2013/2047(INI) | [ParlTrack]

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Awaiting committee decision

2013/2047(INI) Recovery and resolution framework for non-bank institutions
Next event: Indicative plenary sitting date, 1st reading/single reading 2014/01/13

Role	Committee	Rapporteur	Shadows
Lead	ECON	SWINBURNE Kay (ECR)	HÜBNER Danuta Maria (EPP), DOMENICI Leonardo (S&D), BOWLES Sharon (ALDE), BESSET Jean-Paul (Verts/ALE), KLUTE Jürgen (GUE/NGL)

Lead committee dossier: ECON/7/11753
Legal Basis RoP 138

Subjects

Links

Activites

2014/01/13 Indicative plenary sitting date, 1st reading/single reading
2013/10/17 Vote in committee, 1st reading/single reading
2013/09/03 Amendments tabled in committee
- PE516.899
2013/06/18 Committee draft report
- PE514.596
#3238
2013/05/14 Council Meeting
- 3238 summary
  
  The Council discussed the proposal for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms, focusing in particular on the design of the bail-in instrument. The Presidency concluded that to reach an agreement, a balance would have to be struck between establishing a harmonised approach to bail-in and allowing for limited national flexibility in its application. The Presidency stated its intention to re-submit the dossier to the Council at its meeting on 21 June, with the aim of reaching an agreement on the Directive. In summarising the discussion, the Presidency noted convergence around the following points: general agreement on a broad scope for bail-in, with a limited list of defined exclusions; general agreement that the level of loss absorbing capacity must be adapted to match the scope of exclusions; noting that deposits under EUR 100 000 are always fully guaranteed by the deposit guarantee schemes, there was agreement amongst most Member States that the deposit guarantee schemes should also benefit from depositor preference; overall, considerable support for depositor preference (i.e. last category of assets to be bailed in) for deposits over EUR 100 000, with some reservations raised on giving preference to large corporate deposits. The Presidency also recognised that some country-specific concerns should be addressed, in particular as regards euro area vs. non-euro area issues.
2013/03/14 Committee referral announced in Parliament, 1st reading/single reading

Documents

Committee draft report: PE514.596
Debate in Council: 3238
Amendments tabled in committee: PE516.899

