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.
Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler
Previous Article
HMT Publishes Vision for Future of Financial Services SectorRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.