EBA欧洲银行-GL_Article10628229_10页_194kb

Summary of Implementation Guidelines on Article 106(2)(c) and (d) of Directive 2006/48/EC (Recast)

Core Content

These guidelines aim to provide clarity on the implementation of Article 106(2)(c) and (d) of the Capital Requirements Directive (CRD), which allow for exemptions from the large exposures (LE) regime for certain very short-term exposures related to financial services. The exemptions are designed to ensure the smooth functioning of financial markets and related infrastructure, particularly in the context of money transmission, financial instruments clearing, settlement, and custody services.

Main Points

• Purpose of Exemptions:
  The exemptions in Article 106(2)(c) and (d) of the CRD are intended to support the efficient operation of financial markets by allowing certain short-term exposures to be excluded from the LE regime. These exposures are typically volatile and dependent on client activity or market conditions.

• Implementation Timeline:
  The amendments to the CRD must be transposed into national law by 31 October 2010 and applied from 31 December 2010. The European Banking Authority (CEBS) expects its members to transpose and apply the guidelines by these dates.

• Scope of Exemptions:
  The exemptions apply to:

  • Article 106(2)(c): Exposures related to money transmission, financial instruments clearing, settlement, and custody services that do not last longer than the following business day.
  • Article 106(2)(d): Intra-day exposures to institutions providing money transmission, clearing, and settlement services.

Key Information

Article 106(2)(c) – Exemptions for Overnight Exposures

• Eligibility Criteria:

  1. Type of Service: Exposures must arise from the provision of money transmission, clearing, settlement, or custody services.
  2. Client Activity: The exposure must result from client activity, which includes both direct and indirect actions (e.g., payments by agents or contracting partners).
  3. Timeframe: The exposure must not last longer than the following business day.

• Exempted Exposures:

  • Delayed receipts in funding.
  • Unexpected incoming or outgoing flows that cannot be mitigated before the end of the business day.
  • Cash collateral given or received in the context of client services.
  • Re-deposited or re-structured exposures that result from diversification efforts, provided they are reduced below the LE limit by the next business day.

• Additional Conditions for Diversified Exposures:

  • The diversified exposures must result solely from the institution's efforts to reduce risk.
  • The third-party institutions involved must have a credit assessment by an eligible External Credit Assessment Institution (ECAI) associated with credit quality step 3 or above under the CRD's risk weighting rules.

Article 106(2)(d) – Exemptions for Intra-Day Exposures

• Eligibility Criteria:

  1. Type of Service: Exposures must arise from the provision of money transmission, clearing, settlement, or correspondent banking services.
  2. Specific Service Providers: The exposure must be to institutions providing these services.
  3. Timeframe: The exposure must be reduced below the LE limit within the same business day.

• Scope:

  • Exemptions apply to intra-day exposures, regardless of the origin (e.g., from financial instrument transactions, payments for purchases, etc.).
  • The service providers do not need to be payment institutions under the Payment Services Directive, nor does the service need to be a major part of their business.
  • They must be subject to prudential or market supervision equivalent to that under Community law.

General Requirements

• Both articles require that institutions implement robust procedures and control mechanisms to ensure compliance with the exemption conditions.
• The aggregate exposure at the end of the day may exceed the LE limit, but this does not automatically disqualify it from exemption if the individual exposures (i.e., "single exposures") meet the criteria.
• Cash collateral is exempt provided it is not held for a fixed or minimum period exceeding the next business day.

Conclusion

These guidelines are essential for ensuring consistent application of the exemptions under Article 106(2)(c) and (d) of the CRD. They clarify the eligibility criteria and the scope of exemptions, allowing financial institutions to manage short-term exposures without compromising the stability of the financial system. The exemptions are particularly relevant for institutions involved in money transmission, clearing, settlement, and custody services, which deal with highly volatile and time-sensitive transactions.