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The ESAs launch first recruitments to set up DORA joint oversight team

Retrieved on:

Jeudi, avril 18, 2024

EBA, Risk management, EIOPA, ESMA, ICT, Audit

The ESAs launch first recruitments to set up DORA joint oversight team

Key Points:

The ESAs launch first recruitments to set up DORA joint oversight team
The European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) today published three vacancy notices in the context of the Digital Operational Resilience Act (DORA).
This announcement comes as part of the establishment of a fully integrated team within the 3 ESAs (“joint oversight team”) to carry out the oversight of critical third-party providers (CTPPs) required by DORA.
Recruitment
The joint oversight team will be led by 30 staff across the ESAs and will be complemented by experts from competent authorities.
Process
The DORA framework introduces an oversight framework for critical ICT third party service providers.

ESAs to run voluntary dry run exercise to prepare industry for the next stage of DORA implementation

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Jeudi, avril 18, 2024

EBA, Workshop, ESMA, Digital, EIOPA, Collection, Exercise, ICT, Security (finance)

ESAs to run voluntary dry run exercise to prepare industry for the next stage of DORA implementation

Key Points:

ESAs to run voluntary dry run exercise to prepare industry for the next stage of DORA implementation
The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today announced that they will launch in May the voluntary exercise for the collection of the registers of information of contractual arrangements on the use of ICT third-party service providers by the financial entities.
Under the Digital Operation Resilience Act (DORA) and starting from 2025, financial entities will have to maintain registers of information regarding their use of ICT third-party providers.
In this dry run exercise, this information will be collected from financial entities through their competent authorities and will serve as preparation for the implementation and reporting of registers of information under DORA.
Workshop
To provide more information regarding the dry run exercise, the ESAs invite financial entities to take part in an introductory workshop on 30 April 2024 from 10:00 to 12:00.

ESAs consult on technical standards for joint examination teams under DORA

Retrieved on:

Jeudi, avril 18, 2024

RTS, EBA, Civil service commission, EIOPA, ESMA, ICT, European Commission, European

ESAs consult on technical standards for joint examination teams under DORA

Key Points:

ESAs consult on technical standards for joint examination teams under DORA
The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) launched today a public consultation on the draft Regulatory Technical Standards (RTS) on the conduct of oversight activities in relation to the joint examination teams under the Digital Operational Resilience Act (DORA).
The proposed technical standards take into account the high technical complexity of the oversight activities and the scarce availability of the expertise needed to perform them.
Legal basis, background and next steps
These draft technical standards have been developed in accordance with Article 41(1) point (c) of DORA (Regulation (EU) 2022/2554).
The ESAs expect to submit these draft technical standards to the European Commission by 17 July 2024.

Speculation in oil and gas prices in times of geopolitical risks

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Mercredi, avril 3, 2024

Overall, speculation has only a limited role in both oil and gas price dynamics, although the degree of speculation is somewhat higher in European gas markets than in US gas markets.

Key Points:

Overall, speculation has only a limited role in both oil and gas price dynamics, although the degree of speculation is somewhat higher in European gas markets than in US gas markets.
Empirical estimates also suggest that the role of speculation in amplifying the transmission of fundamental shocks to oil prices is limited, including in times of heightened geopolitical risk.

