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Home > Prudential Regulation Authority > Ensuring operational continuity in resolution – PS21/16
 

Ensuring operational continuity in resolution – PS21/16

07 July 2016

Overview

This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to Consultation Paper (CP) 38/15 ‘Ensuring operational continuity in resolution’ and the addendum to CP38/15 (henceforth CP38/15).

In CP38/15, the PRA consulted on rules and a supervisory statement aimed at ensuring firms’ operational arrangements facilitate continuity of critical services supporting functions critical to the economy in resolution. The appendices to this PS set out final rules and a supervisory statement to implement the proposals consulted on in CP38/15.

This PS is relevant to PRA-authorised banks, building societies and investment firms (hereinafter ‘firms’) which have or receive critical services supporting functions critical to the economy that need to be continued in resolution. The conditions for application of the rules is set out in rule 1.1 of the Operational Continuity Part, in Appendix 2 of this PS. Firms above the thresholds in rule 1.1 are expected to have critical services supporting functions critical to the economy that need to continue in resolution.

The PRA has made a change to the financial resilience expectations set out in the draft supervisory statement. The PRA has removed the capital expectation as set out in the supervisory statement and instead the Bank of England, as resolution authority, will consider whether a loss absorbing capacity should be allocated within groups to ensure operational continuity, as part of the minimum requirement for own funds and eligible liabilities (MREL) regime. Chapter 2 of this PS sets out further detail on the change.

O
verall, the PRA does not consider that the responses received to other areas of CP38/15 necessitate significant changes to its proposals. The PRA has however made minor amendments to the proposed rules and supervisory statement consulted on in CP38/15 in light of feedback received, mainly to add further clarity.

Other publications

The PRA has also published the policy statement providing feedback on responses received to CP37/15 ‘The implementation of ring-fencing: prudential requirements, intragroup arrangements and use of financial market infrastructures’. PS21/16 sets out the final rules and supporting policy to implement the proposals consulted on in CP37/15, and the near-final rules and supervisory statements set out in PS10/15.

The PRA has also published a further consultation on the PRA’s proposed ring-fencing policy CP25/16 ‘The implementation of ring-fencing: reporting and residual matters’. CP25/16 sets out the PRA’s proposals in relation to the data it intends to collect in respect of ring-fencing and residual ring-fencing policy matters following publication of CP37/15, including the PRA’s operational continuity policy in respect of access to financial market infrastructures (FMI).

For further details see ‘Structural reform policy published 7 July’ under Related Links.

Policy statement

Ensuring operational continuity in resolution – PS21/16

Appendices
 
  1. Ensuring operational continuity – SS9/16
  2. PRA RULEBOOK: CRR FIRMS: OPERATIONAL CONTINUITY INSTRUMENT 2016

 
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