Amendments	Dossier
111	2013/2047(INI) 2013/09/03 ECON 111 amendments... Amendment 1 # Kay SWINBURNE Motion for a resolution Citation 1 a (new) - having regard to the International Association of Insurance Supervisors report of July 2013 "Global Systemically Important Insurers: Initial Assessment Methodology", Amendment 10 # Jürgen KLUTE Motion for a resolution Recital B B. whereas while EMIR and CSDR aim to reduce systemic risk through well- regulated market infrastructure, ~~there is a strong possibility of unintended consequences~~significantly more regulation for both banks and non-bank financial institutions is needed in order to ensure that financial markets no longer pose a threat to the society; Amendment 100 # Philippe LAMBERTS Motion for a resolution Paragraph 16 a (new) 16a. Regrets that the IAIS and FSB have postponed the publication of guidelines on the assessment of the systemic status of and policy recommendations for reinsurers until July 2014; Calls on the Commission to look carefully at the systemic risk posed by reinsurance, especially with regard to their central role in insurance risk management, their high degree of interconnectedness and poor substitutability; Amendment 101 # Sharon BOWLES Motion for a resolution Paragraph 16 a (new) 16a. Notes again the different timescales, long run off periods, and business nature of insurance compared to banking; Amendment 102 # Ramon TREMOSA i BALCELLS Motion for a resolution Paragraph 17 ~~17. Calls on the Commission to assess whether any asset managers should be designated as systemically important due to their size or business model and would therefore require a recovery plan;~~deleted Amendment 103 # Corien WORTMANN-KOOL Motion for a resolution Paragraph 17 17. Calls on the Commission to assess whether any asset managers should be designated as systemically important ~~due to~~, taking into account a comprehensive set of indicators such as their size or, business model ~~and would therefore require a recovery plan~~, risk profile, creditworthiness, whether or not they trade on own account, are subject to requirements regarding the segregation of the assets of their clients and other relevant factors; Amendment 104 # Jürgen KLUTE Motion for a resolution Paragraph 17 17. Calls on the Commission to assess wh~~ether any~~ich asset managers should be designated as systemically important due to their size or business model and ~~would~~ therefore require a recovery plan; Amendment 105 # Sharon BOWLES Motion for a resolution Paragraph 17 17. Calls on the Commission to assess whether any asset managers should be designated as systemically important due to their scope of activity, size or business model and would therefore require a recovery plan; Amendment 106 # Leonardo DOMENICI Motion for a resolution Paragraph 17 17. Calls on the Commission to carefully assess wthe~~ther any asset managers should be designated as systemically important due to~~ systemic importance of asset managers based on their size o, their business model and geographical scope and would therefore require a suitable recovery plan; Amendment 107 # Sharon BOWLES Motion for a resolution Paragraph 17 a (new) 17a. Notes that client assets are segregated and held with custodians and thus the ability for these assets to be transferred to another asset manager is a substantial safeguard; Amendment 108 # Jürgen KLUTE Motion for a resolution Paragraph 18 18. Believes that an effective securities law regime could mitigate ~~many~~some of the issues involved in case of failure of a large crossborder asset manager; Amendment 109 # Philippe LAMBERTS Motion for a resolution Subheading 4 a (new) Shadow banking Amendment 11 # Olle SCHMIDT, Philippe DE BACKER Motion for a resolution Recital B B. whereas while EMIR and CSDR aim to reduce systemic risk through well- regulated market infrastructure, there is a ~~strong~~ possibility of unintended consequences; ~~(Legislators and supervisors are doing their utmost to avoid unintended consequences of the~~Or. en reform. Without any hard evidence the word “strong” should be deleted.) Amendment 110 # Philippe LAMBERTS Motion for a resolution Paragraph 18 a (new) 18a. Calls on the Commission to complement its work on aspects of the Shadow Banking System with an assessment of the systemic risk posed by financial institutions such as finance companies and securities entities providing credit or credit guarantees or performing liquidity and/or maturity transformation without being regulated as banks and the need for a specific regime for their orderly wind down; Amendment 111 # Danuta Maria HÜBNER Motion for a resolution Paragraph 20 – subparagraph 1 a (new) Since payment systems are at the heart of all cash transfers, it is clear that a market perturbation in such a system would have significant spillovers on other financial market actors. The 1998 Settlement Finality Directive already aims to mitigate potential risks in payment systems. The directive however does not go sufficiently into recovery and resolution, and specific provisions need to be made in order to allow payments systems to adequately react to adverse circumstances. Amendment 12 # Leonardo DOMENICI Motion for a resolution Recital B a (new) Ba. whereas financial market infrastructures are organised along widely differing lines; whereas to facilitate the formulation of appropriate plans for recovery and, above all, resolution, it is necessary to make a distinction between them based on organisational complexity, geographical scope and business model; Amendment 13 # Burkhard BALZ Motion for a resolution Recital C C. whereas mandatory central clearing ~~has~~positively contributes to decreasing the overall systemic risk of financial markets, it has yet increased the concentration of systemic risk in CCPs and all CCPs are systemically important in their own markets; Amendment 14 # Jürgen KLUTE Motion for a resolution Recital D a (new) Da. whereas multiple failures of CCP members will have devastating consequences not only for financial market participants but for societies as a whole; Amendment 15 # Elena BĂSESCU Motion for a resolution Recital E a (new) Ea. whereas risk management processes show that CCPs reduce counterparty risk and uncertainty and prevent contagion; Amendment 16 # Kay SWINBURNE Motion for a resolution Recital H H. whereas the risks of cross-margining of products (portfolio margining) ~~within~~using ring fencing of assets within the default fund of a CCP are untested and so while reducing collateral demands in the short term may reduce costs, the use of cross- margining should not jeopardise the ability of a CCP to correctly manage risk and should recognise the limitations of VaR analytics; Amendment 17 # Sharon BOWLES Motion for a resolution Recital I I. whereas ~~the value~~one of the key benefits that clients derive from ~~the~~ central clearing ~~member lies in their provision of a firewall against counterparty risk in relation t~~is the reduction of the risk of default by a bilateral counterparty and that clearing members pay the counterparty and CCP if the client defaults; Or. en (Clearing members do bnot~~h the CCP and o~~ protect clients against a CCP default but they can protect ther c~~learing members;~~ ounterparty or CCP if the client defaults.) Amendment 18 # Danuta Maria HÜBNER Motion for a resolution Recital I I. whereas the value clients derive from the clearing member may lies in their provision of a firewall against counterparty risk in relation to both the CCP and other clearing members; Amendment 19 # Olle SCHMIDT Motion for a resolution Recital M M. whereas standard insolvency regimes will not provide a complete framework for treatment of client assets should a CSD fail without implementation of the Securities Law Legislation; (SLL will probably not solve the problems with different rules in the Member States regarding the treatment of client assets in a bankruptcy situation. Only a full harmonization