Communications - SIMs and SIM Groups - Amendments to the Prudential Supervision and Large Exposures Framework

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SIMs and SIM Groups: Amendments to the Regulatory Framework on Prudential Supervision and Large Exposures.

1. Preamble
   With this Communication, the regulatory framework contained in the Communication of 31.3.2014(1) concerning the application of CRDIV/CRR rules(2) to SIMs and SIM groups is modified and integrated, as provided in the following paragraph, which shall be deemed integrated and partially replaced by this Communication. This addresses the need to align the regulations applicable to SIMs with the evolution of the European regulatory framework and to keep them aligned with those applicable to banks, whose regulatory framework has been subject to a similar intervention.
2. Amendments to the Regulatory Framework
   With the 20th update of Circular No. 285 (“Supervisory Requirements for Banks”), the chapters on “Prudential Supervision Process” (Part One, Title III, Chapter 1) and “Large Exposures” (Part Two, Chapter 10) have been amended. The amendments aim to align the regulations with the evolution of the European regulatory framework, including the guidelines issued by the European Banking Authority (EBA). The most significant interventions concern, for the prudential supervision process, early intervention measures(3) and interest rate risk in the banking book(4); for large exposures, specific limits for exposures to shadow banking entities(5). Furthermore, in line with European interpretative guidelines(6) and for administrative simplification, the authorization procedure for the recognition of contractual netting agreements for the mitigation of counterparty risk (Art. 296 CRR) has been replaced with an obligation to report concluded agreements (see Circular No. 285 Part Two, Chapter 7, Section II). The competent authority reserves the right to evaluate the information received, together with other available data and information, for the purpose of potentially initiating an ex officio procedure, where applicable, which may conclude with a prohibition order. To ensure the alignment of the prudential framework for SIMs with that of banks, in line with the provisions of the aforementioned 2014 Communication, it is provided that the following amendments shall also apply to SIMs:

• Part One:
  Title III – Chapter 1 – Prudential Supervision Process; 1 See Communication of 31.3.2014 published in the Supervisory Bulletin 3/2014.
  2 Directive 2013/36/EU (CRDIV) and Regulation 575/2013/EU (CRR).
  3 These amendments, already present at the primary level (TUB, TUF), were introduced by the BRRD (Bank Recovery and Resolution Directive, Directive 2014/59/EU).
  4 See EBA Guidelines (2015/08).
  5 See EBA Guidelines (2015/20).
  6 See EBA Q&A question ID 2014_1424.
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• Part Two:
  Chapter 7 – Counterparty risk and credit valuation adjustment risk; Chapter 10 – Large exposures.

3. Entry into Force
   These regulatory amendments enter into force from the date of publication in the Official Gazette.

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This Communication was issued following the opinion of CONSOB, pursuant to Article 6, paragraph 1, of the TUF.
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