Featured Product

    PRA Updates Timeline for Final Basel III Rules, Issues Other Updates

    October 18, 2023

    The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them. PRA announced intent to move the implementation date of the final Basel 3.1 policies by six months to July 01, 2025, reducing the the transitional period to 4.5 years to ensure full implementation by January 01, 2030. Additionally, PRA intends to publish the near-final policies on market, credit valuation adjustment, counterparty credit, and operational risks in the fourth quarter of 2023 while it expects to publish the near-final policy on the remaining elements in the second quarter of 2024; the remaining elements are credit risk, output floor, and reporting and disclosure requirements.

    Below are the key highlights of the recent consultations from PRA:

    • PRA published a consultation paper (CP17/23) on capitalization of foreign-exchange positions for market risk, with the comment period ending on January 31, 2024. The proposals relate to the post-Basel 3.1 PRA-proposed implementation described in CP16/22 and would result in changes to the proposed Article 325 (Approaches for Calculating the Own Funds Requirements for Market Risk) in the proposed Market Risk: General Provisions (CRR) Part of the PRA Rulebook (Appendix 1), the proposed supervisory statement (SS13/13) – Market Risk from CP16/22 (Appendix 2), and the CRR Permission 352(2) supplementary application form (Appendix 3). This consultation also clarifies that items held on the balance sheet at historical exchange rates are not to be included as a risk position for the purposes of calculating Pillar 1 capital requirements.
    • PRA is seeking comments, until November 27, 2023, on the rule and policy updates (in CP20/23) with respect to the establishment of third-country branches and subsidiaries within ring-fenced body sub-consolidation groups. HM Treasury is also consulting on legislative changes that, among other things, would allow ring-fenced bodies to establish entities in third countries. This would allow ring-fenced bodies to compete with international and domestic banking groups, advancing the PRA’s secondary objectives of competition and competitiveness and growth. The proposals in CP20/23 would result in changes to the Ring-fenced Bodies Part of the PRA Rulebook (Appendix 1) and supervisory statement (SS8/16) on Ring-fenced bodies (RFBs) (Appendix 2). The resulting changes are expected to be implemented by the first half of 2024.
    • PRA and the Financial Conduct Authority (FCA) proposed measures to boost diversity and inclusion in financial services, with the feedback periods on both consultations ending on December 18, 2023 and the final rules final rules planned for publication in 2024. The proposals cover integration of non-financial misconduct into the existing regulatory framework, requirements for reporting of diversity and inclusion data, implementation and governance of D&I strategies, and setting of diversity targets. The PRA proposals are applicable to all CRR and Solvency II firms in the UK, including third country branches (excluding credit unions). PRA proposes that firms would report yearly during a three-month window following a reporting reference date that would be specified on publication of the final policy. Both PRA and FCA have proposed one regulatory reporting template (Appendix 7 of PRA consultation paper), with reporting submission expected via the RegData platform of FCA. 


    Visit the Moody’s Analytics microsite for Banking Cloud Solutions to find out how our solutions help banks get up-to-date with the latest capital adequacy requirements and address the regulatory reporting requirements.


    Related Links


    Keywords: Europe, UK, Banking, Basel, Basel 3.1, Regulatory Capital, Reporting, Diversity and Inclusion, Ring-Fencing, Market Risk, FCA, HM Treasury, PRA

    Featured Experts
    Related Articles

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News

    EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules

    The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.

    October 31, 2023 WebPage Regulatory News

    BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks

    As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.

    October 19, 2023 WebPage Regulatory News

    BCBS and EBA Publish Results of Basel III Monitoring Exercise

    The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.

    October 18, 2023 WebPage Regulatory News

    US Treasury Sets Out Principles for Net-Zero Financing

    The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.

    October 17, 2023 WebPage Regulatory News

    EC Launches Survey on G7 Principles on Generative AI

    The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.

    October 14, 2023 WebPage Regulatory News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News

    Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks

    At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938