EBA欧洲银行-Session-2.-Workstreams-on-proportionality-26-simplicity-Prof-Nina-Dietz-Legind_14页_970kb

EBA 2nd Proportionality Workshop Summary

Core Content

The EBA Banking Stakeholder Group (BSG) conducted the 2nd Proportionality Workshop to address the issue of proportionality and simplification in banking regulation. The workshop aimed to evaluate the current regulatory framework and identify areas where proportionality is lacking, with a focus on reducing unnecessary complexity and ensuring that regulations are appropriately tailored to the needs of different institutions.

The BSG, which includes 30 members, has been actively involved in shaping regulatory policies through consultation and discussion papers, as well as contributing to Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS). Since the financial crisis, the group has recognized that newly created legislation has affected various business models in different ways, highlighting the importance of proportionality in regulatory design.

Main Viewpoints

The BSG identified four key dimensions of proportionality:

1. Disproportionality in relation to objectives: A regulation may be excessive in relation to the goal it aims to achieve.
2. Materiality principle: A regulation may apply to institutions that are not material to the objective, leading to unnecessary burden.
3. Excessiveness of the totality of regulation: The combined effect of multiple regulations may be excessive for the key regulatory objectives.
4. Excessive complexity: Regulations may be overly complicated, making them difficult to implement and understand.

The group emphasized that proportionality is a central issue in banking regulation, as all economic activities are impacted by the banking system. Therefore, ensuring proportionality is crucial for maintaining a balanced and effective regulatory environment.

Key Information

• Proportionality Working Group: Formed in June 2014, this ad hoc group consists of 14 out of the 30 BSG members.
• Current Regulatory Challenges: New legislation has created varying impacts on different types of institutions.
• Recommendations: The BSG proposed five high-level recommendations to enhance the application of proportionality in banking regulation:
  • Regular, independent reviews of regulatory complexity and proportionality.
  • Enhanced focus on flexibility in future Level 1 rules.
  • Differentiation between institutions based on their business models and the costs they incur.
  • Review of supervisory reporting requirements, including the leverage ratio.
  • Establishment of a high-level Task Force by the European Commission to evaluate and guide the interpretation of proportionality in financial regulation.

Recommendations Overview

Recommendation I

• Independent reviews of regulatory complexity and proportionality should be conducted regularly.
• A semi-autonomous Proportionality Review Group should be established within regulatory agencies, reporting directly to the Chair and Chief Executive.

Recommendation II

• Future Level 1 rules should be designed with flexibility in mind.
• A harmonised, horizontal ESA guideline should define the Principle of Proportionality and the Materiality principle.

Recommendation III

• Differentiation between institutions is necessary to avoid disproportionate regulatory costs.
• Clarification and improvement of cost/benefit evaluation processes should be prioritized.

Recommendation IV

• Supervisory reporting requirements should be reviewed to remove duplication and introduce differentiation.
• A differentiated leverage ratio could be considered based on business models.
• Impact analyses should themselves be proportionate to the complexity and significance of the issue.

Recommendation V

• A high-level Task Force should be established by the European Commission to evaluate and guide the interpretation of proportionality.
• The Task Force should:
  • Describe current interpretations and implementations of proportionality.
  • Propose future applications.
  • Assess the impact on the existing regulatory framework.
  • Suggest implementation actions, timelines, and resource allocation.

Next Steps

• The final paper will be presented and distributed in early Autumn 2015.
• It will be available on the EBA's website.
• Comments and queries can be sent to: proportionality@wsbi-esbg.org.

Conclusion

The BSG underscores the importance of proportionality in banking regulation and advocates for a structured and ongoing approach to ensure that regulations are both effective and appropriately tailored. Their recommendations aim to enhance regulatory efficiency, reduce unnecessary burdens, and improve the clarity and flexibility of the regulatory framework.