Regulatory Alerts2021-10-27 | NBB_2021_22Added · Updated
NBB Circular NBB_2021_22 / EBA Guidelines of 1 July 2020 on the treatment of structural foreign exchange positions under Article 352(2) of Regulation (EU) No 575/2013
The National Bank of Belgium integrates the European Banking Authority's guidelines on structural foreign exchange positions into its supervisory practice, effective 1 January 2022. This circular specifies the eligibility criteria, structural assessment, exclusion size, and ongoing monitoring requirements for Belgian credit institutions and significant investment firms seeking to apply the treatment under Article 352(2) of the Capital Requirements Regulation. While significant institutions supervised directly by the ECB are recommended to follow these guidelines, the circular explicitly defines the NBB's approach for less significant institutions and significant investment firms.
NBB_2021_22 – 26 October 2021 Circular – Page 1/2 14 Boulevard de Berlaimont – BE-1000 Brussels tel. +32 2 221 54 65 company number: 0203.201.340 RPM Brussels www.nbb.be
Circular Brussels, 26 October 2021 Reference: NBB_2021_22 your contact: Gaëtan Doucet tel. +32 2 221 38 10 gaetan.doucet@nbb.be
EBA Guidelines of 1 July 2020 on the treatment of structural foreign exchange positions under Article 352(2) of Regulation (EU) No 575/2013 (Capital Requirements Regulation)
Scope This circular applies to Belgian credit institutions and approved or designated Belgian financial companies (hereinafter 'institutions'), and to Belgian investment firms referred to in Article 1, paragraphs 2 and 5 of Regulation 2019/2033 (hereinafter 'large investment firms').
Summary/Objectives The EBA Guidelines EBA/GL/2020/09 (hereinafter 'the EBA Guidelines on the treatment of structural foreign exchange positions under Article 352(2) of Regulation (EU) No 575/2013') clarify the conditions that a Belgian institution or large investment firm should meet if it decides to use the treatment provided for in Article 352(2) of Regulation (EU) No 575/2013 concerning structural foreign exchange positions for the calculation of capital requirements. These guidelines apply from 1 January 2022. This circular clarifies the NBB's approach regarding less significant institutions (LSI) and Belgian large investment firms. It is recommended that significant institutions subject to direct supervision by the ECB follow this circular to the extent that the ECB does not publish guidelines on this matter.
Circular – Page 2/2 NBB_2021_22 – 26 October 2021
Madam, Sir,
The National Bank of Belgium wishes to indicate by this circular that the EBA guidelines clarifying the conditions for applying the treatment referred to in Article 352(2) of Regulation (EU) No 575/2013 (CRR) concerning structural foreign exchange positions are integrated into its supervisory practice. These guidelines apply from 1 January 2022. In order to benefit from the provisions provided for in Article 352(2) (CRR), the guidelines specify the process to be followed, in particular:
- the eligibility criteria are described (in particular, the level of application, the currencies concerned, the hedged ratio),
- the criteria for assessing the structural nature of the positions, as well as those concerning the intention to hedge the ratio (in particular governance aspects and the risk management strategy for structural positions),
- the size of the position that may be excluded,
- the ongoing monitoring of the authorization (reporting elements, as well as the frequency thereof). The EBA Guidelines on the treatment of structural foreign exchange positions provided for in Article 352(2) (CRR) can be consulted on the EBA website: EBA-GL-2020-09 Guidelines on Structural FX_COR_FR.docx (europa.eu) or on the NBB website (www.nbb.be). A copy of this circular is sent to the auditor(s), approved auditor(s) of your institution.
Please accept, Madam, Sir, the assurance of my distinguished consideration.
Pierre Wunsch Governor