of Memberdeleted Or. en States insolvency laws in this respect could provide certainty.) Amendment 2 # Kay SWINBURNE Motion for a resolution Citation 1 b (new) - having regard to the International Association of Insurance Supervisors report of July 2013 "Global Systemically Important Insurers: Policy Measures", Amendment 20 # Krišjānis KARIŅŠ Motion for a resolution Recital N a (new) Na. whereas effective recovery plans are crucial to improve the stability of the non- bank financial sector; Amendment 21 # Philippe LAMBERTS Motion for a resolution Recital N a (new) Na. whereas the IAIS reported in July 2013 on Globally Systemic Insurance Institutions and concluded that, while the traditional insurance business model has proven considerably less fragile in financial crises than that of banks, nevertheless, large, highly interconnected cross border insurers, especially those that have significant activities outside traditional underwriting such as credit and investment guarantees, can pose a significant systemic risk; Amendment 22 # Philippe LAMBERTS Motion for a resolution Recital N b (new) Nb. whereas, based on the IAIS assessment method, the FSB has identified nine large insurers as being systemic of which five are headquartered in the Union; Amendment 23 # Elena BĂSESCU Motion for a resolution Recital O a (new) Oa. whereas recovery and resolution represent key international tools dealing with risks presented by global systemically important financial institutions; Amendment 24 # Jürgen KLUTE Motion for a resolution Recital O a (new) Oa. whereas non-bank financial institutions that engage in bank-like activities such as channelling savings into investments or hedging risks should be covered by similar rules as banks; Amendment 25 # Jürgen KLUTE Motion for a resolution Paragraph 1 1. Calls on the Commission not only to prioritise recovery and resolution of CCPs and those CSDs which are exposed to credit risk, ~~and when considering other financial institutions to differentiate appropriately between each type~~but also to develop similar legislation for other financial institutions that are active on the financial markets and which have the potential to pose systemic risks to the economy; Amendment 26 # Olle SCHMIDT, Philippe DE BACKER Motion for a resolution Paragraph 1 1. Calls on the Commission to prioritise recovery and resolution first of CCPs ~~and those CSDs~~, second of CSDs, including those which are exposed to credit risk, and ~~when considering~~if appropriate of other financial institutions, and to differentiate appropriately between each type; Amendment 27 # Leonardo DOMENICI Motion for a resolution Paragraph 1 1. Calls on the Commission to prioritise recovery and resolution of CCPs and those CSDs which are exposed to credit risk, closely examine the possibility of incorporating asset managers also and, when considering other financial institutions, to differentiate appropriately between each type on the basis of their size, business model and geographical scope; Amendment 28 # Jürgen KLUTE Motion for a resolution Paragraph 2 2. Emphasises the importance of EU legislation following internationally agreed principles, as agreed in CPSS-IOSCO, FSB and IAIS and to go further when deemed necessary for financial and economic stability; Amendment 29 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 a (new) Non-bank financial institutions themselves should develop comprehensive and substantive recovery plans that identify critical operations and services and develop strategies and measures necessary to ensure continued provision of critical operations and services; Amendment 3 # Kay SWINBURNE Motion for a resolution Citation 1 c (new) - having regard to the CPSS-IOSCO consultative report of August 2013 on 'Recovery of Financial Market Infrastructures', Amendment 30 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – – subparagraph 1 b (new) The recovery plans should be reviewed by the relevant supervisory authority. The supervisory authority should be able to request changes to the recovery plan and should lead and consult with the resolution authority, which, if different, could make recommendations to the supervisor; Amendment 31 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 c (new) Supervisory authorities should have the power to intervene for financial stability reasons. They may require the implementation of parts of recovery plans, which have not yet been activated or take other actions if necessary. The authorities should however also be aware of the risk of creating market uncertainty in already stressed circumstances; Amendment 32 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 d (new) Resolution and supervisory authorities in each country should strive to cooperate and keep each other informed; Amendment 33 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 e (new) Resolution plans should be owned and developed by the resolution authorities, on the basis of information provided by the financial institution in question; Amendment 34 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 f (new) For groups with entities in different jurisdictions, a group resolution plan should be agreed between different resolution authorities. The group resolution plans should be based on the presumption of cooperation between authorities in different jurisdictions; Amendment 35 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 g (new) To retain a consistency with Article 80 of the bank recovery and resolution directive (BRR), one could avoid creating new resolution colleges if existing groups or colleges perform similar functions and carry out similar tasks already. Existing groups may be adapted. While remaining consistent with the BRR, one should not disregard the specificities of the different non-bank financial institutions. If required, in situations in which urgent action is required, the resolution authority for a financial institution could take decisions and act without consulting the college first; Amendment 36 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 h (new) Resolution measures should differentiate between different services and activities which the financial market infrastructure institution in question is authorised to provide or perform; Amendment 37 # Danuta Maria HÜBNER Motion for a resolution Paragraph 2 – subparagraph 1 i (new) Conflicts with the recovery and resolution plans and existing legislation, in particular the Financial Collateral Arrangements Directive (FCAD) and the European Market Infrastructure Regulation (EMIR), which could constrain or prevent recovery and resolution powers for CCPs and CSDs from being effective, should be avoided; Amendment 38 # Philippe LAMBERTS Motion for a resolution Paragraph 2 a (new) 2a. Underlines the urgent need, in the context of assessing the relevance of specific resolution regimes for market infrastructure, financial institutions and shadow banking entities, for the development of tools for effective near- time monitoring of the stock and flow of financial risk within and across corporate, sectoral and national boundaries in the Union and between the Union and other global regions; Urges the Commission to ensure that the relevant data provided under banking, insurance and market infrastructure legislation is used efficiently for this purpose by the ESRB, ESAs and other competent authorities; Amendment 39 # Philippe LAMBERTS Motion for a resolution Paragraph 2 b (new) 2b. Stresses the importance of clear provisions for a 'ladder of intervention' in any recovery provisions for non-bank financial institutions under which competent authorities monitor appropriately designed indicators of financial health and have the power to intervene early in cases of financial stress of an entity and require it to take corrective measures according to a pre- approved recovery plan in order to stave off the potentially disruptive last resort of putting such an entity into