On June 28, 2018, following a consultation in October 2017 which closed on January 4, 2018, the U.K. Prudential Regulation Authority published a Policy Statement on changes to its large exposures framework.
The Policy Statement sets out the PRA's feedback on the responses received to its consultation. Respondents were largely supportive of the proposals. The PRA is implementing its proposals largely as consulted on, with only minor changes. The Policy Statement outlines the changes as follows:
- Changes to the relevant part of the PRA Rulebook on large exposures and regulatory reporting—the text of the changes is set out in a PRA Rulebook Instrument, "CRR Firms: Large Exposures Amendment Instrument."
- An update to the PRA's supervisory statement on large exposures (SS16/13) to reflect the PRA's expectations on the resolution exemption and to provide additional guidance to firms on Core U.K. Group and Non-core Large Exposures Group permissions.
- An update to the PRA's supervisory statement, Guidelines for completing regulatory reports (SS34/15), to remove the requirement to submit the U.K. integrated groups—large exposures data item (FSA018).
The Policy Statement also contains a simplified worked example of the application of the large exposures limits at the level of the U.K. consolidated group when the firm has a NCLEG permission.
The changes to the rules and updates to the supervisory statements took effect on June 29, 2018.
The Policy Statement (PRA PS 14/18) is available at: https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/policy-statement/2018/ps1418.pdf, the PRA Rulebook Instrument: CRR Firms: Large Exposures Amendment Instrument 2018 (PRA 2018/14) is available at: https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/policy-statement/2018/ps1418app1.pdf, the update to Supervisory Statement SS16/13: Large Exposures is available at: https://www.bankofengland.co.uk/prudential-regulation/publication/2013/large-exposures-ss, the update to Supervisory Statement SS34/15: Guidelines for completing regulatory reports is available at: https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2018/ss3415update-june-2018.pdf and details of the October 2017 consultation are available at: https://finreg.shearman.com/uk-prudential-regulation-authority-consults-on-ch.
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