Prudential Regulation Authority Rulebook

1.

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2.

Where the justified needs for liquid assets in light of the requirement in Article 412 are exceeding the availability of those liquid assets in a currency, one or more of the following derogations shall apply:

1. (a) by way of derogation from point (f) of Article 417, the denomination of the liquid assets may be inconsistent with the distribution by currency of liquidity outflows after the deduction of inflows;
2. (b) for currencies of third countries, required liquid assets may be substituted by credit lines from the central banks which are contractually irrevocably committed for the next 30 days and are fairly priced, independent of the amount currently drawn, provided that the competent authority of the third country has a publicly disclosed liquidity framework which provides for the same alternative option as this paragraph (b) and provided that the third country has comparable reporting requirements in place;
3. (c) where there is a deficit of level 1 assets, additional level 2A assets may be held by the institution, subject to higher haircuts, and any cap applicable to those assets in accordance with Chapter 2 of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook may be amended.

3.

The derogations applied in accordance with paragraph 2 shall be inversely proportional to the availability of the relevant assets. The justified needs of institutions shall be assessed taking into account their ability to reduce, by sound liquidity management, the need for those liquid assets and the holdings of those assets by other market participants.

4.

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5.

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[Note: This rule corresponds to Article 419 of the CRR as it applied immediately before revocation by the Treasury.]