resolution; Amendment 4 # Kay SWINBURNE Motion for a resolution Citation 1 d (new) - having regard to the FSB consultative report of August 2013 on 'Application of the Key Attributes of Effective Resolution Regimes to Non-Bank Financial Institutions', Amendment 40 # Kay SWINBURNE Motion for a resolution Paragraph 3 3. Calls upon the Commission to ensure that CCPs have a default management strategy for all products that are ~~mandated for central clearing~~cleared by the CCP as part of a wider recovery plan approved by the supervisor, with a particular focus on those products that are mandated for central clearing as there is a higher likelihood of risk concentration in these cases; Amendment 41 # Danuta Maria HÜBNER Motion for a resolution Paragraph 3 3. Calls upon the Commission to ensure that CCPs have a default management strategy for all products ~~that are mandated for central clearing~~cleared by a CCP as part of a wider recovery plan approved by the supervisor; Amendment 42 # Olle SCHMIDT Motion for a resolution Paragraph 3 3. Calls upon the Commission to ensure that CCPs have a default management strategy for all products that are ~~mandated for central clearing~~cleared by the CCP as part of a wider recovery plan approved by the supervisor; ~~(The recovery plan should cover all products cleared by the CCP, and not only those that are~~Or. en mandated.) Amendment 43 # Kay SWINBURNE Motion for a resolution Paragraph 4 4. Underlines the importance of monitoring risks to CCPs arising from a concentration of clearing members, and calls on supervisors to inform EBA of the largest 10 clearing members of each CCP so that ~~such risk~~risks such as inter-linkages, contagion and the potential for failure of more than one CCP at a time can be centrally monitored and assessed; Amendment 44 # Jürgen KLUTE Motion for a resolution Paragraph 6 a (new) 6a. Demands that the Commission ensures CCPs act in the general public interest and adopt their business strategies accordingly in order to significantly reduce the likelihood of triggering recovery and resolution scenarios; Amendment 45 # Jürgen KLUTE Motion for a resolution Paragraph 7 7. Calls on the Commission to recognise that while the aim of ring-fencing asset classes within a default fund of a CCP is to limit contagion, it is unclear whether this will be sufficient to prevent such contagion in practice; calls on the Commission to propose further measures in order to minimise this contagion risk; Amendment 46 # Burkhard BALZ Motion for a resolution Paragraph 7 7. Calls on the Commission to recognise that ~~while the aim of~~it is unclear whether ring-fencing asset classes within a default fund of a CCP is sufficient to limit contagion, i~~t is unclear whether this will be sufficient to prevent such contagion in practice~~n practice; therefore calls on the Commission to recommend for CCPs to define recovery and resolution plans in a way that the failure of one asset class does not necessarily trigger the resolution of the entire CCP; Amendment 47 # Danuta Maria HÜBNER Motion for a resolution Paragraph 7 7. Calls on the Commission to recognise that while the aim of ring-fencing asset classes within a default fund of a CCP is to limit contagion, it is unclear whether this will be sufficient to prevent such contagion in practice. However, one should remember that a CCP with a separate default waterfall in respect of specified product lines is more likely to retain its financial stability following a default event and that ring-fencing asset classes represents one important tool in limiting contagion; Amendment 48 # Kay SWINBURNE Motion for a resolution Paragraph 7 7. Calls on the Commission to recognise that while the aim of ring-fencing asset classes within a default fund of a CCP is to limit contagion, it is unclear whether this will be sufficient to prevent such contagion in practice given that commercial incentives related to cross-margining could increase risk in the system; Amendment 49 # Danuta Maria HÜBNER Motion for a resolution Paragraph 8 8. Calls on the Commission to ensure that sound principles are established governing contractual arrangements between a CCP and its clearing members and how clearing members pass on losses to their clients, in such a way that the clearing member's default fund contribution will have to be exhausted before any losses from a defaulting clearing member can be passed on to the client, and that any contractual arrangements between a CCP and its clearing members should distinguish between losses arising from a member default and those arising from other reasons and the approach to be adopted in each case, which may be different; Underlines that the rights of both direct as well as indirect clients (the clients of a client of a clearing member) should be protected; Amendment 5 # Sharon BOWLES Motion for a resolution Citation 1 a (new) - having regard to the Financial Stability Board's consultative report of August 2013 on 'Application of the Key Attributes of Effective Resolution Regimes to Non- Bank Financial Institutions' in August 2013, Amendment 50 # Sharon BOWLES Motion for a resolution Paragraph 8 8. Calls on the Commission to ensure that sound principles are established governing contractual arrangements between a CCP and its clearing members and how clearing members pass on losses to their clients, in such a way that the clearing member's default fund contribution will have to be exhausted before any losses from a defaulting clearing member can be passed on to the client and that any contractual arrangements between a CCP and its clearing members should distinguish between losses arising from other reasons and the approach to be adopted in each case, which may be different; Amendment 51 # Olle SCHMIDT Motion for a resolution Paragraph 8 8. Calls on the Commission to ensure that sound principles are established governing contractual arrangements between a CCP and its clearing members and how clearing members pass on losses to their clients as part of the default waterfall, in such a way that the clearing member's default fund ~~contribution~~ will have to be exhausted before any losses from a defaulting clearing member can be passed on to the client~~; (The process of using resolution tools should be transparent and clear for all members.)~~ as part of a transparent loss allocation process; Or. en Amendment 52 # Danuta Maria HÜBNER Motion for a resolution Paragraph 8 – subparagraph 1 a (new) All CCPs should have in place comprehensive recovery arrangements which provide protection over and above the funds and resources required by EMIR. These recovery plans should provide protection against all foreseeable circumstances, and should be included and published as part of the CCP's rules. It is important that there is no ambiguity between the recovery phase (when the CCP takes emergency action in close discussion with its regulators) and the resolution phase (when the regulators take over). Amendment 53 # Danuta Maria HÜBNER Motion for a resolution Paragraph 8 – subparagraph 1 b (new) In order to allow the recovery arrangements maximum chance of success, the resolution arrangements should be triggered once the recovery arrangements have failed or are considered likely to fail. Amendment 54 # Leonardo DOMENICI Motion for a resolution Paragraph 8 a (new) 8a. Considers it necessary to make a clear distinction between the recovery and resolution phase regarding all market infrastructures subject to the future rules, especially in the case of CCPs. To this end, it is necessary to assign clearly to each additional targets and responsibilities, formulate unequivocal criteria for entry into the resolution phase and establish the resources which can be made available to the resolution authorities; Amendment 55 # Leonardo DOMENICI Motion for a resolution Paragraph 8 a (new) 8a. Resolution concerns what happens when a firm goes bankrupt and allocating the losses in the most efficient