New technical standards for identification of shadow banking entities
On 12 December 2023, Commission Delegated Regulation (EU) 2023/2779 of 6 September 2023 was published (the "New Delegated Regulation"). The New Delegated Regulation supplements Regulation (EU) 575/2013 (the “Capital Requirements Regulation”) by specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures pursuant to Article 394(2) of the Capital Requirements Regulation.
Article 394(2) of the Capital Requirements Regulation, as amended by Regulation (EU) 2019/876 (“CRR2”), sets out the additional reporting obligation for an institution that is required to report its 10 largest exposures to shadow banking entities which carry out banking activities outside the regulated framework on a consolidated basis.
The New Delegated Regulation specifies the criteria for identifying shadow banking entities and defines banking services and activities. Accordingly, any entity (i) that offers banking services or performs banking activities as defined under the New Delegated Regulation and (ii) is not already authorised and supervised in accordance with any of the EU legislative acts listed in the Annex to the New Delegated Regulation shall identify as a shadow banking entity. Also among the entities identified as shadow banking entities are any undertaking for collective investment in transferable securities where those undertakings are authorised as money market funds (certain conditions apply) and certain alternative investment funds including those authorised as money market funds, those employing leverage on a substantial basis or those which are not prohibited from originating loans in the ordinary course of business or from purchasing third-party lending exposures for its own account on the basis of its rules or instruments of incorporation. The New Delegated Regulations also sets out the criteria for excluding entities established in third countries from being deemed to be shadow banking entities.
The New Delegated Regulation entered into force and is directly applicable in all Member States since 1 January 2024.
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