OpenLegislation

The Capital Requirements (Amendment) (EU Exit) Regulations 2018

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2018, ISBN 9780111174661

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Regulations laid before Parliament under paragraph 2(2) of Schedule 2 to the European Communities Act 1972 and paragraph 1 of Schedule 7 to the European Union (Withdrawal) Act 2018, for approval by resolution of each House of Parliament.

Exiting The European Union

Financial Services And Markets

Made ***

Coming into force in accordance with regulation 1

The Treasury are a government departmentf1 designated for the purpose of section 2(2) of the European Communities Act 1972f2 in relation to financial services.

The Treasury, in exercise of the powers conferred by section 2(2) of the European Communities Act 1972, and section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018f3, make the following Regulations.

A draft of these Regulations has been approved by a resolution of each House of Parliament in accordance with paragraph 2(2) of Schedule 2 to the European Communities Act 1972 and paragraph 1(1) of Schedule 7 to the European Union (Withdrawal) Act 2018.

Annotations to the whole text

Footnotes

f1

S.I. 2012/1759.

f2

1972 c.68. Section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c.51) and by section 3 of, and the Schedule to, the European Union (Amendment) Act 2008 c.7. By virtue of the amendment of section 1(2) by section 1 of the European Economic Area Act 1993 (c.51), regulations may be made under section 2(2) of the European Communities Act 1972 to implement obligations of the United Kingdom created or arising by or under the Agreement on the European Economic Area signed at Oporto on 2nd May 1993 (Cm 2073) and the Protocol adjusting the Agreement signed in Brussels on 17th March 1993 (Cm 2183). Paragraph 1A was inserted into Schedule 2 by section 28 of the Legislative and Regulatory Reform Act 2006 (c.51). The European Communities Act 1972 is repealed with effect from exit day by section 1 of the European Union (Withdrawal) Act 2018.

f3

2018 c. 16.

