June 06, 2019

BoE and PRA published their annual reports for the period of March 01, 2018 to February 28, 2019. The reports provide information on the activities and finances of these entities for the preceding year. The PRA Authorizations Performance Reports 2017/18 and 2018/19 and the PRA Prescribed Persons (Reports on Disclosures of Information) Regulations 2017—Annual Report 2018/19 have also been published. In addition, BoE has updated the lists of ring-fenced bodies (as at January 01, 2019) and PRA-regulated banks and building societies (as at May 31, 2019).

  • The information to be provided by a third party seeking authorization to assess the compliance of securitizations with the STS criteria provided for in Securitization Regulation should enable a competent authority to evaluate whether and, to what extent, the applicant meets the conditions of Article 28(1) of the Securitization Regulation. An authorized third party will be able to provide STS assessment services across EU. The application for authorization should, therefore, comprehensively identify that third party, any group to which this third party belongs, and the scope of its activities. With regard to the STS assessment services to be provided, the application should include the envisaged scope of the services to be provided as well as their geographical scope, particularly the following:

    • To facilitate effective use of the authorization resources of a competent authority, each application for authorization should include a table clearly identifying each submitted document and its relevance to the conditions that must be met for authorization.
    • To enable the competent authority to assess whether the fees charged by the third party are non-discriminatory and are sufficient and appropriate to cover the costs for the provision of the STS assessment services, as required by Article 28(1)(a) of Securitization Regulation, the third party should provide comprehensive information on pricing policies, pricing criteria, fee structures, and fee schedules.
    • To enable the competent authority to assess whether the third party is able to ensure the integrity and independence of the STS assessment process, that third party should provide information on the structure of those internal controls. Furthermore, the third party should provide comprehensive information on the composition of the management body and on the qualifications and repute of each of its members.
    • To enable the competent authority to assess whether the third party has sufficient operational safeguards and internal processes to assess STS compliance, the third party should provide information on its procedures relating to the required qualification of its staff. The third party should also demonstrate that its STS assessment methodology is sensitive to the type of securitization and that specifies separate procedures and safeguards for asset-backed commercial paper (ABCP) transactions/programs and non-ABCP securitizations.

    The use of outsourcing arrangements and a reliance on the use of external experts can raise concerns about the robustness of operational safeguards and internal processes. The application should, therefore, contain specific information about the nature and scope of any such outsourcing arrangements or use of external experts as well as the third party's governance over those arrangements. Regulation (EU) 2019/885 is based on the draft regulatory technical standards submitted by ESMA to EC.

     

    Related Links

    Effective Date: June 18, 2019

    Press Release
  • Proposed Rule 1
  • Proposed Rule 2
  • Proposed Rule 3
  • Presentation on Regulatory Framework (PDF)
  • Presentation on Resolution Plan Rules (PDF)
  • The highlights of the BoE annual report include the work done across BoE in preparing for EU withdrawal, ring-fencing the largest UK banks’ retail services, and providing international leadership on understanding the risks from climate change and green finance. The BoE annual report also highlights its strategic goals for 2019. These include maintaining monetary and financial stability during Brexit and beyond; enhancing the strength, security, and efficiency of internal operations of BoE; and building greater operational resilience in the financial system. Overall, BoE is on track to meet the strategic priorities set out in Vision 2020.

    The PRA Annual Report includes information on the authorization of new banks, insurers, and insurance special purpose vehicles (ISPVs) as well as covers the PRA work on EU withdrawal. Mark Carney Governor, Chair of the Prudential Regulation Committee mentioned that PRA is increasingly emphasizing on emerging risks such as Brexit, cyber risk, and climate risk. Looking forward, PRA will take the opportunities technology offers to supervise more effectively and efficiently. That means innovation in the UK financial system will continue to serve the UK and global economy, underpinned by the highest standards of prudential supervision and regulation. Members of the public are invited to make representations to PRA, by September 13, 2019, on the following:

    • PRA annual report
    • The way in which PRA has discharged, or failed to discharge, its functions during the period to which the report relates
    • Extent to which, in their opinion, PRA’s objectives have been advanced and PRA has considered the regulatory principles to which it must have regard when carrying out certain of its functions (contained in section 3B of Financial Services and Markets Act 2000, or FSMA) and facilitated effective competition in the markets for services provided by PRA-authorized firms in carrying on regulated activities in accordance with section 2H of FSMA. 

     

    Related Links

    Comment Due Date: September 13, 2019

    Keywords: Europe, UK, Banking, Insurance, Financial Stability, Brexit, Fintech, Ring Fencing, Annual Report, PRA, BoE

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