way in order to contain them and limit spill-over effects beyond immediate creditors to the broader economy and society; Amendment 56 # Kay SWINBURNE Motion for a resolution Paragraph 8 a (new) 8a. Recognises that losses incurred as a result of poor investment choices by the CCP could also result in the activating of the CCP’s recovery plan; calls upon the Commission to ensure that the CCP’s risk committee is kept fully apprised of the CCP’s investments in order to maintain appropriate oversight; recovery tools such as suspension of dividends and payment of variable remuneration or voluntary restructuring of liabilities through debt- to-equity conversion should be considered the most appropriate tools to be used in these circumstances; Amendment 57 # Krišjānis KARIŅŠ Motion for a resolution Paragraph 8 a (new) 8a. Underlines that a system which requires non-bank financial institutions to draw up recovery plans for the evaluation by the supervisory authority is necessary; Amendment 58 # Leonardo DOMENICI Motion for a resolution Paragraph 8 b (new) 8b. Resolution laws cannot be a way to create obligations for players in order to recapitalise a financial firm be it a CCP, a CSD or a bank; Amendment 59 # Leonardo DOMENICI Motion for a resolution Paragraph 8 b (new) 8b. Believes that the resolution authorities should be given the necessary degree of discretion in assessing the situation, as well as a certain margin of manoeuvre, enabling them to justify their decisions in accordance with very specific criteria: (i) where the sustainability of the market financial infrastructure or asset manager in question is in the process of being, or is already, seriously compromised because of their inability to comply with the prudential requirements applicable, (ii) where there is no alternative to entry into the resolution phase if the situation is to be rectified effectively and without compromising the stability of the financial system, (iii) where a resolution measure is necessary in the public interest insofar as it makes it possible to achieve one or more objectives of the resolution using proportionate means; Amendment 6 # Sharon BOWLES Motion for a resolution Citation 4 a (new) - having regard to the Commission's proposal for a Regulation for the European Parliament and of the Council on improving securities settlement in the European Union and on central securities depositories (CSDs) and amending Directive 98/26/EC (CSDR), Amendment 60 # Leonardo DOMENICI Motion for a resolution Paragraph 8 c (new) 8c. Considers it necessary to establish that the competent authorities may intervene upstream of the resolution phase so as to ensure that recovery is clearly possible; Amendment 61 # Leonardo DOMENICI Motion for a resolution Paragraph 8 d (new) 8d. Considers that, in order to guarantee the effectiveness of the resolution mechanism, it is necessary to guarantee that a normal insolvency procedure may be initiated in respect of an entity subject to a resolution procedure where the conditions necessary for this are considered to have been met; Amendment 62 # Burkhard BALZ Motion for a resolution Paragraph 9 9. Asserts that reaching the dividing-line between recovery and resolution in the case of CCPs ~~is when the default waterfall is exhausted,~~shall necessitat~~ing~~e the option for the supervisor to remove the CCP's management board; Amendment 63 # Kay SWINBURNE Motion for a resolution Paragraph 9 9. Asserts that the dividing-line between recovery and resolution in the case of CCPs is when the default waterfall is exhausted, ~~necessitating the option for the supervisor to~~at this point the supervisor should actively consider the option of removeing the CCP's management board should no alternative recovery tools be agreed between the CCP and its clearing members directly; Amendment 64 # Philippe LAMBERTS Motion for a resolution Paragraph 9 9. Asserts that the dividing-line between recovery and resolution in the case of CCPs is when the ~~default waterfall is exhausted~~loss absorption capacity of the CCP has been depleted and there is no reasonable prospect that action by the CCP can rapidly restore it to the level required under EMIR, necessitating the option for the ~~supervisor~~resolution authority to remove the CCP's management board and take over operational control of the CCP; Amendment 65 # Sharon BOWLES Motion for a resolution Paragraph 9 9. Asserts that the dividing-line between recovery and resolution in the case of CCPs is when the default waterfall (which should include any loss allocation arrangements identified in its recovery plan) is exhausted, necessitating the option for the supervisor to remove the CCP's management board and that considerations should be given as to whether transfer of critical services and resolutions should always take place at this juncture; Amendment 66 # Olle SCHMIDT Motion for a resolution Paragraph 9 9. Asserts that the dividing-line between recovery and resolution in the case of CCPs is when the default waterfall isncluding the loss allocation arrangements described in its recovery plan are exhausted, necessitating the option for the supervisor to remove the CCP's management board; ~~(Is of the opinion that the resolution begins once the CPP has exhausted the default waterfall~~Or. en and its loss allocation arrangements in its recovery plan.) Amendment 67 # Danuta Maria HÜBNER Motion for a resolution Paragraph 9 – subparagraph 1 a (new) Stresses the need to treat "continuity of service" as a key resolution objective. Amendment 68 # Elena BĂSESCU Motion for a resolution Paragraph 9 a (new) 9a. Acknowledges that CCPs have clearing members from a large number of countries, therefore a CCP resolution framework will be effective when it is effective in all the jurisdictions involved; consequently, national insolvency frameworks have to be updated to accommodate the new European resolution regime; Amendment 69 # Danuta Maria HÜBNER Motion for a resolution Paragraph 10 10. Underlines that any voluntary participation of clearing members in loss allocation before removal of the CCP's management should not involve client money, while the resolution authority, once responsible, may employ loss allocation tools such as variation margin cutting or refilling of the default fund by the non-defaulting clearing membersIn being required to provide robust defence against all foreseeable circumstances, recovery arrangements will inevitably include measures which impact their clearing members, and this should not be ruled out as part of a CCP's recovery arrangements. A CCP's supervisor should ensure that a CCP's recovery plans are appropriate and equitable as well as robust; Amendment 7 # Philippe LAMBERTS Motion for a resolution Citation 6 a (new) - having regard to "Global Systemically Important Insurers: Initial Assessment Methodology"1 and "Global Systemically Important Insurers: Policy Measures"2 published by the IAIS in July 2013. __________________ 1 http://www.iaisweb.org/view/element_href .cfm?src=1/19151.pdf 2 http://www.iaisweb.org/view/element_href .cfm?src=1/19150.pdf Amendment 70 # Burkhard BALZ Motion for a resolution Paragraph 10 10. Underlines that ~~any voluntary participation of clearing members in loss allocation before removal of the~~loss allocation may involve client money in case of a CCP's recovery, after clearing member money has already been involved; therefore recommends that the recovery plans of CCP's ~~management should not involve client money, while~~include distinct information on the potential level of costs that may be passed on by clearing members to their clients; suggests further that the resolution authority, once responsible, may employ loss allocation tools such as variation margin cutting or refilling of the default fund by the non- defaulting clearing members; Amendment 71 # Olle SCHMIDT Motion for a resolution Paragraph 10 10. Underlines that any ~~volunta~~mandatory participation of clearing members in loss allocation before removal of the CCP's management should not involve client money, while the ~~resolution authority, once responsible~~CCP's default waterfall, may employ loss allocation tools such as variation margin cutting or refilling of the default fund by the non-defaulting clearing members; ~~(Depending of the organization of the participation in the clearing it should be possible to involve also other participant than direct clearing member in a loss allocation scheme.)