UK Prudential Regulation Authority Consults on Waiving Disclosure Requirements

The Prudential Regulation Authority has launched a consultation on compliance with the European Banking Authority's guidelines on disclosure of the composition of collateral for exposures to counterparty credit risk.

The EBA published final Guidelines on compliance with the regulatory disclosure requirements in the Capital Requirements Regulation on December 14, 2016. The EBA's Guidelines aim to ensure harmonized implementation of the Basel III Pillar 3 requirements that were released in January 2015. The Guidelines introduce specific guidance and formats for Pillar 3 disclosures, including tables and templates. The Guidelines apply to Globally and Other Systemically Important Institutions. However, national regulators are able to require other firms to apply the Guidelines when complying with their Pillar 3 disclosure obligations under CRR.

The EBA Guidelines include the template CCR5-B, which requires firms to disclose the composition of collateral received and posted by collateral type as well as additional information for derivative and structured finance type. National regulators are permitted to waive this disclosure requirement, where a publicly disclosed threshold and criteria are met, because it has the potential to show the existence of central bank liquidity assistance provided in the form of collateral swaps.

The PRA is proposing to waive the disclosure requirement. The draft Supervisory Statement in the appendix of the consultation paper sets out the proposed waiver condition and the PRA's expectations relating to firms' monitoring of the waiver condition and discretion regarding disclosure.

The PRA is also proposing to remove and repeal Supervisory Statement "CRD IV: compliance with the European Banking Authority's Guidelines on disclosure of encumbered and unencumbered assets" (SS 11/14). The EBA Guidelines include a similar waiver to that discussed above. These EBA Guidelines will be replaced by the new Regulatory Technical Standards on disclosure of encumbered and unencumbered assets, once the RTS are finalized. The disclosure template in the draft RTS include a specific mechanism to ensure that detection of central bank assistance is avoided.

Responses to the consultation are due by August 21, 2017.

View the consultation paper.

View the EBA's Guidelines on regulatory disclosure requirements.

View the PRA's Supervisory Statement (SS 11/14).

View the final draft RTS.

View the EBA Guidelines on encumbered and unencumbered assets.