The Prudential Regulation Authority (PRA) proposed rules on the application of prudential liquidity requirements to domestic liquidity sub-groups. The published consultation paper (CP19/21) also proposed revisions to the approach to granting a domestic liquidity sub-groups permission. The consultation closes on October 12, 2021, with the rule finalization expected in November 2021 and the implementation date for the changes expected to be January 01, 2022.
Where certain conditions are met on the availability, distribution, management, and monitoring of liquidity, the Capital Requirements Regulation (CRR) allows PRA to waive the application of liquidity requirements at the level of an individual firm and to permit a firm to form a domestic liquidity sub-group; these requirements encompass the liquidity coverage ratio (LCR) and liquidity risk management, monitoring, reporting, and disclosures. Where a domestic liquidity sub-groups permission is granted, PRA requirements apply at the level of a domestic liquidity sub-group on the basis of the consolidated situation of its members, rather than applying to member firms individually. This reflects the ability of some firms to manage their liquidity jointly with other entities, as if they were a single entity. HM Treasury will revoke this provision from Saturday January 01, 2022. CP19/21 proposes to:
- Permit the inclusion in a domestic liquidity sub-group of firms that are subsidiaries of a common immediate UK qualifying parent undertaking that is not a bank or PRA-designated investment firm (referred to in this consultation as a "sibling domestic liquidity sub-group")
- Revise the conditions to qualify for a domestic liquidity sub-group permission and the factors that PRA will take into account when considering domestic liquidity sub-group applications
CP19/21 would result in changes to the Liquidity (CRR) Part of the PRA Rulebook and the Statement of Policy (SoP) titled "Liquidity and funding permissions." This consultation is relevant to PRA-authorized UK banks, PRA-designated UK investment firms, and building societies. It is also relevant to the UK financial or mixed financial holding companies that are the immediate parent undertakings of firms that may be included in a domestic liquidity sub-groups. It is not relevant to credit unions.
Comment Due Date: October 12, 2021
Keywords: Europe, UK, Banking, Liquidity Risk, Domestic Liquidity Sub Groups, CRR, Reporting, LCR, Disclosures, Basel, PRA
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.