PS27/21 | CP15/21 – Designating investment firms

Policy Statement 27/21 | Consultation Paper 15/21
Please note: Due to the short nature of Policy Statement (PS) 27/21, we have presented the text on this webpage, without a separate document. You can use the ‘Convert this page to PDF’ button below to create a copy.

Published on 15 December 2021

PS27/21 – Designating investment firms

Introduction

This Prudential Regulation Authority (PRA) Policy Statement (PS) provides the PRA’s final update to its Statement of Policy (SoP) ‘Designation of investment firms for prudential supervision by the PRA’ (Appendix 1), and the PRA’s final rule in the Definition of Capital Part of the PRA Rulebook (Appendix 2) following Consultation Paper (CP) 15/21 ‘Designating investment firms’ (see page 2 of 2). 

The PRA received no responses to the consultation.

This PS is relevant to all PRA-designated UK investment firms. 

Background

In CP15/21, the PRA proposed to amend the SoP on the designation of investment firms to:

  1. reflect HM Treasury’s proposed amendments to the PRA-regulated Activities Order (PRA RAO), including the change in the scope of the firms that can be designated. (The PRA RAO has now been amended. Please see Part 3, Section 15 of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021, which were laid before Parliament on Thursday 28 October 2021: The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021)
  2. explain that there will usually be six months, rather than three months, between the Prudential Regulation Committee designating an investment firm and it becoming PRA-regulated;
  3. note that the PRA will take into account whether or not an investment firm is a clearing member of a central counterparty offering clearing services to other financial institutions (that are not clearing members themselves) when making a designation decision; and
  4. delete any obsolete text and make other minor textual amendments.

The CP also proposed to change the Definition of Capital Part of the PRA Rulebook to increase the base capital resources requirement for designated investment firms from €730,000 to £750,000 and to denominate it in Sterling.

The PRA has made no changes to the draft policy. However, it has updated the document formatting in order to bring it in line with current publication standards. This has resulted in minor changes to the paragraph numbering.

Implementation

The policy presented in this PS will take effect on Saturday 1 January 2022.

References related to the UK’s membership of the EU in the policy in this PS have been updated as part of these proposals, to reflect the UK’s withdrawal from the EU. Unless otherwise stated, any references to EU or EU-derived legislation refer to the version of that legislation which forms part of retained EU law. For further information, please see Transitioning to post-exit rules and standards.

Appendix

Appendix 1: Update to Statement of Policy ‘Designation of investment firms for prudential supervision by the PRA’ 
Appendix 2: PRA RULEBOOK: CRR FIRMS: INVESTMENT FIRMS PRUDENTIAL REGIME INSTRUMENT 2021 

Note: All content for this PS is included on this webpage. If you would like a PDF version of the PS, please use the ‘Convert to PDF’ button available below. 


Published on 5 July 2021

CP15/21 – Designating investment firms

Overview

This Consultation Paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals to make minor changes to its policy on designating investment firms. This includes a proposal to increase the base capital resources requirement for PRA-designated investment firms, thereby aligning it with changes to the same requirement for firms undertaking the same type of business that are only regulated by the Financial Conduct Authority (FCA) and not by the PRA – ‘solo-regulated’ firms.  

The proposals in this CP would result in amendments to: 

  • the Statement of Policy (SoP) ‘Designation of investment firms for prudential supervision by the PRA’ (Appendix 1); and 
  • the Definition of Capital Part of the PRA Rulebook (Appendix 2).  

The CP is relevant to all PRA-designated UK investment firms. 

Implementation

The PRA proposes that the changes resulting from this CP would take effect on Saturday 1 January 2022.

Responses and next steps

This consultation closes on Tuesday 5 October 2021. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP15_21@bankofengland.co.uk.

The proposals set out in this CP have been designed in the context of the UK having left the European Union and the transition period having come to an end. Unless otherwise stated, any references to EU or EU-derived legislation refer to the version of that legislation which forms part of retained EU law.

Consultation Paper 15/21

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