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21Nov2024

The new guidelines from the European Supervisory Authorities

Posted By: DEVLHON Consulting

DEVLHON Consulting decodes: The new guidelines from the European Supervisory Authorities

In a context where the governance of financial institutions is under heightened scrutiny, the European Union is strengthening its regulatory framework. The European Supervisory Authorities (ESAs), including the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA), have recently published guidelines aimed at optimizing the fitness and propriety assessments of key leaders and stakeholders in the financial sector. These new measures, which introduce a centralized information exchange system, mark a crucial step toward more harmonized and effective supervision.

A Framework for Strengthened Governance

These guidelines are set within a clear legal framework, stemming from the EU’s founding regulations. Their objective is to ensure that individuals in strategic roles within financial institutions are assessed according to high standards, ensuring their integrity and competence. To achieve this, the ESAs have developed a specific information system, the ESAs Information System, which plays a key role in sharing the necessary data between the competent authorities of various Member States.

The ESAs Information System: A Tool for Authorities

This centralized system allows the essential information on individuals who have undergone an assessment to be cataloged and for the authorities who previously conducted these assessments to be quickly identified. However, to respect data confidentiality, only bilateral exchanges are permitted outside the platform, with information strictly limited to what is necessary. This system ensures a balance between efficiency and personal data protection, complying with the General Data Protection Regulation (GDPR).

Beneficial Harmonization for the Sector

By establishing a common approach across the European Union, these guidelines harmonize supervisory practices between countries and financial sectors. They speed up the assessment process by simplifying access to available information. Additionally, they strengthen the stability of the financial system by ensuring that key individuals in institutions meet the required standards of fitness and propriety, contributing to more robust governance.

Challenges to Overcome

Despite its many advantages, the implementation of this system presents some challenges. Competent authorities must integrate these new requirements without compromising legal evaluation deadlines. Additionally, particular attention must be paid to data security to avoid leaks or misuse. These issues require close coordination between the various sector stakeholders.

A Step Towards the Future

These new guidelines reflect the European Union’s commitment to modernizing financial governance and enhancing transparency in assessment processes. At DEVLHON Consulting, we support our clients in integrating these regulatory changes, helping them comply with the requirements while seizing the opportunities they present.

To learn more about the impact of these guidelines on your organization, contact our experts.

 

19Nov2024

DEVLHON Consulting Deciphers: The Confidential ECB Report

Posted By: DEVLHON Consulting

DEVLHON Consulting Deciphers: The Confidential ECB Report Shaking Up European Banking Regulation

An internal report from the European Central Bank (ECB) has ignited heated debates within the European banking landscape. According to this unpublished document, major EU banks would face significantly stricter capital requirements if subjected to U.S. standards. This revelation emerges amid regulatory tensions as international frameworks, such as Basel III, continue to divide opinions.

Striking Discrepancies Between Europe and the United States

The report, finalized in 2023, concludes that leading European banks would need to increase their minimum capital levels by 10% to 20% to align with current U.S. prudential standards. These figures starkly contrast with a previous report from the European Banking Federation, which predicted a more moderate increase of 5% to 15%. This discrepancy highlights significant divergences in how internal risk evaluation models are applied across the two regions.

The gap primarily stems from the use of internal models, which are more tightly regulated in the U.S. These tools enable European banks to maintain high capital ratios but are sometimes criticized for artificially minimizing risks.

A Fragmented European Response

European authorities have been quick to respond. The European Banking Authority (EBA) has already proposed an average 9.9% increase in Tier 1 capital requirements for European banks, with phased adjustments to mitigate sectoral impacts. However, the ECB’s report underscores that, despite these efforts, European banks still operate with lower capital requirements than their U.S. counterparts.

Furthermore, ongoing reforms, such as the integration of climate-related risks and adjustments to address digital disruptions, add further complexity to the regulatory landscape. According to the ECB’s 2023 Annual Report on Supervisory Activities, European supervisors continue to closely monitor governance weaknesses and risks in vulnerable sectors, such as commercial real estate.