~~Or. en Amendment 72 # Leonardo DOMENICI Motion for a resolution Paragraph 10 a (new) 10a. Member States shall ensure that, when applying the resolution tools and exercising the resolution powers, resolution authorities take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles: (a) the resolution tools are applied and the resolution powers are exercised according to the resolution plan where appropriate; (b) claims of indirect client are adequately protected. Member States shall ensure that resolution tools are applied proportionally and in accordance with the legal form of the financial market infrastructure concerned. For the purposes of paragraph 10a (b), Member States shall ensure that indirect clients’ claims are granted preferential treatment. Amendment 73 # Olle SCHMIDT Motion for a resolution Paragraph 11 11. Believes that if the resolution authority had the ability to impose a stay on early termination rights~~, alongside the lifting of the clearing obligation which would pause the CCP for a maximum period of two days,~~ this could allow the market to correctly re-price the contracts, thus allowing for a more orderly diffusion of risk; ~~(The consequences of lifting of the clearing obligation are unclear and untested and should~~the availability and exercise of such a power should be carefully considered so that it is, at a minimum, conditional on the resolution authority determining that imposition of a stay is necessary in the interests of financial stability, having regard to the resolution objectives, interplay with relevant bank or other resolution regimes applicable to clearing members, default and risk management of the CCP and the impact on each of the CCP's markets, clearing participants and financial markets generally; Or. en therefore be removed.) Amendment 74 # Jürgen KLUTE Motion for a resolution Paragraph 11 11. Believes that if the resolution authority had the ability to impose a stay on early termination rights, alongside the lifting of the clearing obligation which would pause the CCP for a maximum period of two days, this could allow the market to correctly re-price the contracts, thus allowing for a more orderly diffusion of risk whereby the lifting of a clearing obligation should be a means of last resort after it has at least been examined whether another CCP could provide the clearing in the short term or the respective products could be suspended from trading for a limited period of time; Amendment 75 # Danuta Maria HÜBNER Motion for a resolution Paragraph 11 – subparagraph 1 a (new) Central counterparties with a banking licence should be subject to a central counterparty-specific regime and not to the proposed bank recovery and resolution regime of the bank recovery and resolution directive (BRR). Of particular concern in this sense is the fact that the proposed regime for banks would require them to hold an aggregate amount of debt that can be bailed-in. Such a power would be inappropriate for central counterparties holding a banking licence because they do not tend to issue such debt instruments; Amendment 76 # Sławomir NITRAS Motion for a resolution Paragraph 11 a (new) 11a. Given the crucial role of the CCPs to local markets, relevant national authorities should have legal instruments to intervene in an ailing central counter- party when no other solution is possible. The appropriate policy response, respecting the principle of subsidiarity, should be to adopt a set of non-binding guidelines that would assist the Member States complement their national resolution regimes. If national legal systems prove generally unfitted to effective handling of crisis situation concerning CCPs, especially with an international dimension, then adoption of a directive could be considered. Anyway, such a directive should leave the Member States wide discretion which instruments to adopt with regard to institutions under their authority. Amendment 77 # Kay SWINBURNE Motion for a resolution Paragraph 12 12. Establishes that it is the responsibility of a CSD to ensure that its recovery plan clearly provides for operational continuity in reasonable crisis scenarios so that, even if other parts of its business can be disposed of, its primary settlement function ~~can continue~~as well as the other core services of the CSD can continue to be performed by the CSD or an existing third party provider, as authorised under CSDR; Amendment 78 # Danuta Maria HÜBNER Motion for a resolution Paragraph 12 12. Establishes that it is the responsibility of a CSD to ensure that its recovery plan clearly provides for operational continuity in reasonable crisis scenarios so that, even if other parts of its business can be disposed of, its pcri~~mary settlement~~tical functions can continue; Amendment 79 # Olle SCHMIDT, Philippe DE BACKER Motion for a resolution Paragraph 12 12. Establishes that it is the responsibility of a CSD to ensure that its recovery plan clearly provides for operational continuity in reasonable crisis scenarios so that, even if other parts of its business can be disposed of, its pcri~~mary settlement~~tical functions can continue; ~~(Not only the settlement function but also the access to the book-entry system and the~~Or. en financial instruments in such systems could be critical in a crisis scenario.) Amendment 8 # Philippe LAMBERTS Motion for a resolution Citation 6 b (new) - having regard to the Financial Stability Board's publication of "Global systemically important insurers (G-SIIs) and the policy measures that will apply to them"1 on July 18th 2013; __________________ 1 http://www.financialstabilityboard.org/pu blications/r_130718.pdf Amendment 80 # Sharon BOWLES Motion for a resolution Paragraph 12 12. Establishes that it is the responsibility of a CSD to ensure that its recovery plan clearly provides for operational continuity in reasonable crisis scenarios so that, even if other parts of its business can be disposed of, its ~~primary settlement~~'critical functions', can continue; ~~(See definition of 'Critical functions' in FSB's consultative report on 'Application of the Key~~ Or. en Attributes of Effective Resolution Regimes to Non-Bank Financial Institutions' in August 2013) Amendment 81 # Jürgen KLUTE Motion for a resolution Paragraph 12 a (new) 12a. Demands that the Commission ensures CCPs act in the general public interest and adopt their business strategies accordingly in order to significantly reduce the likelihood of triggering recovery and resolution scenarios; Amendment 82 # Danuta Maria HÜBNER Motion for a resolution Paragraph 13 13. Calls, if no separate legislative proposal is imminent, for inclusion in the CSDR of a requirement for national competent authorities to ensure the establishment of appropriate recovery and resolution plans in line with international standards for all CSDs, including references to the articles of the BRRD that should apply to those CSDs operating under a banking licence; Amendment 83 # Olle SCHMIDT, Philippe DE BACKER Motion for a resolution Paragraph 13 13. Calls, if no separate legislative proposal is imminent, for inclusion in the CSDR of ~~references to the articles of the BRRD that should apply to those CSDs operating under a banking licence; (In the short run it is important with recovery and resolution plans for all CSDs and in~~a requirement for national competent authorities to ensure the establishment of appropriate recovery and resolution plans in line with international standards for