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FCA consults on implementation of CRD IV

CRD IV is the EU implementation of Basel III for banks, which affects approximately
2,400 investment firms that are prudentially regulated by the FCA.  It
comprises two sections: the Capital Requirements Regulation (CRR) and the
Capital Requirements Directive (CRD).   The CRR is directly binding on firms as an EU regulation.  The scope of this consultation is restricted to transposing the CRD into the FCA Handbook and implementing a limited number of other areas, such as discretions in the CRR.

The proposals apply mainly to:    

  • investment firms that are currently subject to the CRD including:
    • firms that benefit from the current exemptions on capital requirements and large exposures for certain commodities derivatives firms;
    • firms that only execute orders and/or
      manage portfolios, without holding client money or assets; and
  • other firms in the investment sector (including exempt-CAD firms and collective portfolio management investment firms) subject to certain CRD IV provisions.

The proposals do not apply to credit institutions (banks and building societies) or
investment firms supervised by the PRA.  

The FCA intend to take a legal minimum, forward looking approach to implementation given the European Commission is intending to undertake a review of the appropriate approach for the prudential regime by the end of 2015.  This
will provide an opportunity to address any implementation issues arising. 
Section 4.4 details the liquidity reporting requirements which will apply to
circa 60 firms with a balance sheet of greater than £50 million and which
provide full scope investment firm activities.  These firms will be expected to submit the CRD IV COREP liquidity reporting templates from 2014.

Comments must be submitted by 30 September 2013.  A Policy Statement will be
published later in 2013 so firms have the final rules available before 1 January 2014.

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