Blog: PRA Regulatory Digest – July 2022 – Bank of England

News and speeches

New tides – speech by Nathanaël Benjamin

20 July 2022

Nat Benjamin (Executive Director, Authorisations, Regulatory Technology, and International Supervision) says investment banks have operated in easy economic conditions over the last decade. But now they face challenges, caused by geopolitical and macroeconomic changes, new technology, and climate change, and that they must act now to prepare for those risks.

New tides – speech by Nathanaël Benjamin

Capital and (for a change) Liquidity Buffers – speech by Victoria Saporta

14 July 2022

Vicky Saporta (Executive Director, Prudential Policy) says there is evidence that banks are reluctant to use liquidity buffers and she explains why. She disclosed what the PRA could do to make it easier for banks to use them.

Capital and (for a change) Liquidity Buffers – speech by Victoria Saporta

Solvency II: Striking the balance – speech by Sam Woods

8 July 2022

Sam Woods (Deputy Governor and Chief Executive Officer of the Prudential Regulation Authority) talks about reform to the regulation of insurance providers. He says the key aims of the reforms are to make the insurance sector work better for the UK economy and to safeguard policyholders.

Solvency II: Striking the balance – speech by Sam Woods

Cross cutting publications and updates

Publication of a new Prudential and Resolution Policy Index

19 July 2022

On Tuesday 19 July 2022, jointly the Prudential Regulation Authority (PRA) and the Bank of England (the Bank) published an Index of Prudential and Resolution Policies. As part of the PRA and Bank’s commitment to make policies more accessible, this Index brings them together in one place, and divides them by sectors and topic areas, so that users can easily find them.

Climate and capital conference

19 and 20 October 2022

The Bank and PRA are organising a conference on Wednesday 19 October and Thursday 20 October 2022, on climate change and capital. The objective of the conference is to facilitate discussion on the complex issues associated with adjusting the capital framework to take account of climate-related financial risks. This meets a commitment the PRA made in its Climate Change Adaptation Report 2021 and will support its aim of providing more guidance on its approach to climate and capital by the end of 2022. More information is available on the climate and capital conference webpage.

Banking publications and updates

CP13/22 – Amendments to the PRA’s approach to identifying other systemically important institutions (O-SIIs)

22 July 2022

This Consultation Paper (CP) sets out the PRA’s proposed changes to the criteria and scoring methodology it uses to identify other systemically important institutions (O-SIIs).

The proposals in this CP would result in changes to the Statement of Policy (SoP) on ‘The PRA’s approach to identifying other systemically important institutions (O-SIIs)’. The proposals would also result in an amendment to the SoP on ‘Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU’.

The CP is relevant to credit institutions, investment firms, and parent (mixed) financial holding companies incorporated in the UK. The proposals contained in this consultation do not apply to third-country branches operating in the UK.

This consultation closes on Thursday 22 September 2022.

Letter from Sam Woods and Nikhil Rathi ‘Transforming data collection – an update on progress and plans for 2022’

21 July 2022

Sam Woods of the PRA and Nikhil Rathi of the Financial Conduct Authority (FCA), jointly published a letter to chief executive officers of PRA and FCA regulated firms. The letter updated firms on the work both regulators are doing as part of the joint transformation programme to improve the way that data is collected from all regulated firms.

DP3/22 – Operational resilience: Critical third parties to the UK financial sector

21 July 2022

This Discussion Paper (DP) is issued jointly by the PRA, the FCA, and the Bank in its capacity as supervisor of FMIs (collectively the supervisory authorities).

The purpose of this DP is to share and obtain views on potential measures to manage the systemic risks to the supervisory authorities’ objectives, including financial stability, market integrity and consumer protection, posed by certain third parties to the UK financial sector.

This DP is primarily relevant to third parties (in particular those that could be designated as CTPs by HMT under a potential future statutory framework), firms and FMIs. However, the supervisory authorities would welcome feedback from all stakeholders with expertise in relevant areas to this DP including but not limited to operational resilience, systemic risk, or third party risk management. The supervisory authorities would particularly welcome responses to the questions asked throughout the DP and listed in Chapter 10.

