On Nov. 6, LIC FMA issued its new guideline on minimum reporting.
LIC FMA issued Guideline 2024/2 regarding minimum requirements for the provision of data for resolution purposes, in the case of companies classed as a resolution entity.
Guidance Overview
In its role as resolution authority under Title II Chapter B of the Act of Nov. 4, 2016 on recovery and resolution of banks and investment firms in Recovery and Resolution Act (SAG), LIC FMA published new Guidelines to set out relevant resolution requirements.
On one hand, they explain types of valuation for resolution purposes and, on the other, they disclose supervisory expectations on minimum data to be provided by entities.
A key prerequisite for the resolvability of a company is the effective establishment of an internal management information system (MIS) and the minimum requirements for the MIS can be found with in the EBA Guidelines on resolvability (EBA/GL/2022/01).
An effective MIS ensures consistency of data situation with other internal and external reporting (accounting, reporting, disclosure), and compliance with legal requirements.
The MIS must also ensure the provision of the data according to a two-stage model.
Level 1 includes in particular the provision of information based on existing standard reports and other essential company documents, and includes, if necessary, data that must be monitored on a daily basis due to legal obligations to supervisory authority.
Level 2, on the other hand, requires the implementation of the specified data model that is based upon both the EBA Data Dictionary and the EBA Valuation Handbook.
This guideline applies to all of those companies that are classified as a resolution entity as is defined within Article 3 paragraph 1 no. 5a of the SAG, with in the resolution plan.
The BRRD and the SAG recognize three types of valuation for resolution purposes.
The valuation date to be used is determined in Art 3 of EU Regulation 2018/345 and for valuations before settlement, valuer chooses date as close as possible to expected.
Appendix
The appendices contain all additional information on the required information to be provided after Level 1, applying Oct. 1, 2025, and on Level 2, applying Jan. 1, 2027.
Effectiveness
This Guideline on minimum resolution data rules will enter into force on Jan. 1, 2025.
Companies that are only classified as resolution entities after Jan. 1, 2025, must implement requirements within two years of being designated as a resolution entity.
Regulators
LIC FMA
Entity Types
Auditor; B/D; Bank; IA; Inv Co
Reference
Gd 2024/2, PR 11/6/2024; Reg 2016/1075; Reg 2018/345; BRRD Dir 2014/59, SRMR Reg 806/2014; EBA/GL/2022/01; SAG (LIC)
