EBA: Changes to ITS Reporting Requirements, DK Suggests Efficiency and DORA Compliance
The European Banking Authority (EBA) initiated a public consultation in March 2023 on its proposed amendments to the existing Implementing Technical Standards (ITS) for specific reporting requirements for market risks. These proposals aim to provide necessary data to supervisory authorities to monitor the implementation of the Fundamental Review of the Trading Book (FRTB) approaches and compliance with the own funds requirements for market risk. The consultation paper also highlights possible changes to the ITS on supervisory reporting that mainly reflect the framework for limiting the trading book. The German Banking Industry Committee (DK) emphasizes the importance of efficient reporting requirements that are based on existing metrics and do not go beyond the framework of regulatory capital determination to avoid unnecessary effort. The DK also made a note of the Digital Operational Resilience Act (DORA) in relation to the EBA's consultation.
Navigating Market Risk Reporting and Operational Resilience: EBA Amendments and the Banking Industry's Response
The European Banking Authority (EBA) has taken a significant step towards enhancing market risk monitoring and compliance with the Fundamental Review of the Trading Book (FRTB) approaches and own funds requirements. In March 2023, the EBA initiated a public consultation on proposed amendments to the Implementing Technical Standards (ITS) for specific reporting requirements. These amendments aim to provide supervisory authorities with the necessary data to effectively monitor market risks within the banking sector.
The proposed changes to the ITS for market risk reporting have raised both opportunities and challenges for financial institutions operating within the European Union (EU). On one hand, these amendments would enable supervisory authorities to exercise enhanced oversight and ensure the resilience of the banking sector. By providing more comprehensive data, the proposed amendments align with the EBA's objective of monitoring the implementation of FRTB approaches and assessing compliance with own funds requirements.
However, the potential impact on financial institutions should not be overlooked. The changes could introduce increased reporting burdens, requiring banks to adjust their data collection and reporting processes. The German Banking Industry Committee (DK) has rightly emphasized the importance of efficiency in reporting requirements, cautioning against unnecessary administrative effort. This highlights the concern of banks regarding the potential additional workload and associated costs that could arise from these amendments.
Moreover, the article also highlights the mention of the Digital Operational Resilience Act (DORA) by the DK. This connection introduces an additional layer of complexity for financial institutions. DORA establishes requirements for the operational resilience of financial entities, which may necessitate further adjustments to reporting processes. Banks would need to ensure their reporting systems comply with DORA's rules, potentially requiring investments in technology and cybersecurity.
However, viewing this from a positive perspective, enhanced compliance with DORA can contribute to the overall resilience of the banking sector. By implementing robust systems to manage operational risks and recover from potential disruptions, financial institutions can further strengthen their resilience and adaptability.
In conclusion, the EBA's proposed amendments to the ITS for market risk reporting signal a crucial development in the EU financial landscape. While the changes offer an opportunity for improved oversight and resilience, they also pose challenges for financial institutions. Addressing these challenges will require proactive efforts from banks to adjust their reporting processes, manage increased administrative burdens, and align with the requirements of DORA. By doing so, financial institutions can enhance their compliance, resilience, and adaptability in the ever-evolving regulatory landscape.
Grand is Live
Check out our GPT4 powered GRC Platform