Contents

  1. Part 1: Introduction
  2. 1Citation and commencement
  3. 2Interpretation
  4. Part 2: Amendment of secondary legislation: European Communities Act 1972
  5. 32008 Regulations
  6. 42013 Regulations
  7. 52013 Reporting Regulations
  8. 62014 Regulations
  9. Part 3: Amendment of secondary legislation: European Union (Withdrawal) Act 2018
  10. Chapter 1: Amendment of 2008 Regulations
  11. 7Amendments to the Regulated Covered Bonds Regulations 2008
  12. 8Regulation 2 (eligible property)
  13. 9Regulation 41 (notification of the Commission)
  14. Chapter 2: Amendment of 2013 Regulations
  15. 10Amendments to the Capital Requirements Regulations 2013
  16. 11Regulation 2 (interpretation)
  17. 12Regulation 2A (insertion of new paragraph)
  18. 13Regulation 4 (main provisions)
  19. 14Regulation 5 (capital buffers and Article 458 of the capital requirements regulation)
  20. 15Regulations 6 (co-operation within the European System of Financial Supervision) to 17 (Duties to notify EBA and EIOPA)
  21. 16Regulations 18 (general disclosures required of PRA and FCA) to 19 (specific disclosures required of the PRA and FCA)
  22. 17Regulation 20 (determination of the consolidating supervisor)
  23. 18Regulation 21 (assessment of equivalent of consolidated supervision by supervisory authorities in non-EEA states)
  24. 19Regulations 22 (co-ordination and co-operation arrangements) to 33 (colleges of supervisors)
  25. 20Regulation 34 (supervisory powers: own funds)
  26. 21Regulations 34A and 34B (insertion of new paragraphs)
  27. 22Regulation 35 (specific liquidity requirements)
  28. 23Regulation 35A (insertion of new paragraphs)
  29. 24Regulation 36 (employee remuneration)
  30. 25Regulation 37 (diversity practices)
  31. 26Regulation 38 (consultation with the EBA)
  32. 27Regulation 39 (meaning of “permission” and “protected item” in this part)
  33. 28Regulation 45 (misleading the PRA or FCA)
  34. Chapter 3: Amendment of the 2013 Reporting Regulations
  35. 29Amendments to the Capital Requirements (Country-by-Country Reporting) Regulations 2013
  36. 30Regulation 1 (citation, commencement and interpretation)
  37. 31Regulation 2 (ongoing reporting obligation)
  38. 32Regulation 3 (interim reporting obligation)
  39. 33Regulation 5 (prior disclosure: prevention of duplication)
  40. Chapter 4: Amendment of the 2014 Regulations
  41. 34Amendments to the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014
  42. 35Regulation 2 (interpretation)
  43. 36Regulation 6 (exemption for small and medium-sized investment firms)
  44. 37Chapter 1, Part 3 (designated authority and interpretation)
  45. 38Regulation 7 (designated authority)
  46. 39Regulation 8 (meaning of “UK institution”)
  47. 40Regulation 9 (the buffer guide)
  48. 41Regulation 10 (countercyclical buffer rate)
  49. 42Regulation 12 (announcement of changes to the buffer rate)
  50. 43Regulation 12A (insertion of new paragraph)
  51. 44Regulation 14 (buffer rates for EEA exposures)
  52. 45Regulation 15 (buffer rates for exposures outside the EEA)
  53. 46Regulation 17 (date of application of buffer rates)
  54. 47Regulation 18 (announcement of changes to buffer rates)
  55. 48Regulation 20 (exemption for small and medium-sized investment firms)
  56. 49Regulation 21 (designated authority)
  57. 50Regulation 22 (G-SIIs: location and nature)
  58. 51Regulation 23 (identification methodology)
  59. 52Regulation 24 (sub-categories of G-SII and corresponding buffer rates)
  60. 53Regulation 26 (notification, publication and review)
  61. 54Regulation 28 (transitional provision: 1st January 2016 to 31st December 2019)
  62. 55Regulation 29 (designated authority)
  63. 56Regulation 30 (O-SIIs: location and nature)
  64. 57Regulation 31 (identification of O-SIIs)
  65. 58Regulation 32 (notification, publication and review)
  66. 59Regulation 34 (no requirement to maintain an O-SII buffer)
  67. 60Part 5A (Systemic Risk Buffer)
  68. Part 4: Amendment of retained direct EU legislation
  69. Chapter 1: Amendment of the Capital Requirements Regulation
  70. 61Amendments to the Capital Requirements Regulation
  71. 62Article 1 (scope)
  72. 63Article 2 (supervisory powers)
  73. 64Article 4(1) (definitions)
  74. 65Article 4(2) (definitions)
  75. 66Article 4A and 4B (insertion of new paragraphs)
  76. 67Article 6 (general principles)
  77. 68Article 7 (derogation from the application of prudential requirements on an individual basis)
  78. 69Article 8 (derogation from the application of liquidity requirements on an individual basis)
  79. 70Article 9 (individual consolidation method)
  80. 71Article 10 (waiver for credit institutions permanently affiliated to a central body)
  81. 72Article 11 (general treatment)
  82. 73Article 13 (application of disclosure requirements on a consolidated basis)
  83. 74Article 14 (application of requirements of Part Five on a consolidated basis)
  84. 75Article 15 (derogation from the application of own funds requirements on a consolidated basis for groups of investment firms)
  85. 76Article 17 (supervision of investment firms waived from the application of own funds requirements on a consolidated basis)
  86. 77Article 18 (methods for prudential consolidation)
  87. 78Article 19 (entities excluded from the scope of prudential consolidation)
  88. 79Article 20 (joint decisions on prudential requirements)
  89. 80Article 21 (joint decisions on the level of application of liquidity requirements)
  90. 81Article 23 (undertakings in third countries)
  91. 82Article 26 (Common Equity Tier 1 items)
  92. 83Article 27 (capital instruments of mutual, cooperative societies, savings institutions or similar institutions in Common Equity Tier 1 items)
