07 January 2025
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poland
to the point: financial regulation | 12/2024
Welcome to our to the point newsletter. Every month, we are looking back at the most relevant developments in the area of financial regulation in the CEE region.
In this edition, you will get a mix of updates:
- The Council and Parliament have reached a provisional agreement on new financial reporting rules that aim to streamline data sharing and reduce administrative burdens for financial institutions and authorities. For obliged entities, the new regulation simplifies reporting requirements by establishing a "reporting once" principle, where public authorities must first check if needed data is already available before requesting it, except for urgent cases. Reporting obligations will only cover information derived from EU law, and participation by national authorities in data sharing will be voluntary. These changes reduce duplicate efforts and lower compliance costs for financial entities. The agreement mandates the Joint Committee of ESAs to explore the creation of an integrated reporting system, featuring a common data dictionary and shared data space, within five years. This system would centralise data collection and exchange, further minimising redundant reporting for financial institutions. The Single Resolution Board (SRB), the European Central Bank's Single Supervisory Mechanism (SSM), and the new Anti-Money Laundering Authority (AMLA) will also be included in the data-sharing framework, ensuring comprehensive oversight.
- ESAs (ESMA, EBA, EIOPA) have issued joint Guidelines to ensure consistency in the regulatory classification of crypto-assets under the Markets in Crypto-Assets Regulation (MiCAR). For obliged entities, these Guidelines introduce standardised tests and templates for classifying crypto-assets, aiming to harmonise practices across the EU. Issuers of crypto-assets, particularly asset-referenced tokens (ARTs) and other non-ART or electronic money tokens (EMTs), are now required to include detailed explanations and legal opinions in their white papers to justify the regulatory classification of their offerings. This ensures compliance with MiCAR's provisions and provides a clear basis for communicating with regulators. For supervisors and market participants, the Guidelines promote a unified approach to crypto-asset classification, reducing inconsistencies and the potential for regulatory arbitrage. The standardised templates and explanations enhance transparency, fostering a level playing field while protecting consumers and investors. By aligning practices across jurisdictions, the Guidelines mitigate risks associated with divergent interpretations of MiCAR and strengthen trust in the EU's regulatory framework.
- The EBA has finalised Regulatory Technical Standards (RTS) specifying methods for identifying the main risk driver of a position and determining whether a transaction constitutes a long or short position under the Capital Requirements Regulation (CRR3). Institutions must now assess the main risk drivers of their positions using sensitivities defined under the market risk standardised approach (FRTB-SA) or add-ons from the standardised approach for counterparty credit risk (SA-CCR). A simplified method is also provided for entities dealing with straightforward financial instruments like bonds, futures or plain vanilla options, easing compliance for those with less complex trading activities. These methodologies ensure that institutions can classify positions as long or short based on the impact of risk drivers on market value, aligning with the existing approaches under SA-CCR. These standards also facilitate the implementation of CRR3 provisions on market risk and counterparty credit risk, ensuring consistent application across the EU.
- The Council has reached an agreement on the Financial Data Access (FIDA) framework, which introduces new rules for data sharing in the financial sector. For obliged entities, this means adhering to transparent standards for what data must be shared, how it is shared, and the compensation due for making such data available. Financial institutions, especially those involved in services like investment management, lending and financial advice, will need to adapt their systems to meet these obligations and compete in a more data-driven marketplace. For consumers, including individuals and SMEs, the framework promises easier access to tailored financial products, such as customised loans and investment opportunities, while ensuring they retain control over their personal data. Protections are built into the framework to guard against unfair practices and exclusion, with the European Supervisory Authorities empowered to issue guidelines ensuring fair treatment. The rules clarify their scope by defining the specific data sets and sectors covered, allowing Member States some flexibility, such as opting into the framework for occupational pensions. Obliged entities may also impose time limits on sharing non-digitised customer data. Importantly, the framework introduces stricter oversight for third-country service providers and gatekeepers, ensuring fair competition in cross-border financial services.
- The EBA has published amendment to the supervisory reporting framework (Final Report ITS) for investment firms to align with changes introduced by the Capital Requirements Regulation (CRR3). For obliged entities, these amendments mean that investment firms must update their reporting processes to reflect new requirements on counterparty credit risk, market risk (K-NPR) and credit valuation adjustment (CVA) risk. Notably, investment firms now have the option to report the same data as credit institutions by using COREP templates, streamlining compliance for firms operating across both categories. This alignment introduces cross-references to credit institutions' ITS, requiring investment firms to ensure their reporting frameworks are compatible with the updated standards.
- In a long-overdue reform, the release from Austrian banking secrecy will soon be possible electronically, similar to data protection regulations. A handwritten or qualified electronic signature will no longer be required for the release to be valid – a mere online checkbox can now be sufficient. However, the requirements for explicit consent remain unchanged and have been clearly incorporated into the law. This change will significantly facilitate banking relations and improve the quality of banking products, particularly in online and retail banking.
This amendment has already passed both chambers of Parliament and will become law once properly announced. This marks a significant step towards modern and user-friendly banking and its regulation.
- The index is based on the deposits of unsecured financial institutions and will be administered by the WSE Benchmark. This choice was preceded by analyses and consultations with market participants. Ultimately, WIRF is to be used for credit contracts, financial instruments and investment funds. Further work is planned on alternative indices and recommendations for the market.
- It introduces, among other things, a register of loan servicers, rules for their licensing and obligations to the FSC (Polish Financial Supervision Authority), a ban on charging borrowers for loan transfers and penalties for lack of authorisations. The Act also amends the BFG (Bank Guarantee Fund) regulations to include global systemic institutions in the MREL requirements. Regulations on bank secrecy, investment company shares and public company reorganisations have been adjusted. Most of the regulations will enter into force after 14 days
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Kristýna
Tupá
Attorney at Law
czech republic