The FCA and the PRA have jointly published Occasional Consultation Paper (PRA CP18/17, FCA CP17/34) (the CP). The CP sets out proposed changes to certain parts of the PRA Rulebook and certain Supervisory Statements. Chapter 7 also contains joint PRA and FCA proposals. The CP is relevant to all PRA authorised firms. Chapter 7 is also relevant to FCA regulated MiFID firms.
The CP includes the following proposals:
- chapter 2 – minor amendment to Conditions Governing Business Part of the PRA Rulebook. The PRA proposes to correct rule 3.2(3)(b) by inserting the defined term “volatility adjustment” in exchange for the word “volatility”;
- chapter 3 – amendment to the Internal Capital Adequacy Assessment (ICAA) Part of the PRA Rulebook in relation to market risk. Article 83(3) of the CRD IV Directive clarifies that firms should fund themselves with adequate capital when they hold opposite positions in stock-index futures which are not identical in respect of either maturity, composition, or both. The PRA proposes to amend ICAA 8.4 to reflect this provision;
- chapter 5 – amendments to application requirements – Capital Requirements Regulation and CRD IV Directive. The amendments are to ensure that the calculation bases used in the PRA Rulebook take account of the exercise of any Capital Requirements Regulation (CRR) discretions available to the PRA as competent authority that change the scope of application of requirements, whether implemented through PRA rules or granted to firms on a case-by-case basis as a CRR permission. It is relevant to all CRR firms;
- chapter 6 – whistleblowing in UK branches of non-EEA deposit-takers. The PRA proposes to amend the General Organisational Requirements Part of the PRA Rulebook to clarify that the requirement on firms to share details of their whistleblowing channels with UK branches of non-UK entities that are part of the same group applies to firms that are the UK parent company of the group in addition to those that are subsidiaries;
- chapter 7 – joint PRA and FCA form, PRA Rulebook, and FCA Handbook changes (MiFID II, Insurance Distribution Directive (IDD) and Benchmarks Regulation (BMR) amendments). The PRA and the FCA are jointly consulting on proposed amendments to multiple PRA Rulebook Parts and the Supervision Manual in the FCA Handbook. To update the relevant forms as part of the transposition of the IDD and BMR, and to collect the required information as part of MiFID II, the PRA proposes making the changes outlined in this chapter; and
- chapter 9 – application of European Banking Authority (EBA) guidelines on corrections to modified duration for debt instruments. The PRA proposes to amend its Supervisory Statement 13/13: Market risk to state that UK firms should comply with the EBA guidelines when making calculations under Article 340 of the CRR.
The consultation paper also consults on an administration instruments. An administration instrument is used to make minor corrections to the PRA Rulebook provisions. The corrections are not substantive and are not intended to change the PRA policy. The corrections will result in rule amendments.
The deadline for comments on the consultation paper is 17 October 2017 for the administration instrument (Appendix 15), 3 November 2017 for chapters 7 and 8 and 9 January 2018 for chapters 2 to 6, 9 and 10.
View FCA and PRA October 2017 joint occasional consultation paper, 3 October 2017