  93. 84Article 28 (Common Equity Tier 1 instruments)
  94. 85Article 29 (capital instruments issued by mutuals, cooperative societies, savings institutions and similar institutions)
  95. 86Article 31 (capital instruments subscribed by public authorities in emergency situations)
  96. 87Article 33 (cash flow hedges and changes in the value of own liabilities)
  97. 88Article 36 (deductions from Common Equity Tier 1 items)
  98. 89Article 38 (deduction of deferred tax assets that rely on future profitability)
  99. 90Article 39 (tax overpayments, tax loss carry backs and deferred tax assets that do not rely on future profitability)
  100. 91Article 49 (requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied)
  101. 92Article 52 (additional Tier 1 instruments)
  102. 93Article 77 (conditions for reducing own funds)
  103. 94Article 78 (supervisory permission for reducing own funds)
  104. 95Article 80 (continuing review of quality of own funds)
  105. 96Article 81 (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital)
  106. 97Article 82 (qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds)
  107. 98Article 84 (minority interests included in consolidated Common Equity Tier 1 capital)
  108. 99Article 85 (qualifying Tier 1 instruments included in consolidated Tier 1 capital)
  109. 100Article 87 (qualifying own funds included in consolidated own funds)
  110. 101Article 89 (risk weighting and prohibition of qualifying holdings outside the financial sector)
  111. 102Article 91 (exceptions)
  112. 103Article 95 (own funds requirements for investment first with limited authorisation to provide investment services)
  113. 104Article 96 (own funds requirements for investment firms which hold initial capital)
  114. 105Article 97 (own funds based on fixed overheads)
  115. 106Article 98 (own funds for investment firms on a consolidated basis)
  116. 107Article 99 (reporting on own funds requirements and financial information)
  117. 108Article 100 (additional reporting requirements)
  118. 109Article 101 (specific reporting requirements)
  119. 110Article 107 (approaches to credit risk)
  120. 111Article 113 (calculation of risk weighted exposure amounts)
  121. 112Article 114 (exposures to central governments or central banks)
  122. 113Article 115 (exposures to regional governments or local authorities)
  123. 114Article 116 (exposures to public sector entities)
  124. 115Article 117 (exposures to multilateral development banks)
  125. 116Article 118 (exposures to international organisations)
  126. 117Article 119 (exposures to institutions)
  127. 118Article 123 (retain exposures)
  128. 119Article 124 (exposures secured by mortgages on immovable property)
  129. 120Article 125 (exposures fully and completely secured by mortgages on residential property)
  130. 121Article 126 (exposures fully and completely secured by mortgages on commercial immovable property)
  131. 122Article 128 (items associated with particular high risk)
  132. 123Article 129 (exposures in the form of covered bonds)
  133. 124Article 132 (exposures in the form of units or shares in CIUs)
  134. 125Article 134 (other items)
  135. 126Article 135 (use of credit assessments by ECAIs)
  136. 127Article 138 (general requirements)
  137. 128Article 142 (definitions)
  138. 129Article 150 (conditions for permanent partial use)
  139. 130Article 154 (risk weighted exposure amounts for retail exposures)
  140. 131Article 160 (probability of default)
  141. 132Article 162 (maturity)
  142. 133Article 164 (loss given default)
  143. 134Article 178 (default of an obligor)
  144. 135Article 192 (definitions)
  145. 136Article 197 (eligibility of collateral under all approaches and methods)
  146. 137Article 199 (additional eligibility for collateral under the IRB Approach)
  147. 138Article 201 (eligibility of protection providers under all approaches)
  148. 139Article 202 (eligibility of protection providers under the IRB Approach which qualify for the treatment set out in Article 153(3))
  149. 140Article 212 (requirements for other funded credit protection)
  150. 141Article 224 (supervisory volatility adjustment under the Financial Collateral Comprehensive Method)
  151. 142Article 227 (conditions for applying a 0% volatility adjustment under the Financial Collateral Comprehensive Method)
  152. 143Article 229 (valuation principles for other eligible collateral under the IRB approach)
  153. 144Article 230 (calculating risk-weighted exposures amounts and expected loss amounts for other eligible collateral under the IRB Approach)
  154. 145Article 277 (transactions with a linear risk profile)
  155. 146Article 290 (stress testing)
  156. 147Article 292 (integrity of the modelling process)
  157. 148Article 295 (recognition of contractual netting as risk-reducing)
  158. 149Article 296 (recognition of contractual netting agreements)
  159. 150Article 299 (items in the trading book)
  160. 151Article 311 (own funds requirements for exposures to CCPs that cease to meet certain conditions)
  161. 152Article 312 (permission and notification)
  162. 153Article 315 (own funds requirement)
  163. 154Article 316 (relevant indicator)
  164. 155Article 317 (own funds requirement)
  165. 156Article 323 (impact of insurance and other risk transfer mechanisms)
  166. 157Article 325 (allowances for consolidated requirements)
  167. 158Article 327 (netting)
  168. 159Article 329 (options and warrants)
  169. 160Article 336 (own funds requirements for non-securitisation debt instruments)
  170. 161Article 340 (duration-based calculation of general risk)
  171. 162Article 344 (stock indices)
  172. 163Article 349 (general criteria for CIUs)
