F1PART 5ZAO-SII Buffers

Annotations:
Amendments (Textual)

CHAPTER 2United Kingdom buffer rates for O-SIIs

O-SII buffer rates: The FPC framework34ZB

1

The FPC must have a framework for O-SII buffer rates in the United Kingdom established in accordance with this regulation (“the FPC framework”).

2

The FPC framework must contain the following elements—

a

a set of criteria for assessing the extent to which the failure or distress of a relevant O-SII might pose a risk to the financial system;

b

a methodology for measuring the criteria and giving a relevant O-SII a single score in relation to the criteria; and

c

in relation to each score that an O-SII may receive, a buffer rate that corresponds to the score.

3

In paragraph (2)(a), a relevant O-SII is in distress only if it experiences a significant deterioration in its financial situation.

4

In paragraph (2)(a) the criteria to be specified must each be—

a

measurable; and

b

capable of being applied to a relevant O-SII on an individual basis, a sub-consolidated basis and a consolidated basis.

5

In paragraph (2)(c) the only buffer rates that the FPC may specify are 0%, 1%, 1.5%, 2%, 2.5% and 3%.

6

The way in which buffer rates correspond to scores in the FPC framework—

a

must be clear, precise and unambiguous;

b

must ensure that a score corresponds to one buffer rate only;

c

may not be expressed in terms of a discretion conferred on a person or body (including the FPC); and

may be expressed by way of a formula, an algorithm, a graph or a table.

7

The Bank must publish each element of the FPC framework, together with the FPC’s justification for each element.