Welcome to our to the point newsletter. Every month we look back at the most relevant developments in the area of financial regulation in the CEE region.
Insights waiting for you in this edition:
- European
- European
Union: Investment companies and investment funds
EBA - Guidelines on the application of the group capital test for investment firm groups European Union : Banks
EBA - Guidelines on resubmission of historical data under the EBA reporting frameworkCzech Republic : Cross-sectoral regulation
Government of theCzech Republic - Draft Act amending certain laws in connection with the implementation ofEuropean Union regulations in the field of digital finance and sustainability financingCzech Republic : AML
FAO - Model cases on the interpretation of the concept of clientHungary
New Act on the market for crypto-assets - Hungary Aligns Crypto-Asset Regulation with EU RulesPoland Polish Supreme Court has answered key questions on loans denominated in Swiss francs- SFT Markets Overview: The total outstanding exposure of SFTs stood at
EUR 9.8 trillion inSeptember 2023 . Repos comprised the majority atEUR 6.7 trillion (68 %), followed by securities lending atEUR 2.3 trillion (23 %), buy-sell back atEUR 743bln (8 %), and margin lending atEUR 124bln (1 %); - Repo Market Participants: Banks dominate the repo markets, accounting for 52 % of repo amounts. They are primarily concentrated in a few EEA jurisdictions, with
France as the primary domicile holding significant shares of both EEA repo borrowing and lending; - Cross-border Linkages: Around 41 % of repo amounts observed are between EEA counterparties, indicating strong cross-border connections. Notably, there are robust links with the
UK , with significant amounts of repo borrowing and lending between EEA andUK entities; and - Clearing & Settlement: A majority (61 %) of repo transactions remain uncleared, with most processed bilaterally. Only a small portion (6 %) are managed with a third party;
- Repo Collateral Use: Government bonds are the primary collateral used in repos. The cleared segment predominantly employs EEA sovereign bonds, while the non-cleared segment exhibits slightly more collateral heterogeneity.
- Harmonised criteria: The Guidelines establish unified criteria to address the existing diversity in applying the group capital test, ensuring consistency;
- Assessment criteria: Competent Authorities will evaluate the simplicity of the group structure and the risk posed to clients and the market. Simplified assessment is envisaged for groups comprising small and non-interconnected investment firms;
- Quantitative and qualitative criteria: Both quantitative (e.g. number of undertakings and levels within a group) and qualitative (e.g. clear ownership structure) criteria are outlined in the Guidelines; and
- Methodology for third-country undertakings: The Guidelines provide a methodology for Competent Authorities to assess the adequacy of own funds requirements for third-country undertakings of EU groups.
- General approach: The Guidelines aim to minimise the need for resubmission of historical data, emphasising corrections for the current reporting date and historical data for past reference dates, typically spanning at least one calendar year;
- Exceptions: Clear circumstances are outlined under which resubmission may not be necessary;
- Importance: Ensuring consistency and data quality is emphasised, benefiting competent authorities, resolution authorities and the EBA; and
- Feedback integration: Feedback received during public consultation has been incorporated into the Guidelines, leading to clarifications and adjustments. Notably, the precision requirement for monetary data in the EBA filing rules has been refined.
- a bank employee (in the role of respondent institution) accessing a correspondent account of another bank (in the role of correspondent institution);
- the employee of a corporate entity in whose favour a bank customer's authorisation to debit that customer has been issued;
- the employee of a legal entity in whose favour a bank customer has been authorised to execute MT101 instructions via SWIFT for that customer's account;
- the beneficiary as a legal entity, or its employee, who is not a client of the bank, but in whose favour the bank is to provide performance under an issued bank guarantee, where the beneficiary has requested performance under the terms of the guarantee;
- the principal as a legal person, or its employee, who is not a customer of the bank but who gives the bank an order for payment under an export letter of credit directly to the beneficiary without the intermediary of the issuing bank; and
- a legal entity, or an employee thereof, disposing of a payment terminal for the purpose of accepting payment cards, entering the amount into the payment terminal, depending on the price of the goods, which is requested to be debited from the payment account of a customer of the bank.
ESMA - First overview of EU securities financing transactions markets
European
09/04: ESMA - First overview of EU securities financing transactions markets
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The ESMA recently released its inaugural overview of the EU securities financing transactions (SFT) markets, offering a comprehensive look at the landscape based on data reported by market participants. The report aims to support the ESMA's financial stability objective by tracking developments in the repo market and providing crucial risk metrics for its monitoring framework on securities financing transactions. Key findings from the report include, among others:
11/04: EBA - Guidelines on the application of the group capital test for investment firm groups
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EBA has released its final Guidelines on the application of the group capital test for investment firm groups. These Guidelines aim to standardise the application of the group capital test across the EU, promoting a level playing field, as the key aspects of the Guidelines include:
- The development of these Guidelines falls under the EBA's mandate to ensure consistent supervisory practices within the EU and the uniform application of Union law. The group capital test is outlined in Regulation (EU) 2019/2033, with criteria for its use specified in paragraphs 8(1) and 8(4) of the Regulation.
09/04: EBA - Guidelines on resubmission of historical data under the EBA reporting framework
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The EBA has released its final Guidelines on the resubmission of historical data within the EBA reporting framework. These Guidelines establish a standardised approach for financial institutions to rectify errors, inaccuracies or changes in reported data, aligning with the supervisory and resolution reporting framework developed by the EBA. Key points of the Guidelines include:
29/04: Government of the
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The Government is now discussing the Draft Act to be adopted in connection with the implementation of
02/04: FAO - Model cases on the interpretation of the concept of "client" when providing certain banking services
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Following consultations with the
10/04: New Act on the market for crypto-assets - Hungary Aligns Crypto-Asset Regulation with EU Rules
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The new Hungarian law aligns the national legal framework with the EU Regulation 2023/1114 on markets in crypto-assets (MiCA) and covers the issuance, offering and trading of crypto-assets, as well as the supervision and sanctions of crypto-asset service providers. The new law also amends other Hungarian laws related to the financial sector, such as those on credit institutions, investment firms, collective investment schemes, payment services and consumer protection, to accommodate the new rules and definitions on crypto-assets and crypto-asset services.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Kristýna Tupá
Schoenherr Attorneys at Law
Schottenring 19, A-1010
Tel: 1534 37 50142
E-mail: L.Beukes@schoenherr.eu; J.Schuster@schoenherr.eu
URL: www.schoenherr.eu
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