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UK Regulators issue “Guidance” on securities settlement risk

On 2 June 2021, the PRA and FCA published an open letter reviewing good practice in relation to the commonly-used Delivery vs Payment (DVP) mechanism. DVP is a long-standing market convention, requiring that cash payment for securities is made either very shortly before or simultaneous with delivery of securities. Although an effective mitigant for a […]

PRA finalises 3rd country stay

On 13 November 2015 the PRA published a Policy Statement containing the final rules for contractual stays in financial contracts governed by third-country law. The rules are the offspring of Consultation paper CP 19/15; their intention is to suspend the 3rd country termination and close-out rights of counterparties to a UK entity that has entered […]

The Old Lady of Threadneedle Street rejuvenated

I count myself lucky to have attended yesterday’s Bank of England Open Forum 2015 as the DRS delegate. In the Guildhall’s Grand Hall (with parallel events in Birmingham and Edinburgh), the Bank bravely convened a cross-section of the great and the good from both the City and Civil society for a wide-ranging series of discussions […]

BoE roundtrip on CCP interoperability arrangements

On 15 July 2015, the Bank of England published the summary of feedback received and policy response to the implementation of ESMA’s Guidelines and Recommendations on CCP interoperability arrangements. The Consultation Paper was published on 20 November 2014, seeking comments on a shortlist of five specific issues. The paper noted that the market practice essentially followed […]

Bye-Bye Bonus

The PRA and the FCA have today issued a joint statement outlining far-reaching changes to remuneration policy. PS 15/16: Strengthening the Alignment of Risk and Reward: New Remuneration Rules aims to improve risk-reward alignment, deter the irresponsible and short-term appetite for risk, and to encourage effective risk-management. The rules will apply to FCA-regulated banks and […]

BoE recognises CCPs as TBTF

The Bank of England yesterday announced that it is widening access to its Sterling Monetary Framework to include broker-dealers and CCPs. “Specifically, from today, those broker-dealers deemed critical to the stability of the UK financial system (designated investment firms) and CCPs that operate in UK markets and are either authorised under EMIR or recognised by […]

EU on benchmarks – L’Enfer, c’est les autres

On 27 October 2014, the Fair and Effective Markets Review (FEMR) in the UK published a consultation paper on fixed income, currency and commodities (FICC) markets, with a section dedicated to benchmarks. The Review is led by staff from the HM Treasury, the Bank of England and the FCA. On the same day, the Council […]

LME Clear-ed for lift off

LME Clear, the newly-established clearing house of the LME, has received BoE approval as a CCP under EMIR. The Bank’s authorisation was the final hurdle to clear, following the 28 July approval by European central banks and regulators. LME Clear will offer clearing of all the exchanges derivative products from 22 September 2014. The LME […]

ISDA early termination to be suspended

On 6 August 2014, 11 US banks received a reminder by their regulators that the rights on early termination in their ISDA Master Agreements will require material changes in order to provide credibility for their living wills. This comment likely applies to every institution which is required to produce a living will under the Dodd-Frank […]

Clawback declawed?

As reported everywhere with banker-bashing glee, the PRA yesterday published its final rule on clawback. The final formulation reflects feedback received in response to the Clawback Consultation Paper (CP6/14); contrary to most cursory readings, either celebrating or bemoaning the draconian aspects of the rule; the final formulation represents a climb-down from the original proposal. While […]

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