EBA published its final draft Regulatory Technical Standards (RTS) specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
The final draft RTS clarify that entities carrying out banking activities or services and which have been authorised and supervised in accordance with the EU prudential framework, shall not be considered as shadow banking entities.
For those entities established in a third country, the final draft RTS differentiate between institutions and other entities.
- Institutions are not identified as shadow banking entities provided
they are authorised and supervised by a supervisory authority that
applies banking regulation and supervision based on at least the Basel
core principles for effective banking supervision.
- Other entities are not identified as shadow banking entities
provided they are subject to a regulatory regime recognised as
equivalent to the one applied in the Union for such entities in
accordance with the equivalence provisions of the relevant Union legal
act.
Undertakings included in the consolidated supervision of an
institution are out of the scope of these final draft RTS. In addition,
the final draft RTS clarify that central clearing counterparties (CCPs)
are not identified as shadow banking entities when performing only
clearing as defined in Article 2(3) of Regulation (EU) No 648/2012
(EMIR).
Legal basis
The main basis for the development of the draft RTS are the existing
EBA guidelines on limits on exposures to shadow banking entities which
carry out banking activities outside a regulated framework (EBA/GL/2015/20), taking into due consideration the international developments in shadow banking.
Article 394(2) of the Capital Requirements Regulation (CRR), as
amended by Regulation (EU) 2019/876 (CRR2), sets out the additional
reporting obligation for an institution that is required to report its
10 largest exposures to shadow banking entities which carry out banking
activities outside the regulated framework on a consolidated basis.
Article 394(4) of the CRR mandates the EBA to develop draft RTS to
specify the criteria for the identification of shadow banking entities
referred to in paragraph 2, taking into account international
developments and internationally agreed standards on shadow banking and
whether entity or a group of entities may carry risks to the
institution's solvency or liquidity position. Entities are subject to
solvency or liquidity requirements similar to those imposed by this
Regulation and Directive 2013/36/EU (CRD) should be entirely or
partially excluded from the obligation to be reported as shadow banking
entities.
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