04 January 2007
The Committee of European Banking Supervisors (CEBS) today publishes a survey on supervisory practices for commodities business and firms carrying out commodities business.
The report responds to the first part of a Call for Advice (CfA No. 6) issued by the European Commission in August 2006. CEBS was invited to carry out a survey of supervisory practices for commodities business and firms carrying out commodities business and to assess the prudential risks arising from the conduct of commodities business.
The Call for Advice is part of a larger review of the current provisions concerning commodities business and the prudential treatment of firms carrying out commodities business set out in the Directive 2004/39/EC on Markets in Financial Instruments (MiFID) and the Capital Requirements Directive (CRD, Directive 2006/48/EC and Directive 2006/49/EC).
On the basis of information provided by CEBS members and observers, CEBS reports on the current prudential supervisory practices for commodities business including the scope of the regimes, the coverage of risks and the treatment of business carried out within financial or non-financial groups. The report also addresses the prudential regimes in three major third countries (Australia, US, Switzerland).
The survey shows that the current prudential regimes with regard to commodities business vary within the EU member states and also the EEA countries and the accession country that responded. Given the different relevance of the commodities sector for the respondents, only few countries have implemented specific rules for this sector yet. However, most countries have regulations in place that reflect the requirements of the relevant EU Directives, i.e. Investment Services Directive (93/22/EEC), Capital Adequacy Directive (93/6/EEC), Banking Directive (2000/12/EC) and which address at least firm related and product/transaction related risks. These prudential rules, even if not particularly issued with regard to this sector, also apply to certain aspects of commodities business and firms carrying out commodities business.
In response to the second part of the Call for Advice CEBS will submit an assessment of the risks that arise from the conduct of commodities business and from the activities of firms carrying out commodities business by April 2007.