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    PRA Finalizes Policy for Designation of Investment Firms

    December 15, 2021

    The Prudential Regulation Authority (PRA) finalizes changes, via the policy statement PS27/21, to its policy on designating investment firms. PS27/21 provides amendments to the Statement of Policy on the designation of investment firms for prudential supervision by PRA (Appendix 1) as well as the Definition of Capital Part of the PRA Rulebook (Appendix 2). PS27/21 is relevant to all PRA-designated UK investment firms and will take effect on January 01, 2022.

    PRA published the PS27/21, following the consultation paper CP15/21, to introduce minor changes to its policy on designating investment firms. The consultation took place from July 05, 2021 to October 05, 2021. PRA received no responses to the consultation and has made no changes to the draft policy. PRA proposed, via CP15/21, to amend the Statement of Policy on the designation of investment firms to:

    • Reflect proposed amendments of Her Majesty’s (HM) Treasury to the PRA-regulated Activities Order (PRA RAO), 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 of the PRA Rulebook 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. PRA has made no changes to the draft policy. However, it has updated the document formatting to bring it in line with current publication standards. This has resulted in minor changes to the paragraph numbering.

     

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    Effective Date: January 01, 2022

    Keywords: Europe, UK, Banking, Investment Firms, Designation Process, IFPR, Regulatory Capital, PRA Rulebook, FCA, HM Treasury, PRA

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