United Kingdom

Topic: Capital adequacy

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PRA Policy Statement 22/21: Implementation of Basel standards: Final rules

On 14 October 2021, the Prudential Regulation Authority (PRA) published Policy Statement 22/21 ‘Implementation of Basel standards: Final rules’ (PS22/21). In Policy Statement 17/21 ‘Implementation of the Basel Standards’ (PS17/21), the PRA set out its feedback to responses and the resulting near-final policy following Consultation Paper 5/21 ‘Implementation of Basel standards’ which was published in … Continue Reading

PRA PS21/21: The UK leverage ratio framework

On 8 October 2021, the PRA published Policy Statement 21/21: The UK leverage ratio framework (PS21/21). PS21/21 is relevant to all firms subject to the Capital Requirements Regulation (CRR) and CRR consolidation entities on an individual, consolidated, and where relevant, sub-consolidated basis. In PS21/21 the PRA and Financial Policy Committee (FPC) provide their responses to … Continue Reading

PRA CP20/21: Trading activity wind-down

On 8 October 2021, the PRA published Consultation Paper 20/21: Trading activity wind-down (CP20/21). The proposals in CP20/21 are relevant, although may not apply directly, to all PRA authorised UK banks, their qualifying parent undertakings and PRA-designated investment firms that are engaged in trading activities, and relevant third country branches. In CP20/21 the PRA sets … Continue Reading

PRA statement on freezing O-SII buffer rates for a further year

On 8 October 2021, the PRA issued a statement confirming it was maintaining firms’ Other Systemically Important Institutions (O-SII) buffer rates at 2019 levels for a further year. The PRA is required to review O-SII buffer rates once a year, but the PRA states that barring an unforeseen change in circumstances, it does not currently … Continue Reading

Commission Implementing Decision on third-country equivalence for purposes of treatment of exposures under CRR

On 4 October 2021, there was published in the Official Journal of the EU (OJ) Commission Implementing Decision 2021/1753 on the equivalence of the  supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures in accordance with the Capital Requirements Regulation (CRR). Article 391 of the CRR, … Continue Reading

PRA CP19/21 ‘Domestic Liquidity Sub-Groups’

On 28 September 2021, the PRA published Consultation Paper 19/21: Domestic Liquidity Sub-Groups (CP19/21). In CP19/21 the PRA sets out proposed rules in respect of the application of prudential liquidity requirements to Domestic Liquidity Sub-Groups (DoLSubs). The PRA proposes to: Permit the inclusion in a DoLSub of firms that are subsidiaries of a common immediate … Continue Reading

Commission adopts Delegated Regulations setting out RTS on prudential requirements under IFR

On 28 September 2021, the European Commission adopted the following Delegated Regulations containing regulatory technical standards (RTS) relating to prudential requirements for investment firms under the Investment Firms Regulation (IFR): Commission Delegated Regulation (EU) of 24.9.2021 supplementing the IFR with regard to RTS specifying the amount of total margin for the calculation of the K-factor … Continue Reading

EBA launches 2021 EU-wide transparency exercise

On 24 September 2021, the European Banking Authority (EBA) launched its regular EU-wide transparency exercise, whose results are expected to be published at the beginning of December. As in the past, the exercise is exclusively based on supervisory reporting data, which will keep the burden for the banks to a minimum. Transparency exercises are conducted … Continue Reading

Commission call for advice – review of the EU macro-prudential framework

On 21 September 2021, there was published a letter that the European Commission had sent to the European Banking Authority (EBA) asking for support in the preparation of the review of the macro-prudential framework for banking, as mandated by Article 513 of the Capital Requirements Regulation. As part of the review, the Commission is seeking … Continue Reading

EBA publishes final guidance to assess breaches of the large exposure limits

On 15 September 2021, the European Banking Authority (EBA) published a final report containing guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures to return to compliance. The guidelines have been developed in accordance with the mandate contained in Article 396(3) of the … Continue Reading

Basel III and global cooperation: where do we go from here?