  173. 164Article 354 (closely correlated currencies)
  174. 165Article 365 (VaR and stressed VaR calculation)
  175. 166Article 372 (requirement to have an internal IRC model)
  176. 167Article 377 (requirements for an internal model for correlation trading)
  177. 168Article 382 (scope)
  178. 169Article 383 (advanced method)
  179. 170Article 391 (definition of an institution for large exposures purposes)
  180. 171Article 395 (limits to large exposures)
  181. 172Article 396 (compliance with large exposures requirements)
  182. 173Article 400 (exemptions)
  183. 174Article 402 (exposures arising from mortgage lending)
  184. 175Article 411 (definitions)
  185. 176Article 412 (liquidity coverage requirements)
  186. 177Article 413 (stable funding)
  187. 178Article 415 (reporting obligation and reporting format)
  188. 179Article 416 (reporting on liquid assets)
  189. 180Article 419 (currencies with constraints on the availability of liquid assets)
  190. 181Article 420 (liquidity outflows)
  191. 182Article 421 (outflows on retail deposits)
  192. 183Article 422 (outflows on other liabilities)
  193. 184Article 424 (outflows from credit and liquidity facilities)
  194. 185Article 425 (inflows)
  195. 186Article 427 (items providing stable funding)
  196. 187Article 428 (items requiring stable funding)
  197. 188Article 429 (calculation of the leverage ratio)
  198. 189Article 430 (reporting requirement)
  199. 190Article 432 (non-material, proprietary or confidential information)
  200. 191Article 433 (frequency of disclosure)
  201. 192Article 436 (scope of application)
  202. 193Article 438 (capital requirements)
  203. 194Article 440 (capital buffers)
  204. 195Article 441 (indicators of global systemic importance)
  205. 196Article 443 (unencumbered assets)
  206. 197Article 444 (use of ECAIs)
  207. 198Article 450 (remuneration policy)
  208. 199Article 452 (use of the IRB Approach to credit risk)
  209. 200Heading of Part 9
  210. 201Article 458 (macroprudential or systemic risk identified at the level of a Member State)
  211. 202Article 462 (exercise of the delegation)
  212. 203Article 463 (objections to regulatory technical standards)
  213. 204Article 464 (European Banking Committee)
  214. 205Article 464A and 464B (insertion of new paragraphs)
  215. 206Article 473a (introduction of IFRS 9)
  216. 207Article 483 (grandfathering of State aid instruments)
  217. 208Article 484 (eligibility for grandfathering of items)
  218. 209Article 485 (eligibility for inclusion in Common Equity Tier 1)
  219. 210Article 493 (transitional provisions for large exposures)
  220. 211Article 497 (own funds requirements for exposures to CCPs)
  221. 212Article 498 (exemption for Commodities dealers)
  222. 213Article 501 (capital requirements deduction for credit risk on exposures to SMEs)
  223. 214Article 502 to 519 (reports and reviews)
  224. 215Article 521 (entry into force and date of application)
  225. 216Article 522 (insertion of new paragraph)
  226. 217Annex I (classification of off-balance sheet items)
  227. 218Annex II (types of derivative)
  228. 219Annex III (items subject to supplementary reporting of liquid assets)
  229. Chapter 2: Amendment of Capital Requirements Regulation to transfer powers to the Treasury
  230. 220General transfer of powers to the Treasury
  231. 221Specific transfer of powers to the Treasury
  232. Chapter 3: Amendment of Capital Requirements Regulation to transfer powers to the FCA and PRA
  233. 222European Supervisory Authorities’ functions in the Capital Requirements Regulation transferred to both the FCA and PRA
  234. 223European Supervisory Authorities’ functions in the Capital Requirements Regulation transferred to only the PRA
  235. 224Other functions transferred
  236. 225Amendment to use of term “competent authorities”
  237. Chapter 4: Amendment of Liquidity Commission Delegated Regulation
  238. 226Amendments to the Liquidity Commission Delegated Regulation
  239. 227Article 2 (scope and application)
  240. 228Article 3 (definitions)
  241. 229Article 4 (the liquidity coverage ratio)
  242. 230Article 7 (general requirements for liquid assets)
  243. 231Article 8 (operational requirements)
  244. 232Article 10 (level 1 assets)
  245. 233Article 11 (level 2A assets)
  246. 234Article 12 (level 2B assets)
  247. 235Article 16 (deposits and other funding in cooperative networks and institutional protection schemes)
  248. 236Article 19 (alternative liquidity approaches)
  249. 237Article 23 (additional liquidity outflows for other products and services)
  250. 238Article 24 (outflows from stable retail deposits)
  251. 239Article 25 (outflows from other retail deposits)
  252. 240Article 26 (outflows with inter-dependent inflows)
  253. 241Article 27 (outflows from operational deposits)
  254. 242Article 28 (outflows from other liabilities)
  255. 243Article 29 (outflows within a group or an institutional protection scheme)
  256. 244Article 30 (additional outflows)
  257. 245Article 31 (outflows from credit and liquidity facilities)
  258. 246Article 32 (inflows)
  259. 247Article 33 (cap on inflows)
  260. 248Article 34 (inflows within a group or an institutional protection scheme)
  261. 249Article 35 (grandfathering of Member State-guaranteed bank assets)
  262. 250Article 36 (transitional provision for Member State-sponsored impaired asset management agencies)
  263. 251Final provision
  264. Chapter 5: Amendment of G-SII Commission Delegated Regulation
  265. 252Amendments to the G-SII Commission Delegated Regulation
  266. 253Article 3 (common parameters for the methodology)
  267. 254Final provision
  268. Signature
  269. Explanatory note