Final draft report on draft ITS on IGT and RC reporting templates for conglomerates

JC/ 2020/ 84

Draft

Final Report on draft implementing technical standards on the reporting of intra-group transactions and risk concentration under Article 21a (2b) and (2c) of Directive 2002/87/EC

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Contents

1.	EXECUTIVE SUMMARY	3
2.	BACKGROUND AND RATIONALE	4
Importance of uniform reporting requirements	4
Current requirements as regards the reporting of information on intra-group transactions	4
Main features	5
Current requirements as regards the reporting of information on risk concentration	9
Main features	9
3.	DRAFT IMPLEMENTING TECHNICAL STANDARDS	13
4.	ACCOMPANYING DOCUMENTS	17
4.1	Draft cost-benefit analysis/impact assessment	17
4.2	Overview of questions for consultation	19
4.3	Feedback on the public consultation	20

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1. Executive summary

The Joint Committee of the ESAs has developed these draft implementing technical standards (ITS) on the reporting of intra-group transactions and risk concentration under Article 21a (2b) and (2c) of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate (FICOD)1.

The harmonization of the intra-group transaction and risk concentration templates aims to fully align the reporting under FICOD in order to enhance supervisory overview regarding group specific risks, in particular contagion risk. They will also increase comparability amongst financial conglomerates of different Member States improving supervisory consistency. Further, the harmonization of the templates enables enhancing the level playing field between financial conglomerates diminishing the reporting burden for cross-country financial conglomerates. In doing so, the present regulation will contribute to the consolidation of the single market.

Articles 21 a (2b) and (2c) of FICOD mandate the ESAs through the Joint Committee), to develop uniform conditions of application of the supervisory overview.

This draft ITS proposes harmonised templates for the reporting of intra-group transaction and risk concentration for financial conglomerates aiming at collecting information in order for competent authorities to perform their supervisory overview referred to in Articles 7(2) and 8(2) of FICOD.

Harmonised templates will help coordinators and other relevant competent authorities to identify relevant issues and exchange information more efficiently. Furthermore, they will ensure fair competition while reducing regulatory complexity and firms' compliance costs, especially for financial conglomerates operating on a cross-border basis, therefore fostering the European Single Market.

After a public consultation period of 3 months the Joint Committee has revised the proposal, taking into account the feedback received. Once endorsed by the European Commission, they would take the form of a delegated regulation.

The ITS will enter in force on 1st January 2022.

1. OJ L35, 11.2.2003, p.1-27
2. Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, OJ L331, 15.12.2010, p. 12-47
3. Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC, OJ L331, 15.12.2010, p. 48-83
4. Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC, OJ L331, 15.12.2010, p. 84-119

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3. Background and rationale

Importance of uniform reporting requirements

The aim of the ITS is to offer a single framework of requirements for the reporting due by financial conglomerates subject to supplementary supervision in the EU, thereby helping coordinators and other relevant competent authorities to identify relevant issues and exchange information more efficiently, reducing costs and fostering a level playing field across EU financial conglomerates. It provides the foundation for the full harmonisation of reporting, with one single set of templates, one single embedded dictionary using common definitions and even one single set of instructions to fill in the templates.

One of the main responses to the latest financial crisis was the establishment of a single set of harmonised prudential rules in the EU to facilitate the functioning of the internal market and to prevent regulatory arbitrage opportunities. A single set of harmonised prudential rules also reduces regulatory complexity and firms' compliance costs, especially for firms operating on a cross-border basis.

The ITS on reporting of intra-group transactions and risk concentrations under paragraphs 2b and 2c of Article 21a FICOD will form part of this single set of harmonised prudential rules along with the Commission Delegated Regulation (EU) 2015/23035 of 28th July 2015 and will become directly applicable in all Member States once adopted by the European Commission and published in the Official Journal of the EU.

Current requirements as regards the reporting of information on intra-group transactions

Member States "shall require regulated entities or mixed financial holding companies to report on a regular basis and at least annually to the coordinator all significant intra-group transactions of regulated entities within a financial conglomerate" (Article 8(2) FICOD).

Intra-group transactions are defined by Article 2 (18) FICOD as: "all transactions by which regulated entities within a financial conglomerate rely directly or indirectly on other undertakings within the same group or on any natural or legal person linked to the undertakings within that group by close links, for the fulfilment of an obligation, whether or not contractual, and whether or not for payment".

Moreover, significant intra-group transactions are more specifically specified in Article 2 of the Commission Delegated Regulation (EU) 2015/2303.

5Commission Delegated Regulation (EU) 2015/2303 of 28 July 2015 supplementing Directive 2002/87/EC of the European Parliament and of the Council with regard to regulatory technical standards specifying the definitions and coordinating the supplementary supervision of risk concentration and intra-group transactions

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