The Prudential Regulation Authority’s (PRA) has published the Consultation Paper CP20/21: “Trading activity wind-down“, which sets out the proposed expectations in respect of firms’ engagement in trading activities that may affect the financial stability of the UK.
It proposes that firms engaged in trading activities be able to carry out a full or partial orderly wind-down of their trading activities in recovery and post-resolution restructuring.
The proposals in this CP would result in:
- a new Supervisory Statement (SS) on trading activity wind-down (TWD) (Appendix 1);
- a Statement of Policy (SoP) (Appendix 2); and
- amendments to SS9/17 “Recovery Planning” (Appendix 3) relating to the orderly wind-down of trading activities.
The proposed expectations in CP20/21 are relevant (although may not apply directly) to:
- all PRA-authorised UK banks, their qualifying parent undertakings;
- PRA-designated investment firms that are engaged in trading activities; and
- relevant third country branches.
It is not relevant to credit unions.
The proposed implementation date for the changes resulting from CP20/21 is 1 January 2025 and the PRA intends to publish its final policy in H1 2022.