Brussels, 29/10/2015 (Agence Europe) - On Thursday 29 October, the European Parliament approved the inter-institutional compromise on the proposed regulation aiming to improve the transparency of security financing transactions in the shadow banking sector (see EUROPE 11337).
These operations allow market participants to use shares or bonds they own to secure financing for their operations. It involves the temporary exchange of assets as collateral for a funding transaction (e.g. the lending or borrowing of securities, repurchase or reverse repurchase transactions, buy-sell back or sell-buy back transactions).
In order to increase transparency, the operations in question will be notified and entered in central registers, to which the regulators will have access. This will make it easier for them to identify the risks related to these transactions and any links between the regulated markets and the shadow banking sector. Depending on the category to which they belong, the companies in question will be obliged to start submitting this information between 12 and 21 months after the corresponding technical standards enter into force.
Furthermore, investment funds will have to start disclosing their security financing operations in their regular reports and pre-contractual documentations. The regulation also lays down minimum transparency conditions to be observed for the reuse of securities, such as notification of the risks run and the requirement for prior consent, a provision insisted upon by the European Parliament.
The future regulation will not apply to central banks, public agencies for the management of the sovereign debt of eurozone countries, or the Bank for International Settlements. (Original version in French by Mathieu Bion)