Featured Product

    BoE Policy Committee Deliberates on CCyB Rate and Cyber Stress Tests

    March 26, 2021

    The Financial Policy Committee (FPC) of BoE met recently to identify risks to financial stability and agree on policy actions to safeguard the resilience of the UK financial system. As per the published meeting summary, FPC decided that it expects to maintain the UK countercyclical capital buffer (CCyB) rate at 0% until at least December 2021. Any subsequent increase would not be expected to take effect until the end of 2022. The pace of return to a standard UK CCyB rate in the region of 2% would depend on banks’ ability to rebuild capital while continuing to support the UK economy, households, and businesses. FPC judged that this guidance should help to give banks clarity that they could use capital buffers as necessary. Other topics of discussion at the meeting included the status of LIBOR transition, continued monitoring of financial stability implications of Brexit, results of joint BoE-FCA review of open-ended investment funds, and the next cyber stress testing exercise.

    The work on the next cyber stress test has already restarted and FPC would provide more information on the 2022 cyber stress test in due course. At the March 2021 meeting, FPC discussed its impact tolerance for payments services and initial plans for a 2022 stress test. FPC agreed that the 2022 cyber test should involve a scenario where data integrity had been compromised. This would build on the finance industry’s own work. FPC agreed that the 2022 test should target the most systemic contributors in the end-to-end payments chain, as in the event of disruption, their ability to resume services in a timely manner was particularly important for UK financial stability. FPC further agreed to focus the next cyber stress test on retail payments, so that the results from the test could help shed light on the potential financial stability impact of disruption to retail payments. Building on the lessons of the 2019 pilot, the 2022 test would be expanded to include second-round effects. Participants would be asked to document how they would meet the FPC’s impact tolerance, or, if they were not able to do so, what the impact might be. Firms would also be asked to document any barriers to meeting the FPC’s impact tolerance and to explore the extent to which their recovery options might depend on the actions of other participants. Finally, FPC agreed that the 2022 test would be an exploratory test, rather than a formal pass-fail assessment. Participating firms would, however, be expected to share their findings and plans with their supervisors. 

     

    Related Links

    Keywords: Europe, UK, Banking, Basel, Regulatory Capital, CCyB, COVID-19, Cyber Risk, Stress Testing, Data Integrity, IBOR Reform, Financial Stability, FPC, BoE

    Featured Experts
    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751