Response to consultation Paper on Draft Implementing Technical Standards on reporting requirements for investment firms under Article 54(3) and on disclosures requirements under Article 49(2) of Regulation (EU) 2019/2033
Go back
(i) The “Distribution of profits” requires disclosure on row 0060, the “Employees', directors' and partners' shares in net profits” requires disclosure on row 0090 and “Other discretionary payments of profits and variable remuneration” requires disclosure on row 0100. The guidance, however, does not define the distinction between these three reporting items. It would be helpful for the guidance to define the basis of each of the values to be reported.
(ii) It is our understanding that the discretionary dividend payments should not be included in the Fixed Overhead Requirement calculation. Can the EBA confirm that this interpretation is correct and consider including a statement, within the reporting instructions, which makes this clear?
(iii) The guidance states “Row 0060 (Distribution of profit) shall be lower than row 0050 (Total expenses before distribution of profits)”. Can the EBA provide further clarification and a rationale for this requirement?
(iv) The guidance notes “Row 0030 (Total expenses of the previous year after distribution of profits) is the difference of rows 0050 (Total expenses before distribution of profits) and 0060 (Distribution of profits). The amount reported shall be a positive amount.” Can the EBA clarify whether this should actually state that ‘Row 0300 should equate to the sum of rows 0050 and 0060’?
(i) Inconsistencies in data requests – It was noted that for the purpose of table IF 06.01 in the template IF 06.00, data for the three most recent months is requested however under Article 17 of the IFR the three most recent monthly values are excluded when calculating K-AUM. Similarly, for the purpose of the table IF 06.04 table in template IF 06.00, eight months of data is requested however the calculation only requires six months of data for calculating K-CMH. (Note: K-AUM and K-CMH has been used illustratively; this point applies to all K-factors included within template IF 06.00).
(ii) It would be helpful if the EBA clarify why data that is not required as part of the K-factor calculation is requested. If this data is required, can the supporting instructions be updated to provide the rationale? Alternatively, if the data is not required, can the templates be updated to remove the information that is not necessary for the K-factor calculations to avoid confusion?
(iii) Content of table IF 06.11 - For the purpose of table 06.11 in the IF 06.00 template, can the EBA clarify if this table is to be populated with data relating to only the trading book exposures or should it include other data? The table itself and guidance provided do not specify what this table illustrates therefore additional wording to articulate this would be helpful.
(i) For row 0030, the instructions state “This row is sum of rows 0040, 0050, 0060, 0160, 0220, 0280 and 0290.” Our view is the statement should read ‘This row is the sum of rows 0040, 0050, 0060, 0170, 0230, 0290 and 0300.’
(ii) For row 0170, the instructions state “Sum of rows 0170 – 0210.” Our view is the statement should read ‘Sum of rows 0180 – 0220.’
(iii) For row 0230, the instructions state “Sum of rows 0230 – 0270.” Our view is the statement should read ‘Sum of rows 0240 – 0280.’
(i) Individual vs consolidated reporting and disclosures - We welcome the draft ITS on reporting requirements however the regulations as detailed in Articles 54 and 55 of the IFR and Articles 4, 5 and 10 of the draft ITS appear to require reporting by each regulated entity, as well as reporting on a consolidated basis. It is not fully clear if there are reports and disclosures which are only required on a consolidated basis. In order to avoid unnecessary submissions, it would be helpful if the EBA clarified the level of application (individual / consolidated) for the various reports / disclosures required under IFR.
(ii) Completion of nil returns - It would be helpful if the EBA would confirm the process for returns that are not applicable i.e. is a nil return submission required? For example, if firms are required to submit templates IF 10.01, 10.02 and 10.03, can the EBA confirm that they are not required to submit template IF 05.00 or alternatively a nil submission for IF 05.00 is required?
Question 1: Are the instructions and templates clear to the respondents?
We reviewed the template IF 03.00 and made the following observations:(i) The “Distribution of profits” requires disclosure on row 0060, the “Employees', directors' and partners' shares in net profits” requires disclosure on row 0090 and “Other discretionary payments of profits and variable remuneration” requires disclosure on row 0100. The guidance, however, does not define the distinction between these three reporting items. It would be helpful for the guidance to define the basis of each of the values to be reported.
(ii) It is our understanding that the discretionary dividend payments should not be included in the Fixed Overhead Requirement calculation. Can the EBA confirm that this interpretation is correct and consider including a statement, within the reporting instructions, which makes this clear?
(iii) The guidance states “Row 0060 (Distribution of profit) shall be lower than row 0050 (Total expenses before distribution of profits)”. Can the EBA provide further clarification and a rationale for this requirement?
(iv) The guidance notes “Row 0030 (Total expenses of the previous year after distribution of profits) is the difference of rows 0050 (Total expenses before distribution of profits) and 0060 (Distribution of profits). The amount reported shall be a positive amount.” Can the EBA clarify whether this should actually state that ‘Row 0300 should equate to the sum of rows 0050 and 0060’?
Question 2: Is the level of detail on small and non-interconnected investment firms templates and instructions sufficient and proportionate for the level of activity of these firms?
