16 October 2019

EBA launches consultation on guidelines on the application of the structural FX provision

These Guidelines aim at setting a regulatory framework on Structural FX to address the observed diversity in its application across the EU. In particular, the guidelines identify criteria to assist Competent Authorities in their assessment of the structural nature of a foreign-exchange position and whether such position has been deliberately taken for hedging the capital ratio.

The concept and specific application of the Structural FX provision, as laid down in the Capital Requirements Regulation (CRR), appears to be subject to several interpretations, across both supervisory authorities and institutions. As a result, the application of this provision can have significant impacts on capital requirements. Accordingly, the EBA is of the view that a more harmonised application and enforcement of this provision is necessary and can be achieved thanks to these Guidelines.

This consultation paper is setting objective criteria that Competent Authorities should consider for the purpose of assessing whether the conditions set out in article 352(2) of the CRR for receiving the permission to exclude a foreign-exchange position from the net open position in the foreign currency are met. These guidelines introduce for the first time a detailed regulatory framework around the Structural FX provision and several questions have been included as part of the consultation process to gather feedback around the proposed provisions.

Comments to this consultation can be sent to the EBA by 17 January 2020. A public hearing will take place at the EBA premises in Paris on 25 November 2019 from 16:00 to 17:30 CET time.

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