EBA and Commission agree on amended technical standards on benchmarking of internal approaches

The European Banking Authority (EBA) issued today an Opinion to the European Commission expressing agreement with its proposed amendments to the EBA Implementing Technical Standards (ITS) on benchmarking of internal approaches. These amendments, which were agreed with the EBA building on the experience of the 2014-15 benchmarking exercise, aim at ensuring a better quality of the submitted data and, ultimately, at strengthening the benchmarking analysis performed by the EBA and Competent Authorities. The EBA plans to annually update the ITS and to maintain them on a regular basis to ensure the success and quality of future benchmarking exercises.

The amended ITS on benchmarking of internal approaches will allow the EBA to run its 2016 exercise based on the data requirements specified in the amended standards. In particular, the 2016 exercise will cover credit risk for the so-called high-default portfolios (small and medium enterprises and retail) and market risk portfolios as well as some information about the models used to produce the results.

All EU institutions using internal approaches to calculate capital requirements will be subject to an assessment of their internal approaches and are required to submit to their Competent Authorities the data on those portfolios by close of business on 30 June 2016.

Changes to the ITS will be applied annually since some features of the instruments or counter-parties included in the benchmarking portfolios require regular updating as they may become obsolete or cease to exist.

The EBA is currently taking into consideration the changes to the portfolios relevant for the 2017 exercise. These too will be transmitted to the European Commission and published after the adoption by the EBA Board of Supervisors.

The EBA statement and the Opinion are available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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