Hugh Wallis – Director, Regulatory Analysis, Certent Inc. – January 2018
While replying to some emails the other day I found myself explaining for seemingly the umpteenth time the distinction between terms like EBA, CRD IV, COREP/FINREP, and so on. As I started to write my explanation I realised that I had never seen a fully organised description of the myriad names and acronyms that are being used day to day when talking about the various supervisory reporting mandates in place in Europe. So, I thought that in this month’s blog post on regulatory matters it might be helpful to lay these out in a comprehensive fashion, and thus clear up some confusion.
The source of the confusion over names seems to be that there are numerous distinct aspects to these mandates but there is a tendency to use the name of one of them when referring to another. In the example from the previous paragraph, the EBA is the agency charged with managing the Capital Requirements Directive IV (CRD IV) which requires different reports including those called COREP and FINREP but often these various terms are used interchangeably. To help sort all this out I have identified the various aspects of each of the main European reporting mandates as follows:
- Regulatory Authority: this is the authority that is charged with managing the reporting mandate in question.
- Mandate: this is the actual name of the mandate.
- Implements: this is the agreements or protocols that the mandate implements. It is particularly relevant when the protocols or agreements are defined by a body that is not exclusively European but where a specifically European approach is taken to implementing them.
- Reports required: this is the name or names of various reports or sets of reports that must be produced to comply with the mandate in question.
- Applies to: this describes the types of organisation that are required to produce reports under the mandate.
- Term for National Regulators: reports are typically submitted by the reporting entity to a local, national regulator that then assembles all the reports from those entities that come under its jurisdiction and forwards them on to the central European regulatory authority. The documents describing the different mandates use a term to describe the local, national regulators, but they are not consistent across the different mandates.
An overarching term that covers the 4 mandates addressed here is the European System of Financial Supervision (ESFS). It is centered around the 3 European Supervisory Authorities (ESAs – the EBA, EIOPA and ESMA – see table below), the European Systemic Risk Board (ESRB) and the various national supervisors. To completely turn the alphabet soup into consommé, note that the European Union (EU) comprises the 28 member states that were either original members under the Maastricht treaty that came into force in 1993 or have since joined. The European Economic Area (EEA) comprises the member states of the EU as well as those who are members of the European Free Trade Association (EFTA) except Switzerland. Effectively this adds Norway, Iceland and Liechtenstein to the 28 EU members. All the mandates discussed here except the Single Resolution Mechanism (SRM) affect all 31 EEA members. It is common to refer to the EU and EEA states as though they are separate even though all EU states are also EEA states. As a result, the term EEA is frequently used to refer to just the three non-EU states that are members of the EEA.Another term frequently encountered is Euro Zone or, sometimes Euro system. This refers to those countries that use the Euro as their currency. The European Central Bank (ECB) is the official EU institution at the heart of the Euro system and the Banking Union, the first two pillars of which are the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM).
Editor’s note: Mr. Wallis actively researches and tracks over two dozen posted mandates for financial and regulatory reporting mandates across EMEA (Europe, Middle East, Africa) and works alongside the product and service teams at Certent to keep the software and service offerings in complete compliance. He is a regular contributor to the Certent Insider Blog. To sign up for notifications like this, subscribe with your email to the right.