The Impact of Geopolitical and Economic Changes

With the potential arrival of deregulation policies in the United States under a new administration, European banks fear a loss of competitiveness. This concern is amplified by rising geopolitical risks and macroeconomic uncertainties. The ECB’s annual report also notes an increase in non-performing loans within specific portfolios, adding further pressure on the resilience of banks.

An Opportunity to Rethink Banking Regulation

Faced with these challenges, the report’s publication could mark a turning point for the industry. Some advocate for greater transparency to counteract aggressive banking lobbying, while others call for methodological adjustments to avoid direct confrontations with the sector.

This debate underscores an unavoidable reality: harmonizing international regulatory standards remains a distant goal but is essential to ensure a resilient and competitive banking sector in a rapidly changing world.

Conclusion

The question of capital requirements highlights the structural differences between Europe and the United States while emphasizing the need for European banks to adapt to an ever-evolving environment. This regulatory debate should be seen as an opportunity to strengthen the sector’s resilience while meeting growing societal expectations for sustainability and transparency. DEVLHON Consulting is here to assist you in navigating these complex strategic and regulatory challenges.

6Nov2024

DEVLHON Consulting Decodes: The Challenges and Best Practices of SFDR

Posted By: DEVLHON Consulting

DEVLHON Consulting Decodes: The Challenges and Best Practices of SFDR Disclosures According to the Latest ESA Report

In the context of sustainable finance, disclosures on Principal Adverse Impacts (PAI) of investment decisions play a crucial role in ensuring transparency and accountability among financial actors. Published by the European Supervisory Authorities (ESA), the 2024 annual report on PAIs, in line with Article 18 of the SFDR regulation, provides an overview of disclosure practices and offers recommendations for improving their clarity and accessibility.

Context and Scope of the Report

The ESA report assesses the status of PAI disclosures at both the entity and product levels, based on a survey conducted with National Competent Authorities (NCAs). PAI disclosures are mandatory for market participants with more than 500 employees, while smaller entities may opt for voluntary disclosure, provided they use the Level 2 regulatory template.

Current Status: Notable Improvement, but Gaps Remain

According to the report, disclosure practices have improved, especially in terms of accessibility and quality of information, although compliance with SFDR requirements remains uneven. Significant progress has been noted in making information more accessible to retail investors and improving the quality of product-level disclosures. However, certain entities continue to face challenges, particularly regarding the application of PAI indicators and explanations for disclosure choices.

Best Practices and Recommendations

The ESA highlighted several examples of best practices that could inspire the entire financial sector:

Increased Accessibility: Disclosures are easier to locate thanks to dedicated sections on websites, facilitating information access for investors.

Clarity of Information: Entities that provide contextual explanations and use clear language offer a better understanding of their sustainable impacts.

Details on PAI Indicators: Comprehensive disclosures include required environmental and social indicators, along with explanations of actions taken to reduce negative impacts.

Challenges and Areas for Improvement

The report also underscores key areas for improvement. Among the challenges encountered:

Insufficient Explanations: Some entities provide little to no explanation for their choice not to consider PAIs, often citing resource issues without offering a plan for compliance.

Inconsistencies in Methodologies: Divergent methodologies used for calculating certain indicators make comparisons between entities difficult.

Engagement Policies: ESA noted that many engagement statements remain generic and require more detail to ensure transparency regarding actions taken with investee companies.

Conclusion

With clear recommendations for NCAs and market participants, the ESA report aims to enhance the coherence and quality of sustainability information. By adopting these best practices, companies can not only comply with SFDR requirements but also strengthen their sustainable impact and investor confidence.

5Nov2024

DEVLHON Consulting Decodes the Distribution of AMC

Posted By: DEVLHON Consulting

DEVLHON Consulting Decodes the Distribution of Actively Managed Certificates (AMC)

The distribution of Actively Managed Certificates (AMCs), complex financial instruments, is gaining traction. These products are attracting interest from various financial players—from private banks to investment advisors—looking to diversify their offerings to retail clients. However, the French Financial Markets Authority (AMF) highlights recommendations to regulate this distribution, as AMCs carry unique characteristics and specific risks.

