ITS and RTS Standards of the European Banking Authority

What are ITS and RTS standards?

ITS (Implementing Technical Standards) and RTS (Regulatory Technical Standards) are two types of standards issued by European regulatory authorities, such as the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA). These standards play a crucial role in the consistent implementation and application of financial legislation within the European Union.

Implementing Technical Standards (ITS):

– ITS are detailed technical standards developed by regulatory authorities to implement specific provisions of EU financial regulations.

– They provide specific guidance on how financial institutions and competent authorities should implement regulatory requirements.

– ITS often describe calculation methods, reporting formats, operational procedures, and other technical details necessary for regulatory compliance.

– ITS can be updated or revised based on legislative changes or the needs of the financial sector.

Regulatory Technical Standards (RTS):

– RTS are another type of technical standards issued by European regulatory authorities.

– Unlike ITS, which focus on practical implementation, RTS specify the regulatory requirements themselves, providing specific details and rules that financial institutions must follow.

– RTS often provide precise instructions on how to comply with general legislative requirements established in European directives.

– They are often published after a period of public consultation and dialogue with stakeholders to ensure they are feasible and effective while meeting regulatory objectives.

In summary, ITS provide detailed guidance on the practical implementation of financial regulations, while RTS specify the regulatory requirements themselves. Together, these standards play an essential role in the harmonization and consistent implementation of financial legislation across the European Union.

Which entities are affected?

The Implementing Technical Standards (ITS) and Regulatory Technical Standards (RTS) developed by European regulatory authorities, such as the EBA and ESMA, primarily address companies in the financial sector of the European Union. This includes various actors:

Banks and financial institutions, such as asset management companies, investment firms, and credit unions, are required to comply with the technical standards issued to ensure effective and consistent regulation.

Investment firms, such as brokerage firms and trading companies, as well as portfolio management companies, must comply with the regulatory requirements set out in ITS and RTS to maintain the integrity and transparency of European financial markets.

Insurance companies, insurance brokers, and other players in the insurance industry must also comply with technical standards to ensure financial soundness and consumer protection, especially under Solvency II regulations.

Market infrastructures, such as stock exchanges, clearinghouses, and securities settlement systems, are subject to ITS and RTS to ensure the efficient and safe operation of financial markets.

Financial services companies, such as payment service providers and crowdfunding platforms, are also affected by technical standards depending on the nature of their activities and their regulatory obligations.

In conclusion, the ITS and RTS issued by European regulatory authorities apply to a wide range of actors in the EU financial sector, thereby ensuring a robust and consistent regulatory framework for the entire industry.

Conclusion

To conclude, the implementation of the Implementing Technical Standards (ITS) and Regulatory Technical Standards (RTS) issued by European regulatory authorities is a crucial process for financial sector companies operating within the European Union. These standards define specific regulatory requirements and provide detailed guidance on how to comply with EU financial legislation.

To implement these standards, companies must first analyze and understand the applicable requirements, assess the impact on their operations, design appropriate compliance solutions, implement them, test and validate the changes, and finally, continuously monitor and update the compliance solutions based on regulatory developments.

This process requires a methodical approach, close collaboration between various internal and external stakeholders, and effective change management to ensure a smooth transition. By following these steps, companies can ensure regulatory compliance and contribute to maintaining the integrity and stability of the European financial system.

Our Regulatory Excellence offer : https://www.devlhon-consulting.com/en/service/excellence-reglementaire/