News Update Financial Regulatory

25 March 2020

The developments concerning the coronavirus (COVID-19) are moving at high speed. In this second News Update, the Houthoff Financial Regulatory team provides a brief overview of the most important new developments from a financial regulatory perspective.

We will publish additional updates on a regular basis in the coming period. If you wish to stay informed, you can subscribe to these updates here.

ECB - announcement of EUR 750 billion Pandemic Emergency Purchase Programme (PEPP)

In order to mitigate the economic impact of the coronavirus pandemic, the European Central Bank ('ECB') has launched a new programme for the temporary acquisition of assets of private and public sector securities. EUR 750 billion will be made available for this purpose.

ECB - further flexibility in Banking Supervision in reaction to coronavirus

The ECB has announced the following additional measures for significant institutions ('SIs'), (for less significant institutions ('LSIs') we refer to the DNB message below):

• banks are given further flexibility in prudential treatment of loans backed by public support measures
• banks are encouraged to avoid excessive procyclical effects when applying the IFRS 9 international accounting standards
• the capital and operational relief measures announced on 12 March 2020 are activated
• capital relief of EUR 120 billion could be used to absorb losses or potentially finance up to EUR 1.8 trillion of lending.

ECB - questions and answers on coronavirus supervisory measures

On 20 March 2020, the ECB published questions and answers - to be updated depending on developments - on the subject of:

• relief measures regarding asset quality deterioration and non-performing loans
• relief measures regarding the operational aspects of supervision
• relief measures regarding capital and liquidity requirements
• other clarifications

EBA - clarity for banks and consumers on the application of the prudential framework in light of COVID-19 measures

The European Banking Authority ('EBA') calls for flexibility and pragmatism in the application of the prudential framework. This concerns, for example, when a debtor is in default. However, the EBA requires banks to make an individual assessment of the likelihood of the debtor being able to pay. If deferral is given to consumers, it should be designed in their interest, without hidden charges. Contactless payments should be stepped up to the threshold allowed under EU law. Read more

ESMA - three months deferral of new reporting obligation SFTR

In light of the continuing challenges posed by the coronavirus, the joint European financial supervisory authorities have decided to postpone the new reporting requirements for Securities Financing Transactions ('SFTR') by three months. This obligation should originally enter into force on 13 April. Read more

ESMA - positive opinion on temporary short selling prohibitions in France and Spain

The European Securities and Markets Authority ('ESMA') has issued a positive opinion on the decisions of the French (AMF) and Spanish (CNMV) regulator to prohibit shortselling for one month. The measures apply to French and Spanish trading venues.

ESMA – call taping obligations under MiFID II

ESMA recognises that due to the exceptional circumstances, scenarios may emerge where it is practically impossible to comply with the obligations to record relevant conversations under MiFID II. If this is the case, ESMA expects firms to consider what alternative steps to take to mitigate the risks and to deploy every effort to ensure that this is temporary and that recording of telephone conversations is restored as soon as possible. Read more

ESMA - position on MiFIR tick-size regime for Systematic Internalisers (SIs)

ESMA has indicated that, with regard to the MiFIR tick size regime for investment firms with systematic internalisation, it expects competent authorities to take the necessary measures by:

• not prioritising their supervisory actions between its entry into force on 26 March 2020 and 26 June 2020;
• generally applying their risk-based supervisory powers in their day-to-day enforcement of the applicable legislation in this area in a proportionate manner.

ESMA extends response dates consultation

ESMA has extended the response date for all ongoing consultations with a closing date on or after 16 March 2020 by four weeks.

EIOPA - recommendations on flexibility regarding deadline of reporting and disclosure

To enable companies to concentrate their efforts on monitoring and assessing the impact of the coronavirus as well as ensuring business continuity, the European Insurance and Occupational Pensions Authority ("EIOPA") has made recommendations for three situations:

1. Annual reporting referring to year-end occurring on 31 December 2019 or year-end after that date but before 1 April 2020.
2. Quarterly reporting referring to Q12020-end occurring on 31 March 2020 or after that date but before 30 June 2020.
3. Solvency and Financial Condition Report referring to year-end occurring on 31 December 2019 or year-end after that date but before 1 April 2020.

DNB - corona questions and answers

De Nederlandsche Bank, the Dutch Central Bank, ("DNB") has published questions and answers on its website about the consequences of the coronavirus pandemic for the world of money, economics and finance.

DNB - ECB measures adopted and supplemented for LSIs

DNB adopted the ECB's measures for the LSIs referred to above and extended them with some addenda.

Insurance - the coronavirus and business insurance

Business insurance often does not cover loss of income as a result of the coronavirus or measures to control the coronavirus. For example, business damage or transport insurance provides cover for material damage. There are types of insurance that, depending on the situation and the policy conditions, may offer limited cover for the financial consequences of the coronavirus.

Insurance - CFD wants guarantee scheme for policyholders with financial problems due to coronavirus

The Commissie Financiële Dienstverlening ('CFD') has asked the Cabinet, together with the Dutch Association of Insurers, to set up a guarantee scheme for insured persons who are financially affected by the coronavirus measures and are therefore unable to meet their insurance payment obligations.

Insurance - insurers, government and travel industry join forces to repatriate Dutch nationals

The Ministry of Foreign Affairs, the Dutch Association of Insurers and the travel industry are jointly spending ten million euros to successfully repatriate Dutch travellers. Stranded travellers must pay a contribution. They can apply on bijzonderebijstandbuitenland.nl.

Pensions - respite for paying pension contributions in the event of problems caused by coronavirus

The Stichting van de Arbeid and the organisations of pension providers, the Pensioenfederatie and the Association of Insurers, have agreed that pension providers will, as much as possible, meet entrepreneurs who are experiencing acute problems as a result of the corona crisis when they experience problems in paying pension contributions.

General - Parliamentary questions on monitoring possible liquidity problems in the financial sector as a result of coronavirus

Dutch MP Joost Sneller (D66) asked parliamentary questions on 18 March 2020, amongst others about:

• the one day prohibition on 'going short' by the French regulator and possible additional measures that the Dutch Authority for the Financial Markets and ESMA could take in the coming period
• the EBA's statement on making use of flexibility in the existing regulations, what scope is seen in that and how DNB will make use of it
• DNB's approach to the measures adopted by the ECB
• monitoring liquidity of banks

Read more