Understanding AMCs: Complex Instruments

AMCs are structured debt securities or financial instruments issued under foreign laws. Their distinctiveness lies in the discretionary management of the underlying asset basket, which can be modified during the instrument’s lifecycle without the investor’s consent. This complexity makes them unsuitable for less experienced investors, requiring specific recommendations to protect retail clients.

Stringent Product Governance Requirements

Regulations require professionals to precisely define the target market for AMCs, identifying the client profiles for whom these products are appropriate. The AMF emphasizes the importance of thorough evaluation and alignment between the target market and the distribution strategy. Professionals are thus urged to limit AMCs to clients with a high level of financial knowledge and experience.

Transparency and Client Information

The AMF mandates that professionals provide clear, accurate, and up-to-date information on AMCs. Before investing, clients should be informed of the underlying asset composition and associated costs, especially those related to the regular adjustments in the asset basket. This transparency includes an estimation of rebalancing costs, calculated based on underlying assets and anticipated transaction volumes.

Enhanced Suitability Assessment Requirement

Assessing each investor’s profile is crucial to determine the suitability of AMCs for their financial objectives. Given the complexity of AMCs, professionals must ensure that clients fully understand the product’s functionality and inherent risks. The AMF discourages self-assessment methods, instead recommending more rigorous checks to ensure clients’ comprehension.

Regulation of Solicitation and Public Offerings

AMCs cannot be marketed through financial solicitation, and their distribution is subject to strict rules to ensure greater investor protection. Professionals looking to include AMCs in their offerings must comply with the AMF’s transparency and governance obligations.

Conclusion

For DEVLHON Consulting, this AMF recommendation underscores the importance of a cautious and responsible approach to AMC distribution. By following these guidelines, professionals can optimize their practices while strengthening investor trust.

31Oct2024

Devlhon Consulting Deciphers : Trade Finance Trends in 2024

Posted By: DEVLHON Consulting

Devlhon Consulting Insights: Key Trends in Trade and Trade Finance in 2024

International trade trends and trade finance outlooks are evolving rapidly in the face of global geopolitical and economic challenges. The 2024 ICC Trade Register report, produced in collaboration with Boston Consulting Group (BCG) and Global Credit Data (GCD), offers a comprehensive analysis of the current landscape. This report highlights positive developments for the sector’s future, despite a slowdown in global trade of goods in 2023. Here, Devlhon Consulting explores the report’s key findings and future perspectives for businesses and financial institutions.

Shift Toward Intrablock Trade and Growth of Non-Dollar Transactions

Amid rising geopolitical tensions, trade flows are increasingly shifting within regional blocs. The report highlights an increase in transactions conducted outside the U.S. dollar, particularly with the growing use of the Chinese currency. This change reflects efforts to reduce dollar dependence and respond to more diversified monetary and trade policies.

Sectors in Decline and Those in Strong Growth

Traditional sectors such as energy, metals and mining, and agribusiness experienced a trade decline in 2023, while the automotive and aerospace sectors recorded double-digit growth. Service trade is also expanding, now accounting for a third of global trade, with strong growth in the Middle East and South Asia. These figures suggest opportunities for companies to position themselves in high-growth sectors while diversifying their geographic markets.

Challenges and Opportunities in Trade Finance

Despite high interest rates and international tensions, the trade finance sector continues to show strong resilience. Among the main threats identified, financial institutions cite risks related to trade flows disrupted by geopolitical conflicts and pressure on margins. However, investments in digital technologies and sustainable financing initiatives present sources of optimism for the coming years. In fact, 90% of banks reported a growing interest in digital solutions to enhance customer experience.

Technological Integration as a Growth Driver

The report also emphasizes the increasing importance of artificial intelligence (AI) and generative AI for improving data management, fraud prevention, and document verification. The adoption of these technologies could accelerate supply chain digitization and make trade finance more accessible to smaller companies. The MLETR (Model Law on Electronic Transferable Records) is cited as a key advancement, though 80% of experts believe that successful digitization will depend on collaboration across the entire trade ecosystem.

Risk and Sustainability: Growing Priorities

Sustainable finance is becoming a central focus, supported by environmental regulations like the European Union’s carbon border adjustment mechanism. More than 90% of financial institutions involved in sustainable finance report positive results, indicating that the focus on sustainability will only increase. In terms of risk, financial products such as letters of credit and export financing continue to show resilience to market disruptions, proving their low-risk nature for financial institutions.