On 8 September 2021, the Basel Committee on Banking Supervision published a speech given by its Secretary General, Carolyn Rogers, entitled Basel III and global cooperation: where do we go from here? During the course of her speech Carolyn Rogers addresses, among other things, some of the more common arguments that have been used to … Continue Reading

ECB / EBA letter to the Commission on the implementation of the outstanding Basel III reforms

 On 7 September 2021, the European Central Bank (ECB) and the European Banking Authority (EBA) published a joint letter that they had sent to the European Commission regarding the EU implementation of the outstanding Basel III reforms. In the letter the ECB and EBA argue that it is “crucial to avoid implementation approaches that would … Continue Reading

The EU should stick to the Basel III agreement

On 7 September 2021, a group of EU prudential supervisors and central banks published a joint letter that they had sent to the European Commission arguing that the EU’s legislative proposal implementing the final parts of the Basel III framework should adhere to both the letter and the spirit of the Basel III agreement. They … Continue Reading

IFPR: Impact – Helping you manage each step of your internal implementation projects

The UK Investment Firm Prudential Regime (IFPR) will take effect on January 1, 2022. This will have a significant impact on UK MiFID II investment firms and CPMIs, who should start considering the likely impact of the new prudential regime and the adjustments that will be required to their internal systems and controls. With the … Continue Reading

Commission adopts IFD Delegated Regulations

On 13 August 2021, the European Commission adopted a: Delegated Regulation supplementing the Investment Firms Directive (IFD) with regard to regulatory technical standards (RTS) specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages. Delegated … Continue Reading

FCA CP21/16: A new UK prudential regime for MiFID investment firms

On 6 August 2021, the FCA published Consultation Paper 21/26: A new UK prudential regime for MiFID investment firms (CP21/26). CP21/26 is the third Consultation Paper setting out the FCA’s proposals for the UK Investment Firm Prudential Regime (IFPR). It should be read in conjunction with two earlier FCA Policy Statements (PS21/6 and PS21/9). In … Continue Reading

Consultation on Implementing Decision on the equivalence of certain third countries for the purposes of the treatment of exposures in accordance with the CRR

On 6 August 2021, the European Commission issued a consultation a draft Implementing Decision on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures in accordance with the Capital Requirements Regulation (CRR). The deadline for comments on the draft Implementing Decision is … Continue Reading

IFPR: Impact – Helping you manage each step of your internal implementation projects

The UK Investment Firm Prudential Regime (IFPR) will take effect on January 1, 2022. This will have a significant impact on UK MiFID II investment firms and CPMIs, who should start considering the likely impact of the new prudential regime and the adjustments that will be required to their internal systems and controls. With the … Continue Reading

FCA updates webpages for IFPR

On 27 July 2021, the FCA updated its webpages on authorisation for wholesale investment firms and capital requirements permissions. The update relates to the Investment Firm Prudential Regime (IFPR) which comes into force in the UK on 1 January 2022. On the webpage on authorisation for wholesale investment firms the FCA has added the following … Continue Reading

FCA publishes PS 21/9: Implementation of the Investment Firms Prudential Regime

On 26 July the Financial Conduct Authority (FCA) published policy statement 21/9, which enacts the much anticipated implementation of the Investment Firms Prudential Regime (IFPR). This particular consultation paper follows CP21/7 which was published in April this year. It is in fact the second policy statement on the IFPR, the first being PS 21/6 which … Continue Reading

Basel Committee consults on an amendment to the process for reviewing the G-SIB methodology

On 20 July 2021, the Basel Committee of Banking Supervision published a consultation document setting out a technical amendment to the Basel framework. The amendment sets out a new process that will be used by the Committee to review the assessment methodology for global systemically important banks (G-SIBs). The Committee plans to replace the existing … Continue Reading

EBA consults to amend its technical standards on currencies with constraints on the availability of liquid assets

On 16 July 2021, the European Banking Authority launched a public consultation on amendments to its Implementing Technical Standards on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio. The proposed amendments remove the Norwegian Krone from the list, with the result that no currency will be … Continue Reading

FSB interim report on lessons learnt from the COVID-19 pandemic from a financial stability perspective

On 13 July 2021, the Financial Stability Board (FSB) published an interim report on the lessons learnt from the COVID-19 pandemic from a financial stability perspective. Among other things the interim report notes that: So far, the global financial system has weathered the COVID-19 pandemic thanks to greater resilience, supported by the G20 reforms, and … Continue Reading

EBA publishes final guidelines for the use of data inputs in the expected shortfall risk measure under the IMA

On 13 July 2021, the European Banking Authority (EBA) published final guidelines that clarify the requirements that the data inputs used to determine the scenarios of future shocks applied to modellable risk factors should meet. The guidelines, which have been developed in accordance with Article 325bh(3) of the Capital Requirements Regulation (CRR), become applicable from … Continue Reading
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