1
Application and Definitions
1.1
Unless otherwise stated, this Part applies to:
- (1) a CRR firm in relation to its:
- (a) UK activities; and
- (b) [deleted.]
- (c) other activities wherever they are carried on, in a prudential context; and
- (2) a third country CRR firm in relation to its activities carried on from an establishment in the UK.
- 31/12/2020
1.2
This Part applies:
- (1) in relation to regulated activities;
- (2) in relation to the regulated activity, specified in Article 14 of the Regulated Activities Order (Dealing in investments as principal), disregarding the exclusion in Article 15 of the Regulated Activities Order (Absence of holding out etc.);
- (3) in relation to ancillary activities and (in relation to MiFID business) ancillary services;
- (4) in relation to the carrying on of unregulated activities in a prudential context; and
- (5) taking into account activities of other members of a group of which the firm is a member.
- 01/07/2015
1.3
The changes to this rule are effective from 23:00 on 31/12/2020.
(1) In this Part, the following definitions shall apply:
means the method for calculating the size of a firm’s on- and off-balance- sheet derivative business set out in Article 273(a)(3) of CRR amended by point (73) of CRR2.
means
- (1) (in relation to a body corporate incorporated in the UK under the Companies Acts) the accounting reference date of that body corporate determined in accordance with section 391 of the Companies Act 2006; or
- (2) (in relation to any other body) the last day of its financial year.
means the arithmetic mean of the firm’s total assets over its last four accounting reference dates.
means that part of an employee’s variable remuneration:
- (a) agreed in any contracts relating to the commencement of employment with, or provision of services to, a new firm; and
- (b) the aggregate value of which is less than or equal to such unvested variable remuneration:
- (i) in the employee’s contracts relating to the employee’s employment with, or provision of services to, a previous firm, and
- (ii) which terminated when the employee left employment with, or ceased to provide services to, the previous firm.
means the information provided by a firm to a previous firm in accordance with 15A.5.
means an institution or financial institution which is:
- (1) an undertaking responsible for consolidation;
- (2) a subsidiary of the undertaking responsible for consolidation; or
- (3) where the consolidation group contains a PRA designated institution, a subsidiary of the UK parent financial holding company or UK parent mixed financial holding company by which the PRA designated institution is controlled.
has the meaning provided in Article 3 of the Material Risk Takers Regulation.
means Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019.
has the meaning in section 421 FSMA.
means an employee (of a firm or of any consolidation group entity) whose total annual remuneration is €1 million or more per year or its equivalent in another currency determined by reference to the conversion rate applicable to the corresponding High Earners Report under Chapter 18.
means the report by which a firm provides to the PRA the information required in Chapter 18.
higher paid material risk taker
means a material risk taker:
- (a) whose annual variable remuneration exceeds 33% of their total remuneration, and
- (b) whose total remuneration exceeds £500,000.
has the meaning provided in point 146 of Article 4 of the CRR.
has the meaning provided in Article 2 of the Material Risk Takers Regulation.
has the meaning provided in Article 4 of the Material Risk Takers Regulation.
has the meaning given in 3.1.
Material Risk Takers Regulation
means the draft regulatory technical standards on criteria to define managerial responsibility and control functions, a material business unit and a significant impact on its risk profile, and categories of staff whose professional activities have a material impact on an institution’s risk profile published by the EBA on 18 June 2020.
has the meaning given by regulation 3 of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001.
means a notice provided to a firm by a previous firm in accordance with 15A.9(3).
Remuneration Benchmarking Information Report
means the report by which a firm provides to the PRA the information required in Chapter 17.
means the requirements in 6 to 15A.
means a statement provided to an employee by a previous firm in accordance with 15A.7.
means the investment specified in Article 76 of the Regulated Activities Order (Shares etc).
means a firm which is significant in terms of its size, internal organisation and the nature, scope and complexity of its activities.
significant impact on the relevant business unit’s risk profile
has the meaning provided in Article 5 of the Material Risk Takers Regulation.
means a CRR firm that satisfies both Condition 1 and Condition 2, where:
- (1) Condition 1 is that the firm is not a large institution and either:
- (a) has average total assets not exceeding £4 billion; or
- (b) the firm has average total assets exceeding £4 billion but not exceeding £13 billion;
- and where (in the case of Condition 1(b)):
- (i) it is appropriate for the firm not to be required to comply with the rules specified in 5.3, taking into account the nature, scope, and complexity of its activities, its internal organisation and, if applicable, the characteristics of the group to which it belongs;
- (ii) the firm has a small trading book;
- (iii) the total value of the firm's derivative positions held with trading intent does not exceed 2% of its total on- and off-balance-sheet assets and the total value of its overall derivative positions does not exceed 5%, both calculated in accordance with the Article 273a(3) method; and
- (iv) the firm is not subject to any obligations, or is subject to simplified obligations, in relation to recovery and resolution planning;
- and
- (2) Condition 2 is that the firm is not part of a group containing another firm which:
- (a) is subject to this Part on an individual basis; and
- (b) has average total assets exceeding £13 billion either on an individual basis, consolidated basis or sub-consolidated basis.
[Note: Art. 94(3) and (4) of the CRD]
means a third country CRR firm that satisfies both Condition 1 and Condition 2, where
- (1) Condition 1 is that the average total assets that relate to the activities of the branch operation of the third country CRR firm in the UK either:
- (a) do not exceed £4 billion; or
- (b) exceed £4 billion but do not exceed £13 billion;
- and where (in the case of Condition 1(b)):
- (i) it is appropriate for the third country CRR firm not to be required to comply with the rules specified in 5.3, taking into account the nature, scope, and complexity of the activities and internal organisation of its branch operation in the UK and, if applicable, the characteristics of the group to which it belongs:
- (ii) the firm’s branch operation in the UK has a small trading book; and
- (iii) the total value of the derivative positions held with trading intent relating to its branch operation in the UK does not exceed 2% of its total on- and off-balance-sheet assets and the total value of its overall derivative positions does not exceed 5%, both calculated in accordance with the Article 273a(3) method.
- and
- (2) Condition 2 is that the third country CRR firm is not part of a group containing another firm which:
- (a) is subject to this Part on an individual basis; and
- (b) has average total assets exceeding £13 billion either on an individual basis, consolidated basis or sub-consolidated basis.
means the size of the firm’s (or for the purposes of a small third country CRR firm, the size relating to the activities of the branch operations in the UK of the firm) on- and off-balance-sheet trading-book business is equal to or less than both:
- (a) 5% of the firm’s total assets; and
- (b) €50 million
on the basis of the assessment provided in Article 94 of the CRR, as amended by point (48) of Article 1 of CRR2.
means:
- (1) in relation to a CRR firm, its total assets as set out in its balance sheet on the relevant accounting reference date; and
- (2) in relation to a third country CRR firm, the total assets of the third country CRR firm as set out in its balance sheet on the relevant accounting reference date that cover the activities of the branch operation in the UK.
undertaking responsible for consolidation
means a PRA approved parent holding company, a PRA designated parent holding company, a PRA approved intermediate holding company, a PRA designated intermediate holding company, or a PRA designated institution.
(2) In this Chapter, references to rules in 15 in relation to a firm shall be read on the basis that references to employment with or the provision of services to the firm, include references to employment with or the provision of services to a previous firm to which the buy-out relates.
[Note: CRD]
- 31/12/2020