53rd meeting of the European Financial Markets Lawyers Group
AGENDA
Tuesday, 24 November 2015
10:00 – 17:30
Venue: ECB Offices at the Commerzbank Building (Altes Commerzbank Hochhaus),
Neue Mainzer Strasse 32 - 36, 60311 Frankfurt am Main
Meeting room: CB11
1. Welcome by the Chair and adoption of the agenda
2. Recovery and resolution of credit institutions and investment firms – Article 55 of the BRRD
(follow-up on previous EFMLG discussions with new developments)
Presenters: The Vice Chairman, Asmaa Cheikh, Francis Dickinson and Olivier Coupard
Background:
- The European Banking Authority (EBA) published on 3 July 2015 its final draft Regulatory Technical Standards (RTS) on the contractual recognition of bail-in in order to provide further specification of essential elements to ensure the effectiveness of the resolution regime established by the Bank Recovery and Resolution Directive (BRRD). The standards are part of the EBA's major programme of work to implement the BRRD and address the problem of too-big-to-fail banks. They have been developed according to Article 55(3) of the BRRD, which requires the EBA to further determine the list of liabilities to which the exclusion in Article 55(1) of the BRRD applied, and the contents of the terms required in that paragraph, taking into account banks' different business models.
- Some reflections on Article 55 of the BRRD: British Bankers’ Association (BBA) of 28 October 2015, Association for Financial Markets in Europe (AFME) of 30 October 2015, International Chamber of Commerce of 2 April 2015.
- 2015 ISDA Universal Resolution Stay Protocol of 4 November 2015.
The new Stay Protocol has been published on 12 November 2015. The provisions are substantially the same as the ISDA 2014 Resolution Stay Protocol that was adhered to by the 18 globally significant banking groups. A substantive change is the coverage of securities lending transactions and repurchase transactions entered into under the documentation sponsored by ICMA, ISLA and SIFMA. Further, the 2015 ISDA Universal Resolution Stay Protocol is open to everybody (not just significant banks and broker-dealer).
- FSB Principles for Cross-border Effectiveness of Resolution Actions dated 3 November 2015
After completing its consultation in September 2014, the FSB issued its final paper. It concludes that the development of effective statutory frameworks and legal processes for giving prompt effect to foreign resolution actions should be the ultimate objective.
Documents:
3. MREL & TLAC – State of play
Presenter: Francis Dickinson
Background:
- As regards MREL: the EBA published on 3 July 2015 its final draft Regulatory Technical Standards (RTS) on the Minimum Requirement for Own Funds and Eligible Liabilities (MREL), in order to provide further specification of essential elements to ensure the effectiveness of the resolution regime established by the BRRD. The standards are part of the EBA's major programme of work to implement the BRRD and address the problem of too-big-to-fail banks. The final draft RTS on MREL have been developed according to Article 45 of the BRRD, which mandates the EBA to further specify the MREL criteria.
- As regards TLAC: in November 2014 the FSB published, in consultation with the Basel Committee on Banking Supervision (BCBS) a consultative document on an international standard for Total Loss-Absorbing Capacity (TLAC) to be applied to global systemically important banks (G-SIBs). The TLAC standard is designed to ensure that if a G-SIB fails it has sufficient loss-absorbing and recapitalisation capacity available in resolution to implement an orderly resolution that minimises impacts on financial stability, ensures the continuity of critical functions, and avoids exposing public funds to loss. The final TLAC Principles and Term Sheet of 9 November 2015 reflect changes made following the public consultation and the comprehensive impact assessment studies.
