On 28 May 2021, the PRA published Policy Statement 9/21: Operational continuity in resolution: Updates to the policy (PS9/21).
In PS9/21 the PRA provides feedback to Consultation Paper 20/20: Operational continuity in resolution: Updates to the policy (CP20/20). The PRA also sets out its final policy in the form of:
- Amendments to the Operational Continuity Part of the PRA Rulebook. These amendments become effective from 1 January 2023.
- A new Supervisory Statement 4/21: Ensuring operational continuity in resolution (SS4/21). This will supersede Supervisory Statement 9/16 (SS9/16). SS4/21 will be effective from 1 January 2023. Until then SS9/16 will remain in place.
The PRA reports that after considering the responses to CP20/20, it has amended the following aspects of the policy:
- For the purposes of the rules, the term ‘critical services’ will refer to both critical functions and core business lines. The term ‘essential services’ will not be introduced.
- The PRA has made a consequential amendment to Operational Continuity 1.1 to ensure that the change in the definition does not change which firms are in scope of the rules. The Operational Continuity Part continues to apply to firms that perform a critical function.
- The PRA has made other minor corrections to the rules, such as a minor amendment to Operational Continuity 1.5 to define central counterparties with reference to the Glossary definition.
- Throughout SS4/21, references to essential services have been removed to reflect amendments to the definition of critical services in the rules.
- Paragraph 2.7 of SS4/21 has been amended to clarify expectations relating to hosted firms’ identification of core business lines and broadly comparable outcomes.
- Paragraph 2.8 of SS4/21 has been amended to clarify the purpose of the descriptions of service provision models.
- Paragraphs 11.6 to 11.13 of SS4/21 have been amended to replace the term ‘OCIR financial resources’ with the term ‘OCIR liquidity resources’ to clarify terminology relating to financial arrangements.
- Paragraph 11.8 of SS4/21 has been amended to improve clarity regarding the calculation of annual fixed overheads.
- Paragraph 11.9 has been amended to clarify the intended outcome relating to OCIR liquidity resources.
- Paragraph 11.10 of SS4/21 has been added to clarify expectations relating to ownership of intragroup liquidity resources.
- Paragraph 11.12 of SS4/21 has been amended to clarify the type of assets that can be used as OCIR liquidity resources.
- Paragraph 11.13 of SS4/21 has been amended to clarify expectations relating to ring-fenced bodies.
- Paragraph 12.2 of SS4/21 has been amended to clarify expectations relating to management and governance.
- The PRA has made other minor amendments throughout SS4/21 to improve readability, increase overall clarity, and bring it into line with the current format for these documents.