all CSDs, such plans are very important for those CSDs operating under a banking licence; Or. en particular for those CSDs operating under a banking license.) Amendment 84 # Sharon BOWLES Motion for a resolution Paragraph 13 13. Calls, if no separate legislative proposal is imminent, for inclusion in the CSDR of ~~references to the articles~~appropriate references for recovery and resolution, building ofn the ~~BRRD that should apply to those CSDs operating under a banking licence~~FSB and CPSS-IOSCO requirements, that should apply to CSDs; Amendment 85 # Olle SCHMIDT, Philippe DE BACKER Motion for a resolution Paragraph 14 14. Calls on the Member States~~, in the absence of Securities Law Legislation, to~~ to develop and coordinate their existing special administration regimes for CSDs in order to improve certainty as to how operational continuity will be maintained in a crisis~~, in particular by ensuring access to registries f~~. The competent authorities should aim at developing a solution ensuring no disruption of the access to records [registries, accounts or othe resolution authority so as to identify the owners of assets; (SLL will probably not solve the problem with different rules in the Member States regarding CSDs. Such regime should ensure the access to the book-entry system and the informationr] evidencing rights of participants or third parties to securities; Or. en the treatment of client assets regimes in a bankruptcy situation and in absent of a full harmonization of insolvency law it is important with a special administration regime for about the financial instruments in those systems.) Amendment 86 # Kay SWINBURNE Motion for a resolution Paragraph 14 14. Calls on the Member States, in the absence of Securities Law Legislation, to develop and coordinate their existing special administration regimes for CSDs in order to improve certainty as to how operational continuity will be maintained in a crisis, in particular by ensuring access to the registries ~~for the resolution authority so as~~, records or accounts of the CSD so the resolution authority or national competent authority is easily able to identify the owners of assets; Amendment 87 # Olle SCHMIDT Motion for a resolution Paragraph 14 a (new) 14a. Calls on the Commission to ensure that the proposal for a recovery and resolution framework for CSDs ensures – as far as possible – the continuity of the CSDs during the recovery and resolution; Amendment 88 # Philippe DE BACKER Motion for a resolution Paragraph 14 a (new) 14a. Calls on the Commission to ensure that the proposal for a recovery and resolution framework for CSDs ensures continuity of the CSDs’ legislative environment, in particular by respecting the Settlement Finality Directive, Delivery versus Payment arrangements, the operation of any CSD link, and contracts with critical service providers during the recovery and resolution; Amendment 89 # Sharon BOWLES Motion for a resolution Paragraph 15 15. Calls on the Member States to implement Solvency II within a reasonable time-frame, and calls for the completion of negotiations on Omnibus II so that EIOPA can effectively regulate insurance undertakings;deleted Amendment 9 # Jürgen KLUTE Motion for a resolution Recital A a (new) Aa. whereas privatisation and liberalisation of financial markets have had devastating consequences for the global economy as short-term profit maximisation has caused excessive risk taking leading to systemic instability; whereas this behaviour needs to be ultimately stopped; whereas the general public interest needs to be the main focus of financial service providers including both banks and non-bank financial institutions; Amendment 90 # Peter SKINNER Motion for a resolution Paragraph 15 15. Calls on the Member States to implement Solvency II within a reasonable time-frame set out in Omnibus II, and calls for the completion of negotiations on Omnibus II so that ~~EIOPA can effectively regulate insurance undertakings~~levels two and three of Solvency II can be finalised in a timely manner; Amendment 91 # Elena BĂSESCU Motion for a resolution Paragraph 15 15. ~~Calls on the~~Stresses the importance of a consistent and convergent approach by Member States towards the implementation of Solvency II within a reasonable time-frame, and calls for the completion of negotiations on Omnibus II so that EIOPA can effectively regulate insurance undertakings; Amendment 92 # Philippe LAMBERTS Motion for a resolution Paragraph 15 15. Calls on the Member States to implement Solvency II within a reasonable time-frame, and calls for the completion of negotiations on Omnibus II ~~so that EIOPA can effectively regulate insurance undertakings~~, in particular with regard to the measures to ensure effective systemic and policyholder safeguards on products with Long Term Guarantees, so that EIOPA can effectively regulate insurance undertakings and thus keep to a minimum the probability of resolution authorities having to step in; Amendment 93 # Kay SWINBURNE Motion for a resolution Paragraph 15 a (new) 15a. Calls upon the Commission to further develop the IAIS methodology for designating Systemically Important Insurers placing most weighting upon non-traditional insurance activities (NTNI) and interconnectedness within the EU, followed by size, European activity and substitutability; Amendment 94 # Sharon BOWLES Motion for a resolution Paragraph 15 a (new) 15a. Notes that in the EU there is longstanding prudential regulation for insurance. Considers the completion of Omnibus II and implementation of Solvency II are important improvements for that regulatory framework; Amendment 95 # Peter SKINNER Motion for a resolution Paragraph 16 16. Calls on the Commission to take into account the IAIS's work on recovery and resolution of insurers, and to consider ~~what action is needed to implement it~~it within the context of level two of Solvency II, Financial Conglomerates legislation, and the Insurance Mediation Directive; urges the Commission to proceed with legislation on Insurance Guarantee Schemes to solidify recovery and resolution mechanisms of insurance undertakings; Amendment 96 # Kay SWINBURNE Motion for a resolution Paragraph 16 16. Calls on the Commission to closely take into account the IAIS's work on recovery and resolution of insurers, and ~~to consider what action is needed to implement it~~work with international partners to follow the timetable established by the FSB to implement the policy recommendations surrounding recovery and resolution planning requirements, enhanced group supervision and higher loss absorbency requirements; Amendment 97 # Philippe LAMBERTS Motion for a resolution Paragraph 16 16. Calls on the Commission to take into account the IAIS's work on recovery and resolution of insurers, ~~and to consider what action is needed to implement it;~~in particular the recommendation to have recovery and resolution plans as well as resolvability assessments in place for systemic insurers by the end of 20141 and to consider what action is needed to implement it; __________________ 1 see proposed timetable on p31 of 'Global Systemically Important Insurers:Policy Measures', IAIS, 18 July 2013 Amendment 98 # Danuta Maria HÜBNER Motion for a resolution Paragraph 16 – subparagraph 1 a (new) Recovery and resolution plans in the insurance sector will need to take into account developments in Solvency II. The latter should also be swiftly adopted. Amendment 99 # Danuta Maria HÜBNER Motion for a resolution Paragraph 16 – subparagraph 1 b (new) The long term nature of insurance liabilities, along with the tools available to regulators, provide for efficient resolution practices. Accelerated resolution measures are not needed for insurers and would also not be in the interest of consumers. Ensuring the fulfilment of insurance obligation for them is more important in the long run than a one-time compensation. The focus should therefore be on recovery. source: PE-516.899