Documents:
4. Update on Euribor/Euribor+ - State of play and presentation of the new stakeholder consultation of EMMI on the evolution of Euribor
(Status update on a previous EFMLG item and new developments)
Presenter: Antonio Paredes / Inigo Arruga
Background:
- State of play after the exchange of letters between the EFMLG (25.9.2014) and the European Commission (07.11.2014)
- Following the recommendations outlined in the FSB’s Report “Reforming Major Interest Rate Benchmarks” published in July 2014, Euribor and other major reference interest rates based on unsecured funding costs should be underpinned to the greatest extent possible with transactions data. In this context, EMMI has been working on a transaction-based determination methodology for Euribor. As part of this process, EMMI has published on 30 October 2015 a consultative position paper summarizing EMMI’s plans for the reform of the determination methodology for Euribor, as well as EMMI’s planning for a Seamless Transition to a transaction-based Euribor by July 2016.
Documents:
5. Differences in application of MiFiD by national authorities - Discussion of the Commission’s reply to the EFMLG letter
(Status update of a previous EFMLG item and determining further actions)
Presenter: TBC (previously, Adolfo Fraguas Bachiller, now Nuria Alonso)
Background: By means of a letter on 26 June 2015 the EFMLG invited the European Commission to raise awareness of an existing unlevel playing field created as a result of uncoordinated local developments with respect to EU investor protection rules.
Documents:
6. EFMLG Initiative on Collateral – final steps (follow-up on previous EFMLG discussions – state of play)
Presenter: The Vice Chairman, Dimitris Tsibanoulis
Background: Finalisation of the draft EFMLG paper aiming at analysing the different issues affecting collateral (based on European laws or initiatives).
Documents:
7. Netting – follow up with ISDA (follow-up on previous EFMLG discussions – state of play)
Presenter: The Vice Chairman
Background: It is to be discussed whether to initiate an EFMLG action in front of the European Commission supporting the need to pursue anew previous Commission engagements on ensuring uniform and sound application of netting across the EU.
Documents:
8. Commission proposal for a Regulation laying down common rules on securitization and creating a European framework for simple, transparent and standardized securitization (COM(2015) 473 final) and Commission proposal for a Regulation amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (COM(2015) 473 final) of 30 September 2015 (Discussion of new developments) (14:55-15:30)
Presenter: The Vice Chairman
Background:
- The first regulation refers to the Capital Markets Union (CMU) and the Commission initiative to create a sustainable market for securitizations, without repeating the mistakes made before the financial crisis. The Commission identifies securitizations as an important element of well-functioning capital markets as it may help to free up credit institutions' balance sheets to allow for further lending to the real economy. The regulation introduces a new quality label “STS”, and defines requirements that securitizations have to meet in order to carry that label.
- The second regulation implements the revision of the securitization framework agreed upon in the Basel Committee.
Documents:
9. Negative interest rates - Update on draft legal opinions on the treatment of negative interest rates
(follow-up on previous EFMLG discussions – state of play)
Presenter: Bertrand Brehier, Frank Fischer
Background: State of play in light of the previous discussion at the EFMLG on certain implications of negative interest rate on the interbank market and some assets (deposits, loans, collateral). Further discussions based on national perspectives as shared by the EFMLG members.
Documents:
10. Task Force on Banking Secrecy (follow-up on previous EFMLG discussions – state of play)
Presenter: The EFMLG Secretariat
Background: By means of a letter of 30 October 2014 the EFMLG intended to raise the European Commission’s awareness of a potential dilemma that European financial institutions might face resulting from the various applicable banking secrecy laws as a consequence of banking groups’ international presence on the one hand and new regulations requesting transaction based information or stipulating a group wide risk management approach on the other hand. As explained in the letter, financial institutions have to deal with an increased pressure to comply with several (foreign) laws and other regulatory requests for access to data, potentially conflicting with the various applicable banking secrecy laws which may constrain such disclosures in the countries in which they operate.
11. New Law on recapitalization of Greek banks (new developments)
Presenter: Dimitris Tsibanoulis
Background: On 31 October 2015 Greece’s parliament approved legislation outlining the process of recapitalising the country’s banks. The presentation will focus on the key features of the new law.
12. Any other issues
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