CSSF Regulation No 16-01 on the Automatic Recognition of Countercyclical Capital Buffer Rates During the Transitional Period

CSSF Regulation No 16-01 on the automatic recognition of countercyclical capital buffer rates during the transitional period (Mémorial A – No. 59 of April 12, 2016)

The Directorate of the Commission de Surveillance du Secteur Financier, Having regard to Article 108bis of the Constitution; Having regard to the Law of December 23, 1998 establishing a Commission for the Supervision of the Financial Sector, and in particular Article 9, paragraph (2); Having regard to the Law of April 5, 1993 relating to the financial sector ("LSF"), and in particular Article 59-7 pursuant to which the CSSF, as the designated authority, and after consultation with the BCL, is competent for the recognition of countercyclical buffer rates set abroad; Having regard to the Law of July 23, 2015, transposing in particular Directive 2013/36/EU of the European Parliament and of the Council of June 26, 2013, and in particular Article 73 which does not provide for a transitional period for the application of the countercyclical buffer regime in Luxembourg; Having regard to CSSF Regulation No 15-01 on the calculation of the specific countercyclical capital buffer rate, transposing Article 140 of Directive 2013/36/EU; Having regard to Directive 2013/36/EU of the European Parliament and of the Council of June 26, 2013 on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, and in particular Article 160 detailing the transitional period applicable to the countercyclical buffer regime; Having regard to Council Regulation (EU) No 1024/2013 of October 15, 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions ("SSM Regulation"), and in particular Article 5; Having regard to the Recommendation of the European Systemic Risk Board of June 18, 2014 on guidelines on the setting of countercyclical buffer rates (CERS/2014/1), and in particular Recommendation A.6 providing for the principle recognition of rates set by other Member States beyond the thresholds delimiting the automatic recognition regime; Having regard to the Recommendation of the Systemic Risk Board (CRS/2016/002) of February 15, 2016 concerning the automatic recognition of countercyclical capital buffer rates during the transitional period; Having regard to the opinion of the Prudential Regulation Advisory Committee;

Hereby decides:

Article 1 Automatic recognition of countercyclical buffer rates Following the recommendation of the Systemic Risk Board of February 15, 2016 concerning the automatic recognition of countercyclical capital buffer rates during the transitional period, documented in Annex 1, the countercyclical buffer rates set by the designated authorities of other Member States are automatically recognized up to 2.5% during the transitional period referred to in Article 160 of Directive 2013/36/EU, in accordance with the option taken by the legislator not to adopt a transitional period in Luxembourg.

Article 2 Entry into force This regulation shall take effect from April 1, 2016, to December 31, 2018.

Article 3 Publication This regulation shall be published in the Mémorial and on the website of the Commission de Surveillance du Secteur Financier.

Luxembourg, March 29, 2016 COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER Françoise KAUTHEN Claude SIMON Simone DELCOURT Claude MARX General Director

Annex 1: Recommendation of the Systemic Risk Board of February 15, 2016 concerning the automatic recognition of countercyclical capital buffer rates during the transitional period (CRS/2016/002)

Annex 1 RECOMMENDATION OF THE SYSTEMIC RISK BOARD of February 15, 2016 concerning the automatic recognition of countercyclical buffer rates during the transitional period (CRS/2016/002)

THE SYSTEMIC RISK BOARD, Having regard to Directive 2013/36/EU of the European Parliament and of the Council of June 26, 2013 on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and its Article 160 concerning provisional provisions relating to capital buffers ("CRD IV Directive"), Having regard to the Law of April 5, 1993 relating to the financial sector and in particular Article 59-7 (hereinafter "Law of April 5, 1993"), Having regard to the Law of April 1, 2015 establishing a Systemic Risk Board and amending the modified Law of December 23, 1998 relating to the monetary status and the Central Bank of Luxembourg, and in particular Article 2, paragraph e) and Article 7 ("CRS Law"), Having regard to the internal rules of the Systemic Risk Board of November 16, 2015 and in particular Articles 9, 11 and 12, Having regard to the Recommendation of the European Systemic Risk Board of June 18, 2014 on guidelines on the setting of countercyclical buffer rates (CERS/2014/1).

HAS ADOPTED THIS RECOMMENDATION:

Part 1 Recommendation concerning the recognition of countercyclical buffer rates during the transitional period

Recommendation A: Automatic recognition of countercyclical buffer rates up to 2.5%. In view of Article 59-7(8) of the Law of April 5, 1993, the Systemic Risk Board recommends that the CSSF, acting in its capacity as the designated authority under Article 59-7(1) of the aforementioned Law, proceed with the automatic recognition of countercyclical buffer rates set by the designated authorities of other Member States, up to 2.5%.

Recommendation B: Duration of the automatic recognition period for countercyclical buffer rates. For the purposes of Recommendation A, the Systemic Risk Board recommends that the CSSF, acting in its capacity as the designated authority under Article 59-7(1) of the Law of April 5, 1993, proceed with the automatic recognition of countercyclical buffer rates during the transitional period, as resulting from Article 160 of the CRD IV Directive, from April 1, 2016, to December 31, 2018.

Recommendation C: Notifications Based on this, the Systemic Risk Board invites the CSSF, acting in its capacity as the designated authority under Article 59-7(1) of the Law of April 5, 1993, to carry out the various notifications required, if applicable.

Part 2 Implementation of the recommendation

1. Interpretation The terms used in the previous recommendation have the same meaning as in the Law of April 5, 1993.

2. Monitoring

1. The Systemic Risk Board invites the CSSF, as the recipient of this recommendation, to communicate to the Systemic Risk Board, via the secretariat, the follow-up given to this recommendation as soon as possible.
2. The Systemic Risk Board invites the committee secretariat to publish this recommendation on the website of the Systemic Risk Board[1].

3. Control and evaluation

1. The secretariat of the Systemic Risk Board: a) provides its assistance to the CSSF, with a view to facilitating the implementation of the recommendation; b) prepares a report on the follow-up given to this recommendation and shares it with the Systemic Risk Board.
2. The Systemic Risk Board evaluates and monitors the responses reserved by the CSSF to this recommendation.

Done in Luxembourg, February 15, 2016 The President of the Systemic Risk Board

[1] Given that the CRS website is under construction, the recommendation will be published on the BCL website.