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Pathfinder - Deloitte monthly regulatory update - 08/10/2013


Capital adequacy

CSSF Circular 13/572 of 04/09/2013 on the determination of stressed value at risk (“sVaR”) and on the determination of incremental default and migration risk charge (“IRC”) (French only at this stage)

This Circular implements within Luxembourg the following EBA guidelines:

  • Guidelines on stressed Value at Risk («sVaR») - EBA/GL/2012/2
  • Guidelines on the Incremental Default and Migration Risk Charge («IRC») – EBA/GL/2012/3

These guidelines should be applied in the context of the use of internal models for the calculation of capital requirements on:

  • Foreign exchange risk;
  • Commodity price risk; and/or
  • Trading book risk.

Insurance and reinsurance intermediaries

Grand-Ducal regulation of 27 August 2013 modifying the Grand-Ducal regulation of 24 November 2005 on conditions governing the authorisation and the conduct of insurance and reinsurance intermediation business – Mémorial A 164 of 10/09/2013 (French only at this stage)

The minimum guarantee of coverage shall amount to EUR 1.250.000 by claim and to EUR 1.900.000 overall per year (formerly, respectively EUR 1.240.000 and 1.680.300).

Market abuse

European Parliament’s endorsement of the political agreement on Market Abuse Regulation

The proposal for a Directive defines the offences – insider dealing, unlawful disclosure of inside information and market manipulation – which should be regarded by Member States as criminal offences, at least when they are serious and are committed intentionally. The text adopted by the Council also makes manipulation of benchmarks a criminal offence.

The proposal also requires Member States to criminalise inciting, aiding and abetting insider dealing, unlawful disclosure and market manipulation, as well as attempts at these forms of market abuse. Criminal or non-criminal liability should also be extended to legal persons.

Under the new rules, Member States will have to ensure that criminal sanctions imposed for these offences are effective, proportionate and dissuasive.

Money market funds and shadow banking

Proposal on a Regulation for Money Market Funds (MMF) and FAQ

The EU Commission published a proposal on a Regulation for Money Market Funds (MMFs) and a communication outlining its wider shadow banking work: the former is intended to address the risks posed by investor 'runs' and promote investor protection, in particular, by introducing a 3% cash buffer for constant net asset value funds, while the latter provides a ‘roadmap’ for its work in this area.

Discover the other topics of this newsletter in the attached PDF.

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