EBA publishes final draft Technical Standards on additional collateral outflows

28 March 2014

The EBA published its final draft RTS on additional collateral outflows. These final draft RTS aim at strengthening resilience against liquidity risk in the EU banking sector and will be part of the EU Single Rulebook aimed at enhancing regulatory harmonisation across the sector.

These RTS aim at specifying methods to determine additional collateral outflows stemming from the impact of an adverse market scenario on an institution's derivatives positions, financing transactions and other contracts, if material. In particular, they focus on capturing adverse changes in market valuation of derivatives and similar transactions and contracts that require collateral.

These RTS include two methods to determine the additional collateral outflows:

• the historical look-back approach (HLBA) and
• the advanced method for additional outflows (AMAO).

The HLBA will serve as an obligatory floor to capture minimum additional collateral outflows and is to be implemented by all institutions regardless of whether they adopt the AMAO method or not.

The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.

Press release

Full RTS

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