The impact of regulatory changes on rating behaviour

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Mardi, avril 2, 2024

Długosz, Disagreement, Pi bond, Direct lending, Key, Research Papers in Economics, Finance Secretary (India), University of Oxford, STS, Journal of Economic Perspectives, International, American Economic Review, Life, Columbia Business School, British Academy of Management, Risk assessment, ABS, Rating, EBA, Development, Reputational damage, OBS, CRA, Bond credit rating, Cras, Journal of Monetary Economics, CDO, Becker, Paper, 2007–2008 financial crisis, Raja, University, Environment, Journal of Financial Economics, Perception, H3, Website, Securitization, Working paper, Market, Collection, Total, European Banking Authority, Quarterly Journal of Economics, BBB, Whetten, Column, ESMA, European Journal, Issuer, Asset quality, Information revolution, Federal Reserve Bank, OLS, Statistics, PDF, Private, ECB, Surety, Weighted-average life, CCC, European Commission, Social science, Journal of Financial Stability, JEL, Real, Bias, Journal, Research, Classification, Certification, Commission, Credit, The Journal of Finance, Literature, Karel Škréta, European Central Bank, AA, Finance Research Letters, Origination (telephony), Monetary economics, Section 5, Xia, Kraft Foods, Government, AAA, Mukherjee, Finance, Deku, DOI, White, Risk, IOSCO, MBS, OECD, Wang, Section 4, University Challenge 2013–14, Section 3, Ashcraft, Financial management, Accounting, Financial economics, Fannie Mae, Conference, Pressure, Central bank, Griffin, University of Michigan, Systematic review, EPRS, Freddie Mac, Loan, BCBS, Palgrave Macmillan, R2, Microeconomics, Quarterly Journal, Financial statement analysis, The Japanese Economic Review, Christian Social Union (UK), Green, University of Huddersfield, PSM, Management, Security (finance), Security, Civil service commission, Private placement, American Economic Journal, GFC, Reproduction, IMF, Small business, Trustee, Data

Abstract

Key Points:

Abstract
We examine rating behaviour after the introduction of new regulations regarding Credit Rating
Agencies (CRAs) in the European securitisation market.
There is empirical evidence of rating catering in the securitisation market in the pre-GFC period (He et al.,
2012; Efing and Hau, 2015).
Competition among
CRAs could diminish ratings quality (Golan, Parlour, and Rajan, 2011) and promotes rating shopping by
issuers resulting in rating inflation (Bolton et al., 2012).
This paper investigates the impact of the post-GFC regulatory changes in the European
securitisation market.
In 2011, in addition to the creation of
European Securities and Markets Authority (ESMA), a regulatory and supervisory body for CRAs was
introduced.
We examine how rating behaviours have changed in the European securitisation market after the
introduction of these new regulations.
We utilise the existence of multiple ratings and rating agreements between
CRAs to identify the existence of rating shopping and rating catering, respectively (Griffin et al., 2013; He
et al., 2012; 2016).
We find that the regulatory changes have been effective in tackling conflicts of interest between issuers
and CRAs in the structured finance market.
Rating catering, which is a direct consequence of issuer and
CRA collusion, seems to have disappeared after the introduction of these regulations.
There is empirical evidence of rating catering in the securitisation market in
the pre-GFC period (He et al., 2012; Efing and Hau, 2015).
Competition among CRAs could diminish ratings quality (Golan, Parlour,
and Rajan, 2011) and promotes rating shopping by issuers resulting in rating inflation (Bolton et
al., 2012).
This paper investigates the impact of the post-GFC regulatory changes in the European
securitisation market.
In 2011, in addition
to the creation of European Securities and Markets Authority (ESMA), a regulatory and
supervisory body for CRAs was introduced.
We find that the regulatory changes have been effective in tackling conflicts of interest
between issuers and CRAs in the structured finance market.
Rating catering, which is a direct
