclosure templates from the EBA and the methodology of how results from the stress tests and AQR will be combined from the ECB in its ‘join-up approach’.


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Mind the data gaps

The post-crisis regulatory response has put data firmly into the spotlight. Action clearly needed to be taken as institutions were unable to provide supervisors with the data they needed in the right format and in a timely way.


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Europe’s payments overhaul continues

On 7 July 2014, the European Banking Authority (EBA) published the draft guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for public consultation. The roughly 200 page draft is addressed to Competent Authorities of all Member States of the European Union. The EBA consultation closes on 7 October 2014 and the guidelines are expected to be applied by January 2016 taking into account the results of the public consultation.


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New EBA Reporting Taxonomy – The pace of alerts starts to increase

On 18 August 2014, the European Banking Authority (EBA) published XBRL taxonomy (Taxonomy 2.2) to be used for filings with reference dates of 31 December 2014 onwards. This is one of many technical notes coming out of EBA - a clear sign that we really are in the implementation phase – and it highlights the importance of staying on top of such alerts and publications.


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Introducing a variable leverage ratio?

The UK’s Financial Policy Committee (FPC) is consulting on the use of the leverage ratio to address systemic risk. This may influence the wider debate in the Basel Committee and in Europe on the finalisation of the minimum leverage ratio requirements.


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The ESAs and Product Intervention Powers

MiFIR requires both the national regulators and the European Supervisory Authorities (ESAs) to monitor the market for structured deposits, structured products and investment funds that are marketed, distributed or sold in the European Union. It gives the ESAs powers temporarily to prohibit or restrict certain products, or products with certain features, or types of financial activity or practice. Product interventions are not expected to be common, but they are just one aspect of the wider debate on retail market conduct. KPMG intends soon to issue a fuller thought leadership paper on that wider debate, and the implications for clients across the three sectors and for client leads’ discussions with them.


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European Commission review of the European Supervisory Authorities (ESAs)

The European Commission has published its reports on the operation of the ESAs and the European Systemic Risk Board (ESRB).None of the findings in these reports are particularly surprising, and in the short term not much will happen as a result. Reviewing the ESAs and the ESRB just three years after they were established was never going to generate immediate radical results, especially with banking union gearing up for its November launch.


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Reassessing the EU agenda for financial services

Our recent report ‘New Commission, New Parliament – an agenda for Financial Services in the EU’ was sent to key officials to prompt a debate on how the regulatory agenda could be rebalanced in the interests of economic growth and jobs. It immediately provoked strong interest from the most senior officials and also as anticipated some disagreement from others with our recommendations.


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EIOPA Draft Guidelines on Solvency II – first set of consultation papers

EIOPA issued its first set of draft Solvency II Guidelines in June this year. The Guidelines are set out in five papers and include around 500 individual guidelines. Although addressed to national competent authorities (NCAs), they have a direct impact on authorised (re)insurers. The devil is in the detail, of course, but a recent KPMG alert sets out our key findings and summarises the key changes and clarifications from the previously published Solvency II texts.


Click here to read more


Forthcoming thought leadership from KPMG’s Regulatory Centre of Excellence

The G20 will meet in Brisbane in November; the general view is that it will be the last meeting where financial services regulatory reform agenda will hold a front row seat in the debate.


Key regulatory reform issues for the Brisbane summit will include proposals for systemically important financial institutions to hold a minimum amount of gone concern loss absorbing capacity; cross-border resolution; shadow banking; and international consistency in the regulation of derivatives markets.


For more information on this, or to receive a copy of the report, please reach out to the UK-FM FS Risk & Reg Centre of Excellence.


On the radar

  • EBA consultation on countercyclical capital buffer ends – 27 September
  • EBA consultation on functioning of colleges of supervisors ends – 3 October
  • ESMA hearing on MAD, Paris – 8 October
  • EBA consultation on resolution plans and assessment of resolvability closes – 9 October
  • ECB conference on supervision and data, Frankfurt – 15 October
  • ESMA consultation on MAR ends – 15 October
  • EBA/ESMA/EIOPA consultation on financial conglomerates risk concentration and intra-group transactions ends – 24 October

Financial Services contacts

Darina Barrett

Darina Barrett

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Partner & Head of Financial Services Markets

+353 1 410 1376

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Financial Services

Senior decision makers in Financial Services continue to face significant challenges. Despite signs of recovery from the crisis there is a pressing need to strengthen risk management practices and the focus remains on issues such as capital & liquidity management, the changing regulatory landscape and cost reduction.

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