HMT Proposes Rule Changes Resulting from New Investment Firms Regime
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.
Related Links
Keywords: Europe, UK, Banking, Securities, Investment Firms, IFPR, Designation Process, Statutory Instrument, Regulatory Capital, FCA, 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.
Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler
Previous Article
FI Issues Regulatory Updates for Banks and Investment FirmsRelated 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.
