Basel 3.1

Whistlebrook understands that final publication of the remaining parts of the Basel 3.1 regulation, will be published in early September. Although the timing is later than had been originally planned, it is unclear if the implementation date will be delayed. The outstanding contents of Basel 3.1 are:

• Credit risk including the Output Floor
• Reporting
• Pillar 3 disclosures
• PRA Banking Taxonomy 3.7.0

Whistlebrook will make appropriate changes to its WIRES product.

If clients (particularly those using the automated version of WIRES) feel that they will have firm specific, rather than standard requirements, they are encouraged to contact the WIRES Support desk.

Small Domestic Deposit Takers (SDDT) Regime

Publication of the capital requirements is expected along with those for Basel 3.1.

The disclosure requirements for remuneration are effective from the second half of 2024. The rules are applicable to any listed SDDT firm. These institutions firms must complete Pillar 3 template UK REM1.

 

UK Branches of Foreign Headquartered Firms

The Prudential Regulation Authority (PRA) issued consultation paper 11-24. This paper applies to PRA authorised and regulated investment firms and banks. It is proposed that there be new criteria used by the PRA when the deciding whether the UK entity be regulated as a subsidiary or a branch.

The level of retail deposits is one measure that is used to determine how the UK operation is regulated. That level currently takes no account of the amount of the deposits that are not protected. This consultation proposes a new limit be set at a total level (protected and unprotected) of retail and small company demand deposits that can be held by a branch. Above that level (proposed as £300million), an entity will be treated as a subsidiary. Introduction of this threshold will be in Q2 of 2025.

Under the proposal, changes to the branch return will be made so that more information is collected on the overall group’s liquidity position (i.e. Net Stable Funding and Liquidity Coverage). The effective date for the branch return changes is 31^st December 2025.

 

UK Securitisation Regulation

Replacement of the retained EU law will be effective from November 2024. The new UK rules will apply to PRA regulated investment firms, banks and building societies. Broadly speaking, the existing requirements will remain in place. There will be small changes relative to the retained EU law. These amendments include calculation of the retainer that a manufacturer of non-performing exposure securitisations, is required to apply. Rather than the nominal being used, lower amounts (e.g. market value) will be applicable.

 

WIRES Releases

 

Release	Content	Approximate Timing
6.9	Small enhancements and non-critical fault fixes	End August 2024
7.0	Changes for Basel 3.1	The timing is subject to change as it is dependent on publication of the Basel 3.1 final policy statement and taxonomy.

 

This regulatory update is Whistlebrook’s understanding of the position as at 19th August 2024.