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Senior managers school report – ‘could do better’

The FCA’s recently published Stocktake Report reviewing the implementation of the Senior Managers and Certification Regime (SM&CR) is a polite criticism of senior managers and their superiors in the banking sector. The report consisted of interviews with trade associations, Banking Standards Board, FCA and the PRA to understand how SM&CR has been implemented since it […]

FFX Margin- all that is solid melts into air

A brief spotlight through the fog swirling around the upcoming obligation to exchange margin on forward foreign exchange. There was a widespread, if only whispered, expectation that a 7/8 November ESMA Board of Supervisors meeting would result in an official announcement of forbearance. While the EU has no equivalent mechanism to the CFTC’s enthusiastic use […]

Approaching Terminal Complexity? ISDA Publishes JMP

Introduction On 3 May 2016 The International Swaps and Derivatives Association (ISDA) launched the “ISDA Resolution Stay Jurisdictional Modular Protocol” (the “JMP”).  The JMP is designed to enable market participants to comply with regulations in a number of jurisdictions which, broadly, require banks to obtain consent from their counterparties for the inclusion of statutory stays […]

The Impracticability of Contractual Bail-In

Introduction Article 55 of the BRRD requires Member States to ensure that in-scope institutions include a contractual term by which the creditor or party to the agreement creating a liability recognises that the liability in question may be subject to the write-down and conversion powers within the BRRD and agrees to be bound by any […]

Art 55 BRRD- PRA no action permanent

The PRA yesterday issued a consultation paper (CP)proposing to make permanent its time-limited 25 November 2015 waiver of Article 55 BRRD compliance, in respect of phase 2 liabilities. The waiver took effect via modification by consent, the consent being that of the PRA. If granted, the modification is valid until the earlier of 30 June 2016, […]

Art. 55 BRRD – No-Action Letter Brit-style

The PRA has today issued a short-term waiver in respect of phase 2 liabilities under its transposition of Article 55 BRRD. Its rules require firms to amend contracts with 3rd country counterparties, to include a term that subordinates liabilities to the Bank’s resolution authority, a contractual recognition of bail-in. The requirement was imposed via a […]

Taking the Shine off the Silver Bullet – PRA Provides Gentle Warning Against Over-Reliance on ISDA Resolution Stay Protocol

On 13 November the PRA published its policy statement and supervisory statement containing final rules requiring contractual stays in financial contracts governed by third country law (see this blog post for more detail).  The policy statement requires firms to amend “financial arrangements” entered into, or materially amended, after the relevant effective dates.[1] Whilst the PRA […]

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 […]

US Prudential Regulators finalise non-cleared margin rules

Two of the US prudential regulators[1], the FDIC and the OCC, have voted to jointly adopt final rules regarding the exchange of initial and variation margin for uncleared swaps. The rules will apply to entities that are i) under the supervision of a prudential regulator ii) have registered with the CFTC or SEC as a […]

PRA Consults on O-SII Identification

On 19 October 2015, the Prudential Regulation Authority (PRA) published a consultation paper detailing the criteria and scoring methodology it proposes to use to identify “other systemically important institutions” (O-SIIs)[1] – firms whose distress or failure would have a systemic impact on the UK or the EU economy or financial system.  The consultation period remains […]

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