HM Treasury, also known as HMT, published a draft statutory instrument to amend the Financial Services and Markets Act 2000 (PRA-regulated Activities) (Amendment) Order. This amendments in this statutory instrument will be a result of introduction of the Investment Firms Prudential Regime (IFPR). The draft instrument is still in development. The drafting approach, and other technical aspects of the proposal, may change before the final instrument is laid before Parliament. HM Treasury plans to lay this instrument before the UK Parliament prior to the end of 2021. The statutory instrument is expected to come into force on January 01, 2022.
The existing Order allows PRA to choose to designate any investment firm that fulfils two criteria: dealing in investments as principal and being subject to the initial capital requirement of EUR 730,000. The IFPR will make the initial capital requirement of EUR 730,000 obsolete, as it will create new initial capital requirements for investment firms. Therefore, the reference to the initial capital requirement of EUR 730,000 is being removed by the statutory instrument. The statutory instrument makes changes to the Order to allow PRA to continue to designate systemic investment firms after the IFPR is introduced. Article 2(3) of the statutory instrument makes changes, which allow for all investment firms that deal in investments as principal to be eligible for designation by PRA. This does not mean PRA will necessarily designate all of these investment firms. When designating investment firms, PRA will continue to have regard to its statutory objectives, the assets of the person or group, and its Statement of Policy on designation. The statutory instrument also makes minor technical changes, including the following:
- Clarifies the meaning of "FCA controlled function" and "PRA controlled function."
- Removes the requirement for PRA to consult BoE before issuing a new designation statement of policy. PRA and BoE consider this requirement can be deleted as it does not reflect their current structures, because PRA is now a part of BoE.
- Clarifies that, where FCA has given its approval in relation to a particular function, such an approval should be deemed to be given by PRA. This means that the authorized persons do not need to re-apply for approval when a firm they work for becomes designated by PRA.
Keywords: Europe, UK, Banking, Securities, Investment Firms, IFPR, Designation Process, Statutory Instrument, Regulatory Capital, FCA, PRA, HM Treasury
Previous ArticleFI Issues Regulatory Updates for Banks and Investment Firms
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.