Regulatory Insights: June 2024 Edition
Welcome back to this week's RegFocus!
Your trusted source for the latest regulatory updates across the world. In this edition, we'll explore significant updates from regulatory authorities such as:
European Banking Authority:
EBA Issues Opinion on Adjusting Risk Weight for Commercial Immovable Properties
On June 7, 2024, the EBA responded to Norway's Ministry of Finance regarding adjustments to risk weights for commercial immovable properties secured by mortgages. Acknowledging concerns over financial stability risks, particularly in agriculture, forestry, and fisheries sectors, the EBA supports reconsidering the current 100% risk weight requirement.
EBA Consults on New Framework for Operational Risk Losses
Starting June 6, 2024, the EBA initiated a consultation on new Regulatory Technical Standards (RTS) aimed at standardizing the collection and recording of operational risk losses. The proposed RTS includes a waiver for annual operational risk loss calculations under certain burdensome conditions and establishes a risk taxonomy for merged entities.
EBA Publishes Plan for DPM 2.0 Implementation
The EBA released its plan on June 5, 2024, detailing the implementation of Data Point Model (DPM) 2.0 within its regulatory reporting framework. DPM 2.0 aims to enhance integration, versioning, and data relationship definitions, with a transitional period scheduled until December 2025 to facilitate a smooth transition.
EBA and ESMA Invite Comments on Investment Firms Prudential Framework Review
On June 3, 2024, the EBA and ESMA jointly published a discussion paper seeking stakeholder input on potential revisions to the investment firms' prudential framework. The paper addresses implications of CRD VI, CRR3, FRTB, and CVA on trading books, alongside considerations for non-prudentially regulated firms in commodity markets.
European Securities and Markets Authority:
ESAs Call for Enhanced Supervision on Sustainability Claims
The ESAs issued a call on June 7, 2024, urging improved supervision and market practices to combat greenwashing in sustainable financial products. This initiative aims to align sustainability claims with actual practices, enhancing market integrity and investor confidence through rigorous NCAs scrutiny and potential Common Supervisory Actions.
ESAs Publish Templates for DORA Implementation Dry Run
ESAs released essential tools and documents on May 31, 2024, supporting institutions in conducting a voluntary dry run for reporting registers under the Digital Operational Resilience Act (DORA). These resources aid entities in preparing for mandatory reporting obligations starting 2025.
ESAs and ENISA Formalize Cooperation on Cybersecurity
On June 5, 2024, ESAs signed a MoU with ENISA to enhance cybersecurity collaboration in the financial sector. The agreement aims to bolster regulatory convergence, incident reporting frameworks, and oversight of critical ICT third-party providers under NIS2 and DORA mandates.
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Bank of England:
Bank of England Introduces New Banknotes Featuring King Charles III
Starting June 5, 2024, the Bank of England will circulate new banknotes featuring King Charles III's portrait alongside existing designs. This initiative follows guidelines to gradually replace worn notes while maintaining co-circulation with current polymer notes featuring Queen Elizabeth II.
Securities and Exchange Commission:
SEC Invites Regulated Entities to Submit Diversity Self-Assessment
On June 5, 2024, the SEC initiated its biennial collection of Diversity Self-Assessment Submissions from regulated entities. This voluntary process enables organizations to evaluate diversity policies, contributing to SEC's monitoring and reporting on diversity-related activities.
Office of the Comptroller of the Currency:
Acting Comptroller Discusses AI and Financial Stability
On June 6, 2024, the OCC's Michael J. Hsu addressed systemic risk implications of AI adoption in banking and finance at a conference in Chicago. Hsu emphasized the need for robust risk management frameworks amid rapid technological advancements, drawing parallels to historical challenges in electronic trading.
OCC Releases May 2024 Community Reinvestment Act Evaluations
The OCC published evaluations on June 6, 2024, for CRA performance among national banks and federal savings associations. Out of 19 evaluations, 11 received satisfactory ratings, and eight were outstanding, reflecting institutions' commitments to community reinvestment.
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