Amendments

Dossier

111

2013/2047(INI)

2013/09/03 ECON 111 amendments...

Amendment 1 #

Kay SWINBURNE

Motion for a resolution
Citation 1 a (new)

- having regard to the International Association of Insurance Supervisors report of July 2013 "Global Systemically Important Insurers: Initial Assessment Methodology",

Amendment 10 #

Jürgen KLUTE

Motion for a resolution
Recital B

B. whereas while EMIR and CSDR aim to reduce systemic risk through well- regulated market infrastructure, ~~there is a strong possibility of unintended consequences~~significantly more regulation for both banks and non-bank financial institutions is needed in order to ensure that financial markets no longer pose a threat to the society;

Amendment 100 #

Philippe LAMBERTS

Motion for a resolution
Paragraph 16 a (new)

16a. Regrets that the IAIS and FSB have postponed the publication of guidelines on the assessment of the systemic status of and policy recommendations for reinsurers until July 2014; Calls on the Commission to look carefully at the systemic risk posed by reinsurance, especially with regard to their central role in insurance risk management, their high degree of interconnectedness and poor substitutability;

Amendment 101 #

Sharon BOWLES

Motion for a resolution
Paragraph 16 a (new)

16a. Notes again the different timescales, long run off periods, and business nature of insurance compared to banking;

Amendment 102 #

Ramon TREMOSA i BALCELLS