Version in force , Modified +457 −5,500§
Amended by Regulation (EU) 2019/876 32019R0876 on EUR-Lex (external, EUR-Lex)
dates added to the text: 2020-12-31 · dates removed: 2014-01-01, 2016-06-30, 2016-10-31, 2016-12-31
Explanation, written by a model and checked against the cited text
The provision is reduced from four paragraphs covering EBA reporting deadlines, calculation methodology, and a wide list of leverage-ratio review criteria to two paragraphs, and the Commission's reporting deadline changes from 31 December 2016 to 31 December 2020.
The new text confines the Commission's report to whether a leverage ratio surcharge for O-SIIs should be introduced and whether the definition and calculation of the total exposure measure, including treatment of central bank reserves, is appropriate, removing the earlier detailed lists of business-model, disclosure, and calibration factors and the EBA reporting obligation entirely.
The remaining paragraph now requires the Commission to take into account international developments and internationally agreed standards, and, where appropriate, to accompany the report with a legislative proposal, replacing the prior provisions on levels of the leverage ratio, calibration, and connected flexibility measures.
Cited: Art. 511, v1 (external, EUR-Lex) · Art. 511, v2 (external, EUR-Lex)
v1 is the previous version, v2 this one.
Text from EUR-Lex, before and after
texts differ too much for an inline diff; shown separately
Previous version, in force 26 April 2019 02013R0575-20190426
Article 511 Leverage 1. Based on the results of the report referred to in paragraph 3, the Commission shall submit by 31 December 2016 a report on the impact and effectiveness of the leverage ratio to the European Parliament and the Council. 2. Where appropriate, the report shall be accompanied by a legislative proposal on the introduction of an appropriate number of levels of the leverage ratio that institutions following different business models would be required to meet, suggesting an adequate calibration for those levels and any appropriate adjustments to the capital measure and the total exposure measure as referred to in Article 429, together with any connected flexibility measures if necessary, including appropriate amendments to Article 458 to introduce the leverage ratio within the scope of measures included in that Article. 3. For the purposes of paragraph 1, EBA shall report to the Commission by 31 October 2016 on at least the following: (a) whether the leverage ratio framework provided by this Regulation and by Articles 87 and 98 of Directive 2013/36/EU is the appropriate tool to eliminate the risk of excessive leverage on the part of the institutions in a satisfactory manner and degree; (b) on identifying business models that reflect the overall risk profiles of the institutions and on introducing differentiated levels of the leverage ratio for those business models; (c) whether the requirements laid out in Articles 76 and 87 of Directive 2013/36/EU in accordance with Articles 73 and 97 of Directive 2013/36/EU for addressing the risk of excessive leverage are sufficient to ensure sound management of this risk by institutions and, if not, which further enhancements are needed in order to ensure these objectives; (d) whether and, if so, which, changes to the calculation methodology referred to in Article 429 would be necessary to ensure that the leverage ratio can be used as an appropriate indicator of an institution's risk of excessive leverage; (e) whether, in the context of the calculation of the total exposure measure of the leverage ratio, the exposure value of contracts listed in Annex II determined by using the Original Exposure Method differs in a material way from the exposure value determined by using the Mark-to-Market Method; (f) whether using either own funds or Common Equity Tier 1 capital as the capital measure of the leverage ratio could be more appropriate for the intended purpose of tracking the risk of excessive leverage and, if so, what would be the appropriate calibration of the leverage ratio; (g) whether the conversion factor referred to in point (a) of Article 429(10) for undrawn credit facilities, which may be cancelled unconditionally at any time without notice, is appropriately conservative based on the evidence collected during the observation period; (h) whether the frequency and format of the disclosure of items referred to in Article 451 are adequate; (i) the appropriate level of the leverage ratio for each of the business models identified in accordance with point (b); (j) whether a range for each level of the leverage ratio should be established; (k) whether introducing the leverage ratio as a requirement for institutions would necessitate any, and, if so, which, changes to the leverage ratio framework provided by this Regulation; (l) whether introducing the leverage ratio as a requirement for institutions would effectively constrain the risk of excessive leverage on the part of those institutions, and, if so, whether the level for the leverage ratio should be the same for all institutions or should be determined in accordance with the risk profile and business model as well as the size of institutions and, with regard to this, which additional calibrations or transitional period would be required. 4. The report referred to in paragraph 3 shall cover at least the period from 1 January 2014 until 30 June 2016 and shall take account of at least the following: (a) the impact of introducing the leverage ratio, determined in accordance with Article 429, as a requirement that institutions would have to meet on: (i) financial markets in general and markets for repurchase transactions, derivatives and covered bonds in particular; (ii) the robustness of institutions; (iii) the business models and the balance-sheet structures of institutions; in particular as regards low-risk areas of business, such as promotional credit by public development banks, municipal loans, financing of residential property and other low-risk areas regulated under national law; (iv) the migration of exposures to entities which are not subject to prudential supervision; (v) financial innovation, in particular the development of instruments with embedded leverage; (vi) institutions' risk-taking behaviour; (vii) clearing, settlement and custody activities and the operation of a central counterparty; (viii) cyclicality of the capital measure and the total exposure measure of the leverage ratio; (ix) bank lending, with a particular focus on lending to SMEs, local authorities, regional governments and public sector entities and on trade financing, including lending under official export credit insurance schemes; (b) the interaction of the leverage ratio with the risk-based own funds requirements and the liquidity requirements as specified in this Regulation; (c) the impact of accounting differences between accounting standards applicable under Regulation (EC) No 1606/2002, accounting standards applicable under Directive 86/635/EEC and other applicable accounting framework and other relevant accounting frameworks on the comparability of the leverage ratio.
this version, in force 27 June 2019 02013R0575-20190627
Article 511 Leverage 1. The Commission shall by 31 December 2020 submit a report to the European Parliament and to the Council on whether: (a) it is appropriate to introduce a leverage ratio surcharge for O-SIIs; and (b) the definition and calculation of the total exposure measure referred to in Article 429(4), including the treatment of central bank reserves, is appropriate. 2. For the purposes of the report referred to in paragraph 1, the Commission shall take into account international developments and internationally agreed standards. Where appropriate, that report shall be accompanied by a legislative proposal.