consequence of issuer and CRA collusion, seems to have disappeared after the introduction of
these regulations.
Investors who previously demanded higher spreads for rating agreements for a
multiple rated tranche, did not consider the effect of rating harmony as a risk in the post-GFC
period.
Regarding rating shopping, we find that the effectiveness of the changes has been limited,
potentially for two reasons.
Additionally, we also find that rating over-reliance might still be an issue, especially
Rating catering is a broad term and it can involve rating shopping.
They re-examine the rating shopping and rating
catering phenomena in the US market by looking at the post-crisis period between 2009 and 2013.
Using 622 CDO tranches, they also observe the existence of rating shopping and the diminishing
of the rating catering.
Firstly, our main focus is the EU?s CRA Regulation and its effectiveness in reducing
rating inflation and rating over-reliance.
To the best of our knowledge, this paper is the first to
examine the effectiveness of the EU?s CRA regulatory changes on the investors? perception of
rating inflation in the European ABS market.
Hence, the coverage and quality of our dataset constitutes significant addition
to the literature and allows us to test the rating shopping and rating catering more authoritatively.
The following section reviews the literature
on securitisation concerning CRAs and conflicts of interest, and outlines the regulatory changes
introduced in the post-GFC period.
Firstly, ratings became ever more important as the Securities and
Exchange Commission (SEC) 5 began heavily relying on CRA assessments for regulatory purposes
(i.e.
the investment mandates that highlight rating agencies as the main benchmark for investment
eligibility) (SEC, 2008; Kisgen and Strahan, 2010; Bolton et al., 2012).
issuers) as one of the main explanations for the rating inflation (He et al., 2011; 2012; Bolton
et al., 2012; Efing and Hau, 2015).
Bolton et al., (2012) demonstrate that competition
promotes rating shopping by issuers, leading to rating inflation.
The last phase, CRA III, was implemented in mid-2013 and involves an additional
set of measures on reducing transparency and rating over-reliance.
As mentioned above, rating inflation can be caused by rating shopping
In order to be eligible to use the STS classification, main parties (i.e.
The higher the difference in the number of ratings for a
given ABS tranche, the greater the risk of rating shopping.
Alternatively, the impact of the new
regulations could be limited when it comes to reducing rating shopping.
This is because, firstly,
the conflict of interest between securitisation parties is not necessarily the sole cause for the
occurrence of rating shopping.
L is a set of variables (Multiple ratings, CRA reported, Rating agreement) that
we utilise interchangeably to capture the rating shopping and rating catering behaviour.
Hence, issuers are incentivised to report the highest possible rating and
ensure each additional rating matches the desired level.
All in all, our results suggest that
the new stricter regulatory measures have been effective in tackling conflicts of interest and
reducing rating inflation caused by rating catering.
Self-selection might be a concern in analysing the impact of the
new measures and investors? response with regard to the rating inflation.
This
result is in line with the earlier findings suggesting that regulatory changes have reduced investors?
suspicion of rating inflation and increased trust of CRAs.
Conclusion
Several regulatory changes were introduced in Europe following the GFC aimed at tackling
conflicts of interest between issuers and CRAs in the ABS market.
Utilising a sample of 12,469
ABS issued between 1998 and 2018 in the European market, this paper examined whether these
changes have had any impact on rating inflations caused by rating shopping and rating catering
phenomena.
We find that the
effectiveness of the changes has been more limited on rating shopping potentially for two reasons.
Tranche Credit Rating is the rating reported for a tranche at launch.