Responses are requested by Friday 23 December 2022.

DP3/22 – Operational resilience: Critical third parties to the UK financial sector

CP8/22 – Remuneration: Unvested pay, Material Risk Takers and public appointments

15 July 2022

This CP sets out the PRA’s proposed expectations in respect of changes to the instruments or claims that comprise unvested, deferred sums awarded to Material Risk Takers (MRTs) as part of their variable pay. It considers, in particular, cases where a change is prompted by the need to manage a conflict of interest arising from a MRT seeking a senior public appointment linked to financial policy or financial services regulation (a public-sector appointment).

The proposals in this CP would result in changes to Supervisory Statement (SS) 2/17 ‘Remuneration’.

The CP is directly relevant to PRA-authorised banks, building societies, and PRA-designated investment firms, including third country branches, subject to the Remuneration Part of the PRA Rulebook (firms).

This consultation closes on Monday 19 September 2022.

CP8/22 – Remuneration: Unvested pay, Material Risk Takers and public appointments

CP11/22 – Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251

12 July 2022

This CP sets out the PRA’s and FCA proposals to update the list of instruments as eligible collateral for bilateral margin, to introduce fall-back transitional provisions for certain firms who come into scope of the requirements for the first time, and to update the application of the requirements to central counterparties.

This CP is relevant to banks, building societies, and PRA-designated investment firms in scope of the margin requirements under UK EMIR. In addition, this CP is relevant to all FCA solo-regulated entities and non-financial counterparties in scope of the margin requirements under UK EMIR (FCA firms).

This consultation closes on Wednesday 12 October 2022.

CP11/22 – Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251

The Bank of England’s approach to setting a minimum requirement for own funds and eligible liabilities (MREL)

4 July 2022

Update – Institutions and groups should notify the Bank if they forecast, at any point in time, that their total assets will exceed £15 billion and/or 40,000 – 80,000 transactional accounts in the following three years. This is set out in paragraphs 9.7 and 9.10 of the below SoP. In case of questions, please speak to your usual supervisory or resolution authority contact, or email resolution.enquiries@bankofengland.co.uk.

Insurance publications and updates

CP10/22 – Insurance special purpose vehicles: Further updates to authorisation and supervision

12 July 2022

This CP sets out some proposed changes in the PRA’s approach to authorising and supervising Insurance Special Purpose Vehicles (ISPVs).

The proposals in this CP would result in changes to the SS8/17, ‘Authorisation and supervision of insurance special purpose vehicles’.

The CP is relevant to firms who wish to apply for, or have obtained authorisation as, an ISPV. It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with the UK’s onshored Solvency II framework.

This consultation closes on Tuesday 11 October 2022.

CP10/22 – Insurance special purpose vehicles: Further updates to authorisation and supervision

PS6/22 – Solvency II: Definition of an insurance holding company

7 July 2022

This PRA Policy Statement (PS) provides feedback to the responses to CP17/21 ‘Solvency II: definition of an insurance holding company’. It also contains the PRA’s final rules and policy, as follows:

  • amendments to the Glossary Part of the PRA Rulebook; and
  • updates to SS9/15 ‘Solvency II: group supervision’.

This PS is relevant to insurance firms within the scope of the Group Supervision Part of the PRA Rulebook and to the Society of Lloyd’s.

PS6/22 – Solvency II: Definition of an insurance holding company

PRA statement on the recalculation of the Transitional Measure on Technical Provisions (TMTP)

6 July 2022

This statement highlights the PRA’s recent invitation to insurance firms to recalculate the Transitional Measure on Technical Provisions.

PRA statement on the recalculation of the Transitional Measure on Technical Provisions (TMTP)

More information

Bank Underground – a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England or its policy committees.

Bank Overground – the purpose of Bank Overground is to share our internal analysis. Each bite-size post summarises a pieces of analysis that support a policy or operational decision.

KnowledgeBank – from Interest rates and inflation through to bank failures and financial crises, KnowledgeBank uses everyday examples and engaging visuals to bring economics to life.

European and International developments – readers are referred to the following websites:

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