On 6 September 2023, the European Commission published Commission Delegated Regulation (EU) of 6 September 2023 supplementing Regulation (EU) No 575/2013 of the European Parliament and of Council with regard to regulatory technical standards (RTS) specifying the criteria for the identification of shadow banking entities referred to in Article 394(2) of Regulation (EU) No 575/2013.

The provisions of the Delegated Regulation specify: (i) the criteria for identifying both shadow banking and non-shadow banking entities; (ii) the definition of banking activities and services; and (iii) the criteria for excluding entities established in third countries from being deemed as shadow banking entities. The Commission states that the RTS are aligned with the Guidelines on limits on exposures to shadow banking entities which carry out banking activities outside a regulated framework under Article 395(2) of the Regulation.

The Commission also states:

• Entities that carry out banking activities or services that have been authorised and are supervised in line with the regulatory framework consisting of any of the legal acts referred to in Annex I of the draft RTS (or are part of a group supervised on this basis) must not be considered as shadow banking entities.
• The same treatment must apply to the entities that are exempted or excluded from the application of some of those legal acts, notably the Regulation, Directive 2013/36/EU, Regulation (EU) No 648/2012 or Directive 2009/138/EC.
• All other entities that provide banking activities and services must be considered as shadow banking entities, with specific rules applying to certain collective investment undertakings.
• For entities established in a third country, the draft RTS differentiate between institutions and other entities. Institutions must not be identified as shadow banking entities if they are authorised and supervised by a supervisory authority that applies banking regulation and supervision based on at least the Basel Core Principles for effective banking supervision; other entities must not be identified as shadow banking entities if they are subject to a regulatory regime recognised as equivalent to the one applied in the EU for such entities in line with the equivalence provisions of the relevant EU legal act.

The Delegated Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.