CRD 4: EBA agrees with Commission's amendments to ITS on benchmarking of internal approaches

The EBA has published an opinion agreeing with the EU Commission's proposed amendments to the EBA implementing technical standards (ITS) on benchmarking the internal approaches EU institutions use to calculate own funds requirements for market and credit risk, as required by the Capital Requirements Directive (CRD 4). These ITS, which were published on 2 March 2015, specify that institutions should apply benchmarking portfolios, templates, definitions and IT solutions in their annual market and credit risk benchmarking exercises.

The Commission's amendments aim to incorporate some issues discussed with EBA staff during the 2014-2015 benchmarking exercise, to correct errors and inconsistencies in the original draft ITS and to clarify the instructions in the annexes of the final draft ITS. The EBA has expressed its agreement with these amendments.

The amended ITS will allow the EBA to run its 2016 exercise based on the data requirements specified within them. All EU institutions using internal approaches to calculate capital requirements will be subject to an assessment of their internal approaches and must submit data on those portfolios to their competent authorities by close of business on 30 June 2016.

The EBA has also recommended adopting a more flexible approach to dealing with future amendments to the ITS and CRD 4. It proposes changing the current process, in which benchmarking portfolios and detailed reporting templates and instructions are adopted as part of Commission Implementing Acts, and instead allowing the EBA to regularly update the portfolios, templates and instructions itself.