Regulation 17 O-SII buffer rates: the FPC framework

(1)

The FPC must establish a framework for O-SII buffer rates in the United Kingdom in accordance with this regulation (“the FPC framework”).

(2)

The FPC framework must contain the following elements—

(a)

a set of criteria for assessing the extent to which the failure or distress of a relevant O-SII might pose a risk to the financial system of the United Kingdom,

(b)

a methodology for measuring those criteria and giving a relevant O-SII a single score in relation to those criteria, and

(c)

in relation to each score that a relevant O-SII may receive, a buffer rate that corresponds to the score.

(3)

For the purposes of paragraph (2)(a)—

(a)

a relevant O-SII is in distress only if it experiences a significant deterioration in its financial situation, and

(b)

the criteria to be specified must each be—

(i)

measurable, and

(ii)

capable of being applied to a relevant O-SII on an individual basis, a sub-consolidated basis and a consolidated basis.

(4)

The only buffer rates that the FPC may specify for the purposes of paragraph (2)(c) are 0%, 1%, 1.5%, 2%, 2.5% and 3%.

(5)

The FPC must ensure that the way in which buffer rates correspond to scores in the FPC framework—

(a)

is clear, precise and unambiguous,

(b)

ensures that a score corresponds to one buffer rate only,

(c)

may not be expressed in terms of a discretion conferred on a person or body (including the FPC), and

(d)

may be expressed by way of a formula, an algorithm, a graph or a table.

(6)

The Bank must publish each element of the FPC framework, together with the FPC’s justification for each element.