Conclusion: Opportunities and Outlook for 2024 and Beyond

The findings of the 2024 ICC Trade Register report indicate that despite significant challenges, global trade finance remains a key and relatively secure sector. Banks and companies investing in digitization and sustainability will be best positioned to navigate the complexities of international markets. This report reiterates that low-risk transactions, supported by advanced technological solutions and sustainability initiatives, will drive stability and growth for trade finance players in an increasingly complex economic landscape.

For businesses, understanding these developments enables them to prepare for future opportunities while navigating a shifting geopolitical and economic environment.

 

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30Oct2024

DEVLHON Consulting Breaks Down New Technical Standards

Posted By: DEVLHON Consulting

DEVLHON Consulting Breaks Down New Technical Standards for the European Single Access Point (ESAP)

In response to the growing demand for transparency and harmonization of financial information across Europe, the European ESAP Regulation establishes a European Single Access Point—a central, standardized platform designed to facilitate access to financial and investment data. To ensure the efficiency and security of this platform, Implementing Technical Standards (ITS) have been defined. DEVLHON Consulting analyzes the final report from the Joint Committee (JC) of the European Supervisory Authorities (ESA), outlining the responsibilities of collection bodies (CB) and the technical specifications of the ESAP.

Collection Bodies: Roles and Responsibilities

Collection bodies, or “CBs,” are the guardians of the quality and integrity of financial data intended for the ESAP. Designated by national or European organizations, CBs play a crucial role in validating and transmitting information submitted by issuing entities.

Main Tasks of CBs:

– Automatic Validations: CBs are responsible for performing automatic validations for each type of data received. This step ensures data compliance with established standards and prevents duplication across Member States.

– Open Standard License: All data made available on the ESAP must adhere to a CC0 license or its equivalent. However, some protected data, notably credit ratings, may require more restrictive licenses to limit commercial use.

– Data Formats and Metadata: To ensure maximum interoperability, the ESAP mandates standardized data formats that allow for automated extraction and reading of information. The required metadata includes key elements such as the issuing entity, legal framework, and publication dates.

CBs are also required to transmit validated data to the ESAP within a maximum of 60 minutes, ensuring speed and fluidity in the process.

The ESAP: Technical Features and Accessibility

The ESAP is designed as a unified and open platform, meeting accessibility standards and offering advanced user features.

Publication API Features:

– Data Management: The API enables bulk access to information without manual intervention, facilitating efficient system interactions. The adoption of a widely supported RESTful architecture aligns with best practices for data flow.

– Download and Visualization: Users will be able to download large volumes of data, while an integrated viewer will make financial information accessible and easy to interpret.

The ESAP will also guarantee 97% availability each month, ensuring continuous access for users.

Unique Legal Identifier (LEI) and Metadata

The Legal Entity Identifier (LEI), compliant with ISO 17442, has been chosen as the unique identifier for entities listed on the ESAP. This identifier ensures high interoperability, facilitating links between various databases and allowing for enhanced data traceability.

The metadata accompanying each piece of information enables precise categorization and easy searchability. CBs are responsible for transmitting relevant metadata, including the legal framework of the publication, the originating Member State, and references from the Global LEI Foundation (GLEIF).

Market Feedback and Adjustments

As part of a public consultation, market participants suggested adjustments to harmonize validations across CBs to minimize differences between Member States. Other proposals included greater flexibility in formats, notably to allow the inclusion of non-extractable elements, such as graphs.

In response to this feedback, Level 3 (L3) documentation will be established to detail validation procedures and support CBs in their implementation.

Timeline and Implementation

Once adopted, the ITS will provide a clear and precise framework for CBs and the ESAP to manage the centralized collection, validation, and publication of financial information. The ESAP project will proceed in three progressive phases from 2026 to 2030, allowing CBs and companies to adapt gradually to these new requirements.