The EBA consults on Guidelines on redemption plans under the Markets in Crypto-Assets Regulation

Retrieved on:

Mardi, avril 2, 2024

Crypto, ART, EBA, Guideline, Emergency medical technician, EIOPA, ESMA, Outline, European, Comment, The, Prudential, EMT, Market, Cryptocurrency

The EBA consults on Guidelines on redemption plans under the Markets in Crypto-Assets Regulation

Key Points:

The EBA consults on Guidelines on redemption plans under the Markets in Crypto-Assets Regulation
The European Banking Authority (EBA) today launched a consultation on the Guidelines for the plans to orderly redeem asset-referenced or e-money tokens in the event that the issuer fails to fulfil its obligations under the Markets in Crypto assets Regulation (MiCAR).
The Guidelines specify the content of the redemption plan, the timeframe for review and the triggers for its implementation.
The Guidelines are addressed to issuers of asset-referenced tokens (ART) and of e-money tokens (EMT), and to competent authorities under MiCAR.
Legal basis
The EBA has developed the draft Guidelines on redemption plans based on the mandate set out in Article 47(5) of MiCAR.

The EBA publishes final draft technical standards on complaints handling for issuers of asset referenced tokens

Retrieved on:

Mardi, avril 2, 2024

Crypto, RTS, EBA, The, ESMA, Policy, Market, Official Journal, Cryptocurrency

The EBA publishes final draft technical standards on complaints handling for issuers of asset referenced tokens

Key Points:

The EBA publishes final draft technical standards on complaints handling for issuers of asset referenced tokens
The European Banking Authority (EBA) today published the final draft Regulatory Technical Standards (RTS) that set out the requirements, templates and procedures for handling complaints received by issuers of asset reference tokens (ARTs).
The draft RTS were subject to a public consultation between 12 July 2023 and 12 October 2023.
General support was shown by respondents for the approach proposed by the EBA, which they considered to be appropriately balanced.
However, some respondents expressed their preference for a more uniform approach between the EBA’s RTS and the equivalent RTS by ESMA on complaints handling for crypto asset service providers.

EQS-News: Logwin 2023 with satisfactory development in a difficult market environment

Retrieved on:

Mercredi, mars 13, 2024

Corporate social responsibility, Atmosphere, ESMA, CSR, Sale, Atmosphere of Earth, EUR, Annual, Lithium

Grevenmacher (Luxembourg) – The Logwin Group achieved a satisfactory revenue and earnings performance in 2023 in a difficult market environment.

Key Points:

Grevenmacher (Luxembourg) – The Logwin Group achieved a satisfactory revenue and earnings performance in 2023 in a difficult market environment.
At EUR 91.7m, the operating result (EBITA) in the 2023 financial year was below the previous year (2022: EUR 120.1m) as well.
By contrast, the Logwin Group's net result increased to EUR 80.2m thanks to an improved financial result and the reassessment of deferred tax assets.
The Logwin Group recorded a cash inflow from operating activities of EUR 107.9m (2022: EUR 169.6m).

ESA’s Joint Board of Appeal confirms ESMA’s decision to withdraw the recognition of Dubai Commodities Clearing Corporation

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Mercredi, février 7, 2024

EBA, Civil service commission, EMIR, ESMA, DCCC, European Commission, Terrorism, CCP, EIOPA

ESA’s Joint Board of Appeal confirms ESMA’s decision to withdraw the recognition of Dubai Commodities Clearing Corporation

Key Points:

ESA’s Joint Board of Appeal confirms ESMA’s decision to withdraw the recognition of Dubai Commodities Clearing Corporation
The Joint Board of Appeal (“the Board”) of the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) unanimously decided to dismiss the appeal brought by Dubai Commodities Clearing Corporation (“DCCC”) against the European Securities and Markets Authority (“ESMA”) and to therefore confirm the ESMA decision to withdraw its recognition.
The application was brought in relation to ESMA’s Decision, adopted under Article 25p of Regulation (EU) No 648/2012 (EMIR), to withdraw the recognition of DCCC as a Tier 1 third-country central counterparty (CCP).
The Board had decided to suspend the ESMA decision in October 2023 until the outcome of the appeal is concluded.
With today’s publication, the suspension has expired and the ESMA decision has become fully operational.

EBA consults on targeted amendments to the prudent valuation framework

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Samedi, février 3, 2024

European, RTS, EBA, ESMA, CRR, Calibration, Capital Requirements Regulation 2013, Comment

EBA consults on targeted amendments to the prudent valuation framework

Key Points:

EBA consults on targeted amendments to the prudent valuation framework
The European Banking Authority (EBA) today published a consultation paper on targeted amendments to the Regulatory Technical Standards (RTS) on prudent valuation, aiming to promote a more harmonised application of the RTS and to reduce the observed variability of additional value adjustments (AVAs) under the core approach, as well as to set the rules for the application of the prudent valuation framework in extraordinary circumstances.
The RTS on prudent valuation set out the requirements that institutions operating in the EU should apply for the valuation of their fair-valued assets and liabilities for prudential purposes.
Building on a review of the implementation of those requirements since 2016, the consultation paper proposes targeted amendments to the RTS to promote best practices and ensure a more harmonised application of the RTS.
In addition, the consultation paper contains a proposal for a framework for ‘extraordinary circumstances’ for prudent valuation, including conditions for determining the presence of extraordinary circumstances, and rules for the calculation of AVAs under those circumstances.