On 10 October 2014, the European Commission published a delegated act to supplement EU Regulation (EU) No 575/2013 (‘Delegated Act’) with regard to the liquidity coverage requirement (LCR) for credit institutions. This legislation is due to enter into force by 31 December 2014. It will be directly applicable in the United Kingdom from 1 October 2015. In light of this, the PRA must revoke existing rules where appropriate, and restate its overall approach to regulating liquidity.
This consultation is relevant to UK banks, building societies and UK designated investment firms (‘firms’). It is also relevant to third country firms that are banks or designated investment firms, and European Economic Area credit institutions that have a branch in the United Kingdom.
Summary of the proposals covered by the CP
This CP seeks views on draft rules and a draft supervisory statement which set out the PRA’s proposed update to its liquidity regime.
The CP is structured as follows:
- Section I details how the PRA proposes to carry out the transition to its new liquidity regime, taking into account the Delegated Act that will apply from 1 October 2015.
- Section II explains the requirements the PRA proposes to place on firms beyond meeting the LCR.
- Section III details the elements of the PRA’s proposed new regime which will not be covered by EU legislation.
- Section IV contains a cost benefit analysis of the proposals.
Appendices to CP27/14 include a draft supervisory statement: The PRA’s approach to supervising liquidity and funding risk, draft rules and the mapping of BIPRU 12 rules to the Internal Liquidity Adequacy Assessment (ILAA) Part of the PRA Rulebook.
This consultation closed on Friday 27 February 2015.
Please address any comments or enquiries (structured by chapter) to CP27_14@bankofengland.co.uk
The PRA intends to publish a policy statement with feedback, final rules and a supervisory statement in 2015 Q2.
CRD IV: Liquidity - CP27/14
Policy statement with feedback, final rules and supervisory statement
On 8 June 2015, the PRA published its policy statement with final rules and a supervisory statement.
CRD IV: Liquidity – PS11/15