Conclusion

The establishment of the European Single Access Point (ESAP), supported by the ITS, marks a strategic advancement for European capital markets. By setting rigorous standards for the collection, validation, and accessibility of information, this project aims to provide investors with a reliable and centralized financial database. By optimizing access to information and ensuring its security, the ESAP will serve as a critical tool for transparency and the effectiveness of the European single market.

18Oct2024

DEVLHON Consulting deciphers: Summary of SPOT Controls- October 2024

Posted By: DEVLHON Consulting

DEVLHON Consulting deciphers: Summary of SPOT Controls on AIFM, MMF, and ROSA Regulatory Reporting – October 2024

The Autorité des Marchés Financiers (AMF) has conducted a series of SPOT controls, as announced in its 2023 supervision priorities, to assess the quality of data transmitted by portfolio management companies (SGP) through AIFM, MMF, and ROSA regulatory reports. These controls take place in a context where reporting is an essential tool for overseeing systemic risks and monitoring the financial sector, particularly regarding alternative investment funds.

 Context and Objectives

The AIFM directive, implemented after the 2008 financial crisis, imposes reporting obligations on alternative investment fund managers. In 2023, this reporting covered 9337 funds, managing a total of €1219 billion. Additionally, money market funds (MMF) play a crucial role, with 2171 reports filed between 2021 and 2023. The ROSA platform, introduced in 2021, enables SGPs to submit various regulatory information to the AMF.

The controls focused on four key areas:

  1. Organization and governance of the reporting systems.
  2. Procedural framework related to report production.
  3. Analysis of the operational processes of AIFM and MMF report production.
  4. Internal control mechanisms in place.

 Key Findings and Observations

 Organization and Governance

The audited SGPs have largely outsourced part of their reporting production process to external providers. However, there is an increased risk of error when processes are not fully integrated, as manual steps are often combined with automated processing. Most SGPs have implemented independent control systems to validate reports before submission to the AMF, though some gaps remain, particularly in staff training and project governance.

 Operational Processes and Internal Control

Internal control is generally well-structured, but anomalies were noted in some SGPs, especially in the monitoring of management delegations. Issues were also identified in the formalization of contracts with external providers, which do not always include the necessary quality control measures.

 Recommendations and Best Practices

The AMF recommends:

– Separating the reporting production and control functions.

– Integrating the monitoring of reports into risk management committees to enhance coordination.

– Using key performance indicators (KPIs) to monitor the efficiency of external providers.

 Conclusion

The reliability of data submitted to the AMF remains a priority to ensure effective oversight of financial risks. The AMF will continue to monitor the quality of reports while encouraging the adoption of best practices within the sector.

17Oct2024

The Development of Big Techs in the Financial Sector

Posted By: DEVLHON Consulting

The Development of Big Techs in the Financial Sector: What Risks? What Regulatory Responses?

In recent years, major tech players, known as “big techs,” have gradually expanded into the financial services sector. Although their presence in Europe remains limited, their potential for growth raises critical questions about the risks posed to financial stability and the appropriate regulatory responses.

 Big Techs in Finance: A Gradual but Concerning Expansion

Technology giants like Google, Amazon, Meta, and Apple, traditionally focused on digital activities (social networks, e-commerce, search engines), are increasingly diversifying into financial services. This move is fueled by several comparative advantages: a global user base, unmatched data management capabilities, and remarkable financial strength. These dynamics allow them to compete with well-established financial institutions, particularly in segments like payments, non-bank credit, and digital asset management.

Driven by technological innovations and new consumer expectations, especially the post-pandemic shift toward digitalization, big techs have become key players in the digital economy. Their dominant position in cloud services and potential in areas like mobile payments and cryptocurrencies further strengthen their growing influence over traditional financial systems.

 Risks to Financial Stability

The entry of big techs into finance brings many innovations. However, it also raises new risks, particularly regarding financial stability. The main issue lies in the fragmentation of financial services they cause. By leveraging digital technologies, big techs externalize and unbundle financial value chains, creating increasing interconnections between the financial and commercial sectors. This interdependence can heighten the vulnerability of traditional financial institutions.

Operational Resilience: Many financial institutions depend on services provided by a small number of tech players, particularly for cloud services. This concentration raises the risk of systemic failure in case of an outage or interruption of these critical services. Today, giants like Amazon Web Services and Microsoft Azure dominate this sector.

