Prudential Regulation Authority Rulebook

For the purposes of Chapter 2 of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook, the following definitions shall apply:

1. (1) 'level 1 assets' means assets of extremely high liquidity and credit quality as referred to in Article 10;
2. (2) 'level 2 assets' means assets of high liquidity and credit quality and further subdivided into level 2A and 2B assets in accordance with Articles 11 and 12;
3. (3) 'liquidity buffer' means the amount of liquid assets that a credit institution holds in accordance with Title II (The Liquidity Buffer);
4. (4) 'reporting currency' means the currency in which the liquidity items referred to in Titles II and III of Part Six of CRR must be reported to the competent authority in accordance with Article 415(1) of CRR;
5. (5) 'asset coverage requirement' means the ratio of assets to liabilities as determined for credit enhancement purposes in relation to covered bonds by the national law of the United Kingdom or a third country;
6. (7) 'net liquidity outflows' means the amount which results from deducting a credit institution's liquidity inflows from its liquidity outflows in accordance with Title III (Liquidity outflows and inflows);
7. (9A) 'UK deposit guarantee scheme' means the depositor protection part of the Financial Services Compensation Scheme established under section 213 of FSMA;
8. (10) 'personal investment company' ('PIC') means an undertaking or a trust whose owner or beneficial owner, respectively, is a natural person or a group of closely related natural persons, which was set up with the sole purpose of managing the wealth of the owners and which does not carry out any other commercial, industrial or professional activity. The purpose of the PIC may include other ancillary activities such as segregating the owners' assets from corporate assets, facilitating the transmission of assets within a family or preventing a split of the assets after the death of a member of the family, provided these are connected to the main purpose of managing the owners' wealth;
9. (11) 'stress' (or 'stressed') means a sudden or severe deterioration in the solvency or liquidity position of a credit institution due to changes in market conditions or idiosyncratic factors as a result of which there is a significant risk that the credit institution becomes unable to meet its commitments as they fall due within the next 30 calendar days;
10. (12) 'margin loans' means collateralised loans extended to customers for the purpose of taking leveraged trading positions.
11. (13) [Note: Provision left blank]
12. (14) [Note: Provision left blank]
13. (15) [Note: Provision left blank]
14. (16) [Note: Provision left blank]

[Note: This rule corresponds to Article 3 of Regulation (EU) No 2015/61 as it applied immediately before revocation by the Treasury.]