UK:
Financial Policy Committee Given Certain Macro-Prudential Powers Of Direction
14 April 2015
Shearman & Sterling LLP
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On March 25, 2015, UK legislation was enacted which gives the
BoE's FPC power to issue directions to the PRA and the FCA for
certain macro-prudential measures. The FPC will be able to give a
direction to (i) specify a minimum leverage ratio for UK banks and
PRA-designated UK investment firms; (ii) require UK banks and
PRA-designated UK investment firms for which the PRA sets a
strategic risk buffer to also maintain an additional leverage ratio
specified by the FPC; (iii) require globally systemically important
institutions to hold sufficient Tier 1 capital to satisfy an
additional leverage ratio specified by the FPC; and (iv) require UK
banks and PRA-designated UK investment firms to hold sufficient
capital to maintain a countercyclical leverage buffer. The
legislation comes into force on April 6, 2015, except for the power
of direction for firms required to hold a strategic risk buffer
which comes into force on January 1, 2019.
The legislation is available at: http://www.legislation.gov.uk/uksi/2015/905/pdfs/uksi_20150905_en.pdf.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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