Credit Distribution and Non-Bank Activities: The growth of big techs in non-bank lending (such as “Buy Now, Pay Later” services) also poses challenges. While these activities provide alternative solutions for consumers, they often escape the strict regulations imposed on banks, thus creating risks of financial contagion.

Competition and Consumer Protection: With their massive user base and data processing capabilities, big techs can easily lock down markets and push competitors out, creating de facto monopolies. These situations raise questions about fair competition and the protection of user data.

 Regulatory Responses in Europe: What Are the Shortcomings?

The European Union has quickly responded to these developments by introducing several regulatory frameworks. The Digital Operational Resilience Act (DORA) and the Digital Markets Act (DMA) were implemented to strengthen the operational resilience of financial systems and regulate the major digital players. However, these initiatives are primarily focused on technical resilience and competition, leaving out key aspects of financial stability.

DORA, for instance, imposes requirements on financial institutions using IT service providers but does not fully address the risks posed by big techs as financial service distributors or non-bank lending operators. Furthermore, there is a lack of consolidated supervision of big tech activities across Europe. Current prudential frameworks are often bypassed by these groups, complicating regulators’ efforts to gain a comprehensive view of their operations.

 Proposals for a Strengthened Regulatory Framework

To address these challenges, several regulatory proposals have been put forward. On one hand, it is crucial to strengthen and harmonize rules governing the activities in which big techs are expanding, especially in payment services and non-bank lending. This could include introducing new prudential requirements to monitor and regulate their activities at a consolidated level.

On the other hand, it is recommended that big techs be required to consolidate their significant financial activities within a dedicated structure, allowing for more comprehensive supervision. This restructuring would enable the application of the same prudential rules as traditional banks if needed, ensuring fair treatment and limiting the risk of regulatory evasion.

 Conclusion: Balancing Innovation and Regulation

While the rise of big techs in finance brings major innovations and efficiency gains, it is essential to establish an adequate regulatory framework to manage the risks associated with this rapid transformation. European regulations must evolve to ensure that big techs can innovate while safeguarding financial stability and protecting consumers. Only a harmonized framework, accounting for both the specificities of big techs’ financial activities and the risks they pose, will allow for a balance between innovation and security in the financial sector.h

15Oct2024

Speech by François Villeroy de Galhau (Banque de France) – Fintech Forum

Posted By: DEVLHON Consulting

DEVLHON Consulting Decodes: François Villeroy de Galhau’s Speech at the Fintech Forum – Paris, October 14, 2024

The speech by François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Prudential Supervision and Resolution Authority (ACPR), at the Fintech Forum on October 14, 2024, addresses several key issues surrounding the intersection of technological innovation and regulation in the French financial sector. Structured around three main themes – continuity, disruption, and challenge – this speech highlights the priorities of the Bank of France and the ACPR in supporting the fintech ecosystem while ensuring effective regulation.

 A Continuity: The Commitment of the Bank of France and the ACPR

The first point raised by François Villeroy de Galhau concerns the stabilization of funding for French fintechs after a period of contraction in 2023. Indeed, fundraising reached €560 million in the first half of 2024, compared to €568 million in the same period in 2023, showing relative resilience in the sector despite economic uncertainties and rising interest rates. France continues to lead the fintech market in the European Union, although it lags behind the United Kingdom.

This continuity reflects the ACPR’s commitment to maintaining active communication with fintech players through initiatives such as the “Mon Parcours Fintech” platform, as well as supporting specific innovations, such as the issuance of the first stablecoins in France. The speech also highlights the need for regulatory harmonization in Europe, in response to the challenges faced by fintechs in their international expansion.

Disruption: The Impact of Artificial Intelligence

The second part of the speech emphasizes artificial intelligence (AI) as one of the major drivers of innovation for fintechs. François Villeroy de Galhau acknowledges that despite the exponential progress of generative AI, the financial sector has yet to fully grasp the transformations ahead. He advocates for a proactive approach, affirming that the Bank of France and the ACPR must stay aligned with these technological developments.

