EBA seeks further explanation on UCITS and AIFMD rulings following the disclosure of CRD report findings
EBA Recommends Clarification on Article 21c of CRD and its Impact on UCITS and AIFMD
The European Banking Authority (EBA) has recommended clarification on the interaction between Article 21c of the Capital Requirements Directive (CRD) and other sectoral legislations, such as UCITS and AIFMD. The aim is to ensure a consistent application and understanding of the exemptions and carve-outs provided under Article 21c for third-country institutions providing core banking services in the EU.
Article 21c of CRD6 primarily allows certain exemptions for interbank or intragroup transactions and services provided under reverse solicitation or MiFID investment services. However, the EBA has concluded that it is not appropriate to extend these exemptions to other types of EU financial entities, such as those governed by UCITS and AIFMD. This implies stricter requirements and the need for licensing or authorization for third-country providers under those sectoral frameworks.
The EBA's recommended clarification pertains to aligning the scope of Article 21c CRD with sector-specific regulations like UCITS and AIFMD. The clarification is intended to avoid regulatory uncertainty and ensure regulatory coherence and supervisory control.
It is worth noting that Article 12 of the MMF Regulation and Article 50(1)(e) of the Ucits Directive allow for placing deposits in third-country banks as eligible investments. Delegation of the safe keeping of assets to sub-custodians, as mentioned in Article 21(11) of the AIFMD and Article 22a of the Ucits Directive, may involve the provision of cross-border core banking services.
The EBA's recommendations do not involve an amendment to the new Article 21c of the CRD. Instead, the EBA suggests that clarification on these interactions could be provided via their Q&A tool. The EBA's Q&A tool is designed to receive questions on the practical application or implementation of legislation within its remit, including "Joint Q&As" where legislation is relevant to more than one European Supervisory Authority.
The EBA's recommendations are aimed at benefiting both authorities and market participants by providing clear guidance on the interaction between Article 21c of the CRD and other sectoral legislations. The EBA's report on the provision of services from third countries mentions specific interactions between Article 21c of the CRD and provisions of UCITS and AIFMD.
In summary, Article 21c CRD6 provides specific exemptions mostly for interbank/intragroup and reverse solicitation contexts. The EBA does not support extending these exemptions to other financial sector entities under UCITS and AIFMD. The EBA recommends clear guidance on how Article 21c interacts with UCITS and AIFMD to avoid regulatory uncertainty. The EBA's recommendations are related to the direct provision of banking services from third countries.
- The EBA's recommendations for clarification on Article 21c of CRD aim to establish a consistent interpretation and application of the regulations across asset management businesses, such as those governed by UCITS and AIFMD, to ensure regulatory coherence and supervisory control.
- In the context of asset management, the provision of cross-border core banking services, as delegated in Article 21(11) of the AIFMD and Article 22a of the UCITS Directive, may require licensing or authorization for third-country providers, following the EBA's recommendations for stricter requirements.
