Rating Agency Developments

On November 1, 2017, DBRS issued a report entitled: Rating Canadian Trade Receivables Securitization Transactions. Report

On November 1, 2017, DBRS issued a report entitled: Rating Canadian Credit Card and Personal Line of Credit Securitizations. Report

On November 1, 2017, Moody's published an update to its ratings methodology for: Not-For-Profit Healthcare. Report

On October 31, 2017, Fitch issued a report entitled: EMEA Equity Release Mortgage Bespoke Rating Criteria. Report

On October 30, 2017, DBRS issued a report entitled: Global Methodology for Rating Secured Obligations of Finance Companies. Report

On October 30, 2017, Moody's published an update to its ratings methodology for: Public Port Revenue Bonds. Research

On October 30, 2017, Moody's published an update to its ratings methodology for: Privately Managed Toll Roads. Research

On October 27, 2017, Fitch issued a report entitled: European RMBS Rating Criteria. Report

On October 27, 2017, Fitch issued a report entitled: EMEA RMBS Rating Criteria. Report

On October 26, 2017, Moody's published an update to its ratings methodology for: Notching Corporate Instrument Ratings Based on Differences in Security and Priority of Claim. Research

European Financial Industry Developments

EBA Finalizes 2018 EU-Wide Stress Test Timeline

On October 30, 2017, the EBA published a press release on the 2018 EU-wide stress test timeline.

The EBA intends to follow the following timetable:

• November 2017. The EBA to publish the final methodology.
• End of 2017. The EBA to circulate final templates and guidance to participating banks by this date.
• January 2018. Launch of the 2018 EU-wide stress test. The EBA will publish the macroeconomic scenario at the time of the launch.
• Early June 2018. First submission of results to the EBA.
• Mid-July 2018. Second submission of results to the EBA.
• Late October 2018. Final submission of results to the EBA.
• November 2, 2018. The EBA to publish results of the stress test.

The EBA has decided to extend the overall timeline for the stress test to take into account the challenges that the implementation of IFRS 9 poses regarding the availability of starting point data in early 2018.

European Commission Inception Impact Assessment on Legislative Proposal for EU Framework on Crowdfunding

On October 30, 2017, the European Commission published an inception impact assessment for a legislative proposal for an EU framework on crowd and peer-to-peer finance.

In the impact assessment, the Commission sets out information on a potential initiative relating to crowdfunding. The aim of the initiative is to create a framework that will encourage cross-border activity relating to crowdfunding platforms and to provide platforms with a proportionate and effective risk management framework. The Commission is concerned that, to date, crowdfunding activities have been confined to national markets with very little cross-border activity. It is also concerned about the perceived lack of reliability of crowdfunding and peer-to-peer platforms, with the biggest perceived risks being loan defaults, business failures, fraudulent activities and the collapse of platforms because of malpractice.

The Commission sets out three potential options for an EU framework on crowdfunding:

• A self-regulatory approach with minimum EU standards. Under this option, the Commission would map best practices and local regulatory regimes with the aim of recommending a set of non-binding minimum standards and industry best practices.
• A comprehensive EU framework. Under this option, the framework would consist of a specific crowdfunding license under the passporting framework, allowing platforms to operate across the single market. Crowdfunding platforms would be subject to proportionate governance and transparency requirements. The Commission envisages that crowdfunding platforms would be subject to a similar regulatory regime as regulated trading venues or payment institutions. The framework might be established through stand-alone legislation or through amendments to existing financial services legislation.
• A stand-alone opt-in EU framework. Under this option, the Commission would create an EU framework for crowdfunding platforms that platforms wishing to conduct cross-border activity could opt into, with other platforms subject to national law. This framework would also involve a passport and governance and transparency requirements.

If the Commission decides that no EU framework is needed, it envisages that it will maintain regular dialogue with the European Supervisory Authorities (ESAs), member states and the crowdfunding sector to promote convergence and the sharing of best practices.

The Commission indicates that the next steps for this initiative will take place in the first quarter of 2018.

EIOPA Final Report on First Set of Technical Advice on Solvency II Delegated Regulation

On October 31, 2017, EIOPA published a document containing the first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation ((EU) 2015/35) (EIOPAA-BoS-17/280).

The advice covers the following areas:

• Simplified calculations of capital requirements in the Solvency Capital Requirement ("SCR") standard formula.
• Reducing reliance on external credit ratings in the calculation of the SCR.
• Exposures guaranteed and exposures to regional governments and local authorities ("RGLA").
• Risk-mitigation techniques.
• Undertaking specific parameters.
• Look-through for investment related undertakings.
• Loss-absorbing capacity of deferred taxes ("LAC DT"). The advice contains factual information only; this issue will be addressed further in EIOPA's second set of advice to the Commission.

EIOPA published a consultation paper on the advice in July 2017 (EIOPA-CP-17/004), which followed on from a discussion paper published in December 2016 (EIOPA-CP-16/008). EIOPA has also published a final report that contains details of the feedback that it received on EIOPA-CP-16/008 and EIOPA-CP-17/004, as well as the final text of the advice and a summary of comments received to EIOPA-CP-17/004.

EIOPA is providing its advice in two sets. It will send the second set of advice to the Commission by the end of February 2018. EIOPA issued a call for evidence relating to this second tranche of advice in April 2017. This will address issues such as policy proposals on LAC DT to increase supervisory convergence, risk margin, catastrophe risks, non-life and life underwriting risks, non-proportional reinsurance covers, unrated debt and unlisted equity and own funds. EIOPA plans to consult on these issues before the end of 2017.