Some attendees requested clarification regarding the role of CEBS guidelines especially on the new liquidity regulatory regime, given the regulatory framework outlined in the recent Basel publication and EC consultation on CRD IV.
The Committee of European Banking Supervisors (CEBS) held a public hearing on 10 March 2010 to present its draft revised Guidelines on stress testing. The hearing was chaired by Piers Haben (Chair of the CEBS Stress Testing Task Force).
Around 50 representatives from individual institutions, industry associations, consultancy agencies and journalists attended the hearing, which facilitated a significant degree of constructive debate during the three hour session, which within the context of broad support, led to several constructive points being raised for consideration.
In general, the draft revised guidelines were welcomed by attendees as clarification of supervisory expectations that would incentivise them to strengthen their stress testing frameworks.
Industry representatives raised some important challenges, particularly regarding the level of detail and prescription in the guidelines. Whilst attendees agreed that further explanatory detail and examples are useful, they requested that some of the more detailed points be clearly identified as being as good practices which banks and supervisors should consider, but not necessarily limit themselves to. Similarly, attendees asked for further clarification about the application of proportionality against some of the guidelines.
Some attendees requested clarification regarding the role of the guidelines in light of proposed changes to the regulatory framework outlined in the recent BCBS publication3 and EU Commission consultation paper on CRD IV4, particularly in relation to the proposals for the new liquidity regulatory regime. CEBS is continually monitoring developments in the regulatory framework and will review if necessary, relevant aspects of the guidelines in order to make them consistent with any new regulatory regime, once proposals are finalised.
Industry representatives also raised questions about the proposed implementation date for the guidelines – 30 June 2010, suggesting that it would take time for institutions to implement the guidelines and make any necessary enhancements to their infrastructure and frameworks. It was clarified that CEBS proposes a phased implementation approach to the guidelines, where institutions will be expected to transition to more sophisticated approaches to stress testing over time and gradually improve their stress testing frameworks.
© CEBS - Committee of European Banking Supervisors
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