CRD/CRR, Current developments

On 23 November 2016, following a public consultation on specific changes to the CRD IV (Capital Requirements Directive) and the CRR (Capital Requirements Regulation) in 2015, the European Commission initiated the formal legislative process to revise the CRD IV and the CRR.

In 2015 the European Commission held a public consultation on the CRD IV (Capital Requirements Directive) and the CRR (Capital Requirements Regulation). Its focus was the financing of small and medium-sized enterprises (SMEs), infrastructure projects, and, in connection with measures concerning the Capital Markets Union, an exploration of European financial markets legislation as a whole. The resulting proposal for amendments to the CRD IV and the CRR, which was published on 23 November 2016, addressed topics including the following:

CRD

  • Pillar 2 capital requirements and recommendations
  • Limitation of both the Supervisory Review and Evaluation Process (SREP) and Pillar 2 to microprudential oversight
  • Introduction of a revised framework for interest-rate risk in the banking book

CRR

  • Waivers from capital and liquidity requirements for subsidiaries
  • Implementation of the globally agreed Total Loss-Absorbing Capacity (TLAC) standard
  • Standardised Approach for Counterparty Credit Risk (SA-CCR)
  • Exposures to central counterparties
  • Definition of trading book and capital requirements for the market risk in trading book positions
  • Large exposures regime
  • Leverage ratio as an additional capital requirement and adjustment of the method used to calculate the ratio
  • Regulatory reporting system and disclosure
  • Net Stable Funding Ratio (NSFR)
  • Transitional arrangements for the initial application of IFRS 9 “Financial Instruments”
  • Expansion of preferential treatment with regard to the capital requirements for credit risk at small and medium-sized entities

An official consultation on the published amendment proposals was not envisioned. The European Parliament and the Council, and thus also the German Federal Ministry of Finance (BMF), are studying the amendments proposed by the European Commission. The specific amendments to the CRD IV and the CRR will be decided in trialogue negotiations involving the European bodies, i.e. the Parliament, the Council, and the Commission.