We have no additional comments.Question 3: Are the instructions and templates IF 05.00 and IF 05.01 clear to the respondents?
We have no additional comments.Question 4: Do the respondents identify any discrepancies between templates IF 06.01 - IF 06.13 and instructions and the calculation of the requirements set out in the underlying regulation?
We reviewed the templates IF 06.01 – IF 06.13 and identified the following discrepancies:(i) Inconsistencies in data requests – It was noted that for the purpose of table IF 06.01 in the template IF 06.00, data for the three most recent months is requested however under Article 17 of the IFR the three most recent monthly values are excluded when calculating K-AUM. Similarly, for the purpose of the table IF 06.04 table in template IF 06.00, eight months of data is requested however the calculation only requires six months of data for calculating K-CMH. (Note: K-AUM and K-CMH has been used illustratively; this point applies to all K-factors included within template IF 06.00).
(ii) It would be helpful if the EBA clarify why data that is not required as part of the K-factor calculation is requested. If this data is required, can the supporting instructions be updated to provide the rationale? Alternatively, if the data is not required, can the templates be updated to remove the information that is not necessary for the K-factor calculations to avoid confusion?
(iii) Content of table IF 06.11 - For the purpose of table 06.11 in the IF 06.00 template, can the EBA clarify if this table is to be populated with data relating to only the trading book exposures or should it include other data? The table itself and guidance provided do not specify what this table illustrates therefore additional wording to articulate this would be helpful.
Question 5: Do the respondents identify any discrepancies between templates IF 07.00 – IF 08.00 and instructions and the calculation of the requirements set out in the underlying regulation?
We have no additional comments.Question 6: Are the instructions and templates clear to the respondents?
We have reviewed the Liquidity template IF 09.00 and related instructions. Inconsistencies were noted between the template and the instructions which are described below. It would be helpful if the following could be reviewed and the instructions updated if necessary:(i) For row 0030, the instructions state “This row is sum of rows 0040, 0050, 0060, 0160, 0220, 0280 and 0290.” Our view is the statement should read ‘This row is the sum of rows 0040, 0050, 0060, 0170, 0230, 0290 and 0300.’
(ii) For row 0170, the instructions state “Sum of rows 0170 – 0210.” Our view is the statement should read ‘Sum of rows 0180 – 0220.’
(iii) For row 0230, the instructions state “Sum of rows 0230 – 0270.” Our view is the statement should read ‘Sum of rows 0240 – 0280.’
Question 7: Are the instructions and templates (IF 11.01, 11.02, 11.03) clear to the respondents?
We have no additional comments.Question 8: Do the respondents identify any discrepancies between the template and instructions and the requirements set out in the underlying regulation?
On review of the template EU IF CC1, the “Sources based on the balance sheet in the audited financial statements” (column E - ref (b)) is requested. The majority of these items are not individually disclosed on the balance sheet in the financial statements and therefore it would be helpful to understand why this information is required. In addition, where an amount exists under column D and it is not disclosed in the audited financial statements, can the EBA confirm that it is not mandatory to populate column E in this situation?Question 9: Do the respondents identify any discrepancies between the template and instructions and the requirements set out in the underlying regulation?
At the top of the template EU IF CC2, it states that it is a “Flexible template” and “Columns shall be kept fixed, unless the investment firm has the same accounting and regulatory scope of consolidation, in which case the volumes have to be entered in column (a) only.” It would be helpful if further clarity could be provided on the definition of “accounting” in relation to this template. For example, “accounting” in relation to consolidation may only be prepared for regulatory purposes and thus is aligned with the regulatory scope by default. However, if accounting in this template refers to “statutory accounting” then there could be differences in items between solo (statutory financial statements) and consolidated positions (non-statutory financial statements prepared for regulatory purposes only).Question 10: Are the instructions and templates clear to the respondents?
We have no additional comments.Question 11: Is the ITS text clear to the respondents?
We reviewed the draft Implementing Technical Standards (‘ITS’) and noted the following points:(i) Individual vs consolidated reporting and disclosures - We welcome the draft ITS on reporting requirements however the regulations as detailed in Articles 54 and 55 of the IFR and Articles 4, 5 and 10 of the draft ITS appear to require reporting by each regulated entity, as well as reporting on a consolidated basis. It is not fully clear if there are reports and disclosures which are only required on a consolidated basis. In order to avoid unnecessary submissions, it would be helpful if the EBA clarified the level of application (individual / consolidated) for the various reports / disclosures required under IFR.
(ii) Completion of nil returns - It would be helpful if the EBA would confirm the process for returns that are not applicable i.e. is a nil return submission required? For example, if firms are required to submit templates IF 10.01, 10.02 and 10.03, can the EBA confirm that they are not required to submit template IF 05.00 or alternatively a nil submission for IF 05.00 is required?
Question 12: Are the provisions of the RTS, the templates and instructions clear? In those cases where you identify issues, please provide concrete examples or detailed explanations to illustrate your doubt.
We have no additional comments.Upload files
BlackRock Response to EBA IFR CPs 040920.pdf
(308.17 KB)