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A-Team Insight Blogs

EBA to Prioritise AML in 2020 Work Programme, ESMA to Focus on EMIR 2.2

The European Banking Authority (EBA) has released its Work Programme for 2020, with a focus on prioritising anti-money laundering (AML) regulations, moving towards an integrated EU data hub, and delivering the new ‘Basel IV’ banking package.

The authority plans to work “intensively” on the mandates from the Risk Reduction Measures (RRM) package with a view to delivering the Level 2 regulations necessary for the implementation of the new CRD, CRR and BRRD, together with the introduction of the Investment Firms Directive (IFD) and Investment Firms Regulation (IFR) regime and the Covered Bonds Directive. These regulatory changes will follow clear roadmaps and aim to (i) reduce excessive leverage, (ii) address long-term funding risk, (iii) address market risks by increasing the risk sensitivity of the framework and enhancing proportionality, and (iv) ease the compliance burden for smaller institutions.

Another key area of focus will be the implementation of more risk sensitive requirements for market risk, following the Basel work on the Fundamental Review of the Trading Book (FRTB). The amendments will establish clearer rules on the scope of application to prevent regulatory arbitrage, increase proportionality, and strengthen the conditions for using internal models to enhance consistency and risk weight comparability across banks.

The EBA plans to finalise its roadmap for calculating minimum capital requirements for credit risk, to address the concerns around the excessive variability of capital requirements for credit risk, stemming from the application of internal models.

The agency will also carry out another EU-wide stress test, in line with its previous decision to aim for a biannual exercise.

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, also recently published its 2020 Work Programme (WP), setting out its priorities and areas of focus for the next 12 months in support of its mission to enhance investor protection.

The key issue facing ESMA in 2020 is the implementation of its new mandates, and enhanced role, in areas including direct supervision, supervisory convergence, investor protection, relations with third countries, sustainability and technological innovation. This follows the conclusion of the European Supervisory Authority (ESA)’s latest Review, which will involve changes to its mission from 2020, and EMIR 2.2., where ESMA will build its capacity to supervise Third Country Central Counterparties (CCPs) and further promote convergence for EU CCPs.

“2020 will be a transformative year for ESMA when the organisation begins to implement its new mandates following the ESA’s Review and EMIR 2.2. These bring new responsibilities in the fields of direct supervision, supervisory convergence, investor protection, relations with third countries, sustainability and technological innovation, and are, I believe, a recognition of how ESMA has met the challenges it has faced since its creation in 2011 and of its capabilities as a regulator and supervisor,” says ESMA Chair Stephen Maijoor.

“In tandem to this implementation work, ESMA will continue its focus on promoting supervisory convergence and assessing risks with a continued emphasis on the implementation of MiFID II/MiFIR, tackling the issue of cost and performance of retail investment products and facilitating data-driven supervision.”

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