On 9 July 2021, the PRA published Policy Statement 17/21: Implementation of the Basel Standards (PS17/21).
In PS17/21 the PRA provides feedback on comments received on Consultation Paper 5/21: Implementation of Basel Standards and sets out near final rules.
The proposals in CP5/21 sought to address some of the remaining weaknesses in banks’ risk management systems and the regulatory framework through:
- Implementing some of the remaining Basel III standards, including by implementing adapted versions of those standards.
- Restating without material modification those aspects of the Capital Requirements Regulation (CRR) which HM Treasury proposes to revoke and the PRA proposes to restate in the PRA Rulebook.
In paragraphs 1.11 and 1.12 of PS17/21 the PRA summarises some of the more material changes that it has made to its policy. This includes that the PRA has changed a number of Required Stable Funding factors under the Net Stable Funding Ratio, including those applicable to certain centrally cleared derivatives transactions.
The material in PS17/21 is near final. The PRA does not intend to change the policy or make significant alterations to the text of the instruments before making the final policy material.
The PRA expects to publish the final rule instruments in a subsequent Policy Statement, after HM Treasury has laid the Statutory Instrument, to delete the relevant parts of the CRR that these near-final rules will replace.
The policy is intended to take effect at the same time as HM Treasury’s revocation of the relevant parts of the CRR, which will be on 1 January 2022.