The ACPR is ready to take on the role of market supervisor for AI in the financial sector, in line with European legislation adopted in June 2024. This legislation identifies several “high-risk” uses, particularly in credit scoring and insurance pricing. To this end, the ACPR will draw on years of expertise in algorithm auditing and collaboration with various financial sector stakeholders.

A Challenge: Balancing Openness and Trust

Finally, François Villeroy de Galhau highlights the challenge of ensuring increased trust in a rapidly opening digital environment. He mentions several European initiatives, such as the Payment Services Directive (PSD2) and the proposed Financial Data Access (FIDA) framework, which encourage data openness for the benefit of consumers while managing risks.

The Digital Operational Resilience Act (DORA), which will come into force in January 2025, is also emphasized as a key pillar for operational resilience in the financial sector in the face of rising risks, particularly cyber risks. DORA mandates compulsory penetration testing, strengthens third-party risk management, and promotes information sharing among financial entities to better address cyber threats.

Conclusion

François Villeroy de Galhau’s speech illustrates the Bank of France and ACPR’s commitment to balancing innovation with regulation. While fintechs are key players in the digital transformation of the financial sector, they cannot thrive without a regulatory framework adapted to new technological realities, such as artificial intelligence and cybersecurity. The Governor concludes by underscoring the importance of the alliance between innovators and regulators to ensure a modern, resilient, and secure financial system.

 

Source : file:///C:/Users/devlh/Downloads/2024-10-14_Discours-Forum-Fintech.pdf

3Oct2024

EBA publishes its programme for 2025

Posted By: DEVLHON Consulting

DEVLHON Consulting deciphers: The priorities of the European Banking Authority’s (EBA) 2025 work program

The European Banking Authority (EBA) recently released its 2025 work program, part of a long-term strategy covering the period 2025-2027. This program reflects the EBA’s ambitions to adapt European Union (EU) banking regulations while ensuring financial stability in an evolving economic environment. Here are the key priorities of the EBA for the coming years, deciphered by DEVLHON Consulting.

 Strengthening the EU regulatory framework

One of the EBA’s main priorities for 2025 will be implementing the “EU banking package,” which includes Basel III reforms aimed at enhancing the resilience of banks in the face of crises. This framework introduces more risk-sensitive approaches to determining capital requirements, especially for credit, market, and operational risks. The EBA will develop regulatory standards to finalize this framework and ensure consistent application across the EU.

 Promoting sustainable financial stability

Sustainability is becoming a central issue for the banking sector. In a context of geopolitical risks and economic tensions, the EBA is focusing on forward-looking risk assessments, notably through stress tests. In 2025, the authority will launch a data portal to improve risk analysis infrastructure. This will also include initiatives to better monitor risks related to environmental, social, and governance (ESG) factors.

 Launching supervisory activities for DORA and MiCAR

The Digital Operational Resilience Act (DORA) and the Markets in Crypto-Assets Regulation (MiCAR) will come into effect in 2025. The EBA will begin overseeing critical IT service providers and supervising crypto-asset issuers, in collaboration with other European authorities. The introduction of these new responsibilities highlights the growing importance of digital technologies and decentralized finance in the European financial landscape.

 Transitioning to a new anti-money laundering framework

In 2025, the EBA will support the transition to the new EU Anti-Money Laundering Authority (AMLA). During this transition phase, the EBA will continue to carry out its mandate in this field while preparing to transfer its responsibilities to AMLA by the end of 2025. The focus will be on smooth regulation and integrating innovations in this domain.

 Conclusion

The EBA is pursuing an ambitious roadmap for 2025, marked by the rapid evolution of banking regulations and the increasing prominence of digital and ESG-related risks. At DEVLHON Consulting, we closely monitor these developments to provide you with insightful analyses and strategic support in your compliance and financial innovation initiatives.

The EBA’s 2025 program clearly demonstrates that resilience, sustainability, and innovation will be at the heart of European financial regulation in the coming years.

 

Source : https://www.eba.europa.eu/sites/default/files/2024-09/a5bce431-7793-4b75-bd07-d5741c961fbe/EBA%20Work%20programme%202025.pdf

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