PRA Publishes Near-Final Text of Remaining Basel III Standards
The Prudential Regulation Authority (PRA) published the policy statement PS17/21 that is focused on implementation of the remaining Basel III standards in UK. PS17/21 provides feedback to responses to the consultation paper CP5/21 and contains near-final rule instruments, Statements of Policy (SoPs), supervisory statements, and reporting templates and instructions. PRA expects to publish the final rule instruments in a subsequent policy statement, after Her Majesty's (HM) Treasury has laid the Statutory Instrument, to delete the relevant parts of the Capital Requirements Regulation (CRR) that these near-final rules will replace. This policy is intended to take effect at the same time as HM Treasury’s revocation of the relevant parts of the CRR, which will be on January 01, 2022. This policy statement is relevant to UK banks, building societies, and PRA-designated investment firms as well as the UK financial holding companies and UK mixed financial holding companies of certain PRA-authorized firms.
The appendices to this policy statement contain near-final policy material with respect to the following:
- CRR Rules Instrument 2021
- CRR Firms: (CRR 2 Revocations and Other Amendments) Instrument 2021
- SS15/13 titled “Groups,” SS12/13 titled “Counterparty credit risk,” SS16/13 titled “Large Exposures,” SS24/15 titled “The PRA”s approach to supervising liquidity and funding risks,” SS34/15 titled “Guidelines for completing regulatory reports,” SS2/19 titled “PRA approach to interpreting reporting and disclosure requirements and regulatory transactions forms after the UK”s withdrawal from the EU,” and SS6/17 titled “Compliance with the EBA”s Guidelines on disclosure.”
- The SoP titled “The PRA”s methodologies for setting Pillar 2 capital,” SoP titled “Liquidity and funding permissions,” and SoP titled “Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK”s withdrawal from the EU”
- Updated reporting data items and instructions including PRA101–PRA108; RFB001, RFB003, and RFB004; and Annex I–XXIX of UK COREP and FINREP data items and instructions
- Updated UK Pillar 3 disclosure data items and instructions
- Detailed analysis of objectives, summary of the purpose of the rules, corresponding provisions, and restatement provisions (in Appendices 12 to 15, respectively)
PRA had proposed, via CP5/21 in February 2021, new requirements to implement some of the remaining Basel III standards in the UK. PRA had also proposed to make rules that restate elements of the CRR and related on-shored EU level 2 regulations made under the CRR (CRR Level 2 Regulations) that are being revoked by the HM Treasury. In response to the feedback received on CP5/21, PRA has:
- Changed a number of Required Stable Funding factors under net stable funding ratio (NSFR), including those applicable to certain centrally cleared derivatives transactions
- Postponed the application of the mandatory substitution approach to large exposures that are secured by collateral issued to a third party, pending further consultation and impact assessment
- Decided to consider, on a case-by-case basis, applications from firms to increase their non-core large exposures group limits to offset the impact of applying Standardized approach for counterparty credit risk instead of the internal model method
- Introduced a notification requirement that applies if firms’ exposures to collective investment undertakings are material
- Assessed that further consideration is needed of the conditions under which a domestic liquidity subgroup may be granted
- Not implemented new reporting templates for the Fundamental Review of the Trading Book Alternative Standardized Approach in light of changes to HM Treasury’s approach to Basel III implementation
- Made consequential changes to update the Statement of Policy titled "Interpretation of EU Guidelines and Recommendations: BoE and PRA approach after the UK’s withdrawal from the EU." This reflects the discontinued relevance of EBA Guidelines on disclosure requirements under Part Eight of CRR and EBA guidelines on LCR disclosure, once the Disclosure Part of the PRA Rulebook comes into effect
PRA also decided to implement the proposed standardized approach to counterparty credit risk (SA-CCR) framework as set out in the CP5/21 and will undertake a holistic review of SA-CCR and other elements of the counterparty credit risk framework as part of the implementation of Basel 3.1 standards. The near-final policy material broadly corresponds to the set of issues covered by the EU's Capital Requirements Regulation 2 (EU CRR2), which implements the same set of remaining Basel III standards. PRA does not intend to change the near-final policy material in PS17/21 or make significant alterations to the text of the instruments before the making of the final policy material. PRA expects to publish the final rule instruments in a subsequent policy statement, after HM Treasury has laid the Statutory Instrument to delete the relevant parts of the CRR that these near-final rules will replace.
Related Links
Effective Date: January 01, 2022
Keywords: Europe, UK, Banking, Basel, CRR, CP5/21, PS17/21, SA-CCR, NSFR, LCR, Regulatory Capital, Liquidity Risk, Operational Risk, Disclosures, Reporting, Market Risk, PRA, HM Treasury
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.

Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Related Articles
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),
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
APRA Reduces Committed Liquidity Facility, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
EBA Updates Standards for 2023 Benchmarking of Internal Approaches
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
EIOPA Responds to Stakeholder Views on Blockchain in Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.