Featured Product

    FCA Issues Statement for Firms Preparing for BRRD2 Transposition

    December 09, 2020

    FCA published a statement that is relevant for firms preparing for transposition of the revised Bank Recovery and Resolution Directive (BRRD2). HM Treasury laid a statutory instrument before the UK Parliament on October 15, 2020 to transpose BRRD2, which the UK is required to do by December 28, 2020. Certain provisions of this directive will come into effect on December 28, 2020, but then will cease to be effective in the UK on December 31, 2020. Unlike PRA, that has consulted on short-lived rule changes to come into effect on December 28, 2020, FCA has not identified any conflicts between its current requirements and those in the statutory instrument that will implement BRRD2. The statement highlights that FCA will not be addressing those new requirements in BRRD2 that do not apply to FCA solo-regulated firms. Firms should consult the website of HM Treasury and PRA for further information on these changes.

    FCA also highlighted the following relevant areas that apply to FCA-regulated firms:

    • Article 48(7) on the priority of debts in insolvency—As transposed by HM Treasury, certain changes are made to the priority of debts in insolvency in the case of insolvency proceedings commenced during the four-day period.
    • Article 55 on the Contractual Recognition of Bail-in—FCA has requirements in place for firms to include terms in their contracts recognizing that a liability may be “bailed in” (for example the debt may be written-down or converted into equity) by the resolution authority. BRRD2 adds to these with a mechanism for firms to notify the resolution authority in situations where it is “legally or otherwise impracticable” to include the required terms in contractual provisions. These additional requirements do not conflict with existing rules of FCA. Any notifications submitted that have not already been acted upon will automatically lapse on January 01, 2021.
    • Other potentially relevant article—Article 44a addresses the sale of subordinated eligible liabilities to retail clients and will be introduced via Handbook rules. FCA is consulting on the introduction of the requirements in this area in its quarterly consultation paper (No. 30), which was published on December 04, 2020.

     

    Related Link: FCA Statement

     

    Keywords: Europe, UK, Banking, Securities, BRRD2, BRRD2 Transition, Resolution Framework, Basel, Bail-In, Brexit Transition, HM Treasury, FCA

    Featured Experts
    Related Articles
    News

    APRA Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494