PRA Proposes to Amend Policy on Designating Investment Firms
PRA proposed, via CP15/21, to make minor changes to its policy on designating investment firms. This includes a proposal to increase the base capital resources requirement for PRA-designated investment firms, thereby aligning this requirement to the same requirement for firms undertaking a similar type of business that is only regulated by FCA and not by PRA (“solo-regulated” firms). The proposals would result in amendments to the Statement of Policy on designation of investment firms for prudential supervision by PRA (Appendix 1) and the Definition of Capital Part of the PRA Rulebook (Appendix 2). CP15/21 is relevant to all PRA-designated UK investment firms. The consultation period on these proposals ends on October 05, 2021, with the proposed effective date of these changes being January 01, 2022.
The proposals would ensure that the PRA policy reflects the impact of the new Investment Firms Prudential Regime proposed by FCA. PRA proposes to amend the Statement of Policy on the designation of investment firms to:
- Reflect HM Treasury’s proposed amendments to the PRA Regulated Activities Order, including the change in the scope of the firms that can be designated
- Explain that there will usually be six months, rather than three months, between the Prudential Regulation Committee designating an investment firm and it becoming PRA-regulated
- Note that PRA will take into account whether or not an investment firm is a clearing member of a central counterparty offering clearing services to other financial institutions (that are not clearing members themselves) when making a designation decision
- Delete any obsolete text and make other minor textual amendments
PRA also proposed to change the Definition of Capital Part to increase the base capital resources requirement for designated investment firms from EUR 730,000 to GBP 750,000 and to denominate it in Sterling. The proposals have been designed in the context of UK having left EU and the transition period having come to an end. Unless otherwise stated, any references to EU or EU-derived legislation refer to the version of that legislation which forms part of retained EU law.
Related Links
Comment Due Date: October 05, 2021
Effective Date: January 01, 2022 (Proposed)
Keywords: Europe, UK, Banking, Investment Firms, Designation Process, IFPR, Regulatory Capital, PRA Rulebook, CP15/21, FCA, HM Treasury, PRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting
Previous Article
HMT Publishes Vision for Future of Financial Services SectorRelated Articles
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
