CRD 3: Final Rules

PS11/12 – “Strengthening Capital Standards 3” – includes the final rules to implement CRD 3.

The rules largely concern BIPRU 7 (Market Risk) and BIPRU 9 (Securitisation) and are unlikely to have much relevance for most limited licence/limited activity firms, which form the majority of firms subject to BIPRU.

However, tucked away in BIPRU 11.3 (‘Disclosure (Pillar 3)’) there is an enhancement to a firm’s required disclosure policy. BIPRU 11.3.3(2) will be added requiring a firm to have policies for “.. assessing whether its disclosures convey its risk profile comprehensively to market participants”. Where it is concluded that the disclosures do not achieve this requirement then the firm must publicly disclose the necessary information.

BIPRU 11.5 will impose greater disclosure obligations in respect of securitisations and market risk where these are applicable.

The rule changes, which will come into force on 31 December 2012, can be seen in Appendix 1 of PS11/12.

As may be known, CRD 4 is currently in the legislative negotiation process which is expected to have concluded by summer 2012 with implementation from 1 January 2013; the FSA advise that they have not yet set a timetable for UK consultation.

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