Financial Regulatory Developments Focus – 17 June 2014

In this newsletter, we provide a snapshot of the principal European, US and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

COMPENSATION

EBA Report on EU Remuneration Trends

On 13 June 2014, the European Banking Authority ("EBA") published a report on remuneration practices across the EU. The report, which is based on data collected on a consolidated basis from 2010 to 2012, illustrates the diversity in quantity and structure of pay across the EU financial sector. The report highlights that practices vary on the deferral of variable remuneration depending on the application of the proportionality principle by Member States and individual firms. The EBA is analyzing an emerging practice on the use of "position or role-based allowances" and intends to provide guidance criteria on the allocation of those elements of pay to either fixed or variable remuneration because it is concerned that the practice may lead to the cap between variable and fixed remuneration being thwarted.

The EBA report is available at: http://www.eba.europa.eu/documents/10180/534414/EBA+Remuneration+benchmarking+report+2010+to+2012.pdf.

CAPITAL AND PRUDENTIAL REGULATION

Further Secondary Legislation under CRD IV Published

On 13 June 2014, secondary legislation under the Capital Requirements Regulation ("CRR") and the Capital Requirements Directive was published in the Official Journal of the European Union. The legislation comprised regulatory technical standards ("RTS"), setting out the requirements for investor, sponsor, original lenders and originator institutions relating to exposures to transferred credit risk, and implementing technical standards ("ITS") on the information exchange between home and host Member State regulators.

The legislation is available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2014_174_R_0006&from=EN and http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2014:172:FULL&from=EN.

EBA Consults on Draft Guidelines for Pillar 3 Disclosure Waivers

On 13 June 2014, the EBA published a consultation on proposed Guidelines for banks and investment firms wishing to utilize the Pillar 3 disclosure waivers available under the CRR. The draft Guidelines cover the process that banks and investment firms should follow and the criteria that should be applied when firms assess whether to use any waiver relating to the materiality...