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    BoE Addresses Statistical Reporting & EMFS Exposures Under Basel Rules

    December 07, 2022

    The Bank of England (BoE) published five notices on statistical reporting requirements for banks, announced a simulation exercise to test resilience of financial sector to operational disruptions, and a statement sets out the Prudential Regulation Authority’s (PRA) observations on the capital requirements for firms’ exposures under the Energy Markets Financing Scheme (EMFS).

    Below are the key highlights of these recent updates:

    • In Statistical Notice 2022/20, BoE published version 1.3.0 of the Bank of England Statistics taxonomy, with the aim to extend the taxonomy to include statistical collection Form IPA as announced in Green Notice 2022/01 and Statistical Notice 2022/17. BoE notified that the first reporting of the Statistical Taxonomy 1.3.0 for Form IPA will be December 2023 for the November 2023 reporting period. BoE highlights that all entry points from taxonomy v1.2.4 have been included in this release so that firms can adopt this latest taxonomy if they wish.
    • In Statistical Notice 2022/21, BoE announced that, by November 18, 2022,  it will adjust the applicable ratio for cash ratio deposits (CRDs) and issue call notices to CRD payers. This CRD ratio will be applied to average eligible liabilities (Els) in excess of GBP 600 million over the previous six end-calendar months. CRDs are non-interest bearing deposits lodged with the BoE by eligible institutions (that is, banks and building societies), which have reported average eligible liabilities in excess of GBP 600 million over a six-month calculation period. The level of each institution’s CRD is calculated twice yearly (in May and November).
    • In Statistical Notices 2022/22 and 2022/23, BoE confirmed that, with effect from December 01, 2022, the Online Statistical Collection Application (OSCA)—both production and pre-production environments—has been decommissioned will be unavailable for submission of statistical data and all statistical data must be submitted in an XBRL format on the Bank of England Electronic Data Submission (BEEDS) portal. Statistical Notice 2022/23 also sets out the reporting guidance to reflect the change in reporting method from OSCA to BEEDS In this context, several amendments have been made to the documents published on Statistical Reporting. A summary of all Statistical Notice items that are yet to come into effect are also available to view on the Statistical notices page.
    • Green Notice 2022/02 explains that, in November, the BoE Data and Statistics Division (DSD) met with a panel of reporters to discuss a new approach to managing data confidentiality across DSD’s suite of statistical publications. The change of approach is to seek prior approval from reporting institutions should the data they provide contribute to a published aggregate where there are less than three contributors. The aim of the new approach is to reduce the burden on both reporting institutions and DSD staff when BoE seeks permission to publish data. Adoption of this new approach will be on a voluntary basis. More information on this new approach will be shared in March 2023 via a Statistical Notice.
    • BoE undertook SIMEX 22 exercise, in collaboration with HMT and FCA, to test the resilience of the financial sector in UK to a major operational disruption. This two-day exercise involved 50 regulated firms as well as the financial authorities. The exercise has been developed by the Cross Market Operational Resilience Group (CMORG), a joint initiative between the financial authorities, UK Finance, and industry. The initiative aims to improve the resilience of the UK financial sector through collective action. CMORG achieves this through identification and creation of guidance and resilience capabilities that address potential systemic risks in the sector. CMORG will consider the findings and ensure that collective capabilities are developed to mitigate any risks that are identified. 
    • For treatment of guarantees under EMFS, PRA issued a statement that addresses credit risk mitigation (CRM) eligibility, capital treatment under the standardized and internal ratings-based (IRB) approaches for credit risk, and leverage ratio treatment of these guarantees. HM Treasury and BoE had launched EMFS to address the extraordinary liquidity requirements faced by energy companies operating in the UK wholesale physical gas and/or electricity markets. PRA states that firms should assess the exposures against the relevant articles of CRR, and any relevant PRA rules and expectations (including expectations set out in Supervisory Statement SS17/13 on "Credit risk mitigation"). Where necessary, firms should seek independent advice to confirm that all the applicable requirements and expectations have been satisfied.

     

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    Keywords: Europe, UK, Banking, Reporting, Statistical Notice, OSCA, BEEDS, Form IPA, Cash Ratio Deposits, SIMEX 22, Operational Resilience, Operational Risk, CRR, Credit Risk, Regulatory Capital, Basel, Leverage Ratio, HM Treasury, FCA, PRA, BOE

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