HM Treasury Publishes Amendments to UK Capital Requirements Regulation09/23/2021HM Treasury has made certain amendments under the U.K. Capital Requirements Regulation (Amendment) Regulations 2021 to the U.K. Capital Requirements Regulation. The UK CRR is the U.K. version of the corresponding EU regulation, as applicable after Brexit. The new regulations introduce some new provisions and revoke certain others. The related explanatory memorandum describes the changes in further detail. The changes will come into force on January 1, 2022.
The EU had enacted various amendments to the CRR which, at the time of Brexit, were not yet in force. At the same time, the U.K. is in the process of "pushing down" more technical EU legislation into the rulebook of UK regulators. The majority of the revoked provisions in the new regulations will be replaced by updated rules introduced by the U.K. Prudential Regulation Authority to reflect standards introduced by the Basel Committee on Banking Supervision that were not in force at the time the U.K. onshored the EU Capital Requirements Regulation. Some of the revoked provisions will not be replaced, for instance because the PRA can use other powers to achieve a similar effect, the provisions are subject to delayed commencement and so do not currently impose obligations on firms or the provisions are time limited and will no longer be needed by the time the new PRA rules are introduced.
HM Treasury will also make the following amendments to U.K. CRR:
- HM Treasury will be granted the indefinite ability to extend, for a period of one year at a time, the transitional period during which central counterparties who submitted applications for qualifying CCP recognition prior to the end of the Brexit implementation period can be treated as QCCPs while their applications are being considered;
- In order to grant HM Treasury enough time to extend equivalence decisions under Article 391 of U.K. CRR (relating to the definition of an institution for large exposures purposes) to appropriate third countries, HM Treasury will maintain the effect of the EU’s regime that grants equivalence under Article 391 for institutions that have been deemed equivalent under other CRR articles for a transitional period. The transitional period will end when either HM Treasury makes an equivalence decision under Article 391 or Article 391 is amended. In addition, existing overseas equivalence decisions made by HM Treasury in respect of Article 107 of U.K. CRR (relating to approaches to credit risk) will also apply for the purposes of Article 391, as the equivalence assessments for both articles are identical.
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