The European Banking Authority seeks comments on identification of shadow banking entities

The European Banking Authority has launched a public consultation on its proposed changes to regulatory technical standards (RTS) for identification of shadow banking entities for reporting large exposures.

This consultation, which will run until 26 October, seeks comments on the classifications.

A shadow banking entity is one that offers banking services defined under the RTS but are not regulated and not supervised with any of the acts in the framework.

The EBA states that funds regulated under the Undertakings for the Collective Investment in Transferable Securities (UCITS) Directive and the Alternative Investment Fund Managers (AIFM) Directive have special provisions included in the draft RTS.

It also states that due to the “severe liquidity issues” that impacted money markets funds (MMFs) during the Covid-19 crisis and ongoing discussions at EU and international level to bolster their regulation, MMFs are categorised as shadow banking entities.

The draft also considers situations of entities established in third countries and provide for a treatment that differentiates between banks and other entities.

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