UK: Listing Rule amendments - FCA policy statement - dual class shares, free float and minimum capitalisation

New Listing Rules come into force today, following a consultation by the Financial Conduct Authority and, before that, the publication of the UK Listings Review report and recommendations. Further information about the changes now in place can be found in the FCA's policy statement, available here (pdf). The principal changes include: (1) permitting dual class share structures within the premium listing segment; (2) lowering the minimum free float from 25% to 10%; and (3) for ordinary commercial companies listed on the premium or standard segments, increasing the minimum market capitalisation threshold from £700,000 to £30 million (so, lower than the £50 million originally proposed). 

UK: PRA report - climate change and the regulatory capital framework

The Prudential Regulation Authority has published a report exploring the links between climate change and the regulatory capital framework.  The report concludes that regulatory capital has a role to play in dealing with the consequences - the financial risks - of climate change, but notes that further work design and evaluation work is required.  In this regard, the PRA plans to publish a call for research and host a conference. The aim is to provide more guidance by the end of 2022. A copy of the report, titled Climate Change Adaptation Report 2021 - Climate-related financial risk management and the role of capital requirements, is available here (pdf).

BCBS: Basel III monitoring report published

The Basel Committee on Banking Supervision has published the latest edition of its Basel III monitoring report: see here or here (pdf). The report, based on data from December 2020, notes that banks have (on average) improved their capital and liquidity ratios. 

UK: Secondary Capital Raising Review - terms of reference and call for evidence

The terms of reference for the UK Secondary Capital Raising Review were published today alongside a call for evidence: see, respectively, here (pdf) and here (pdf). An short overview is also available in the HM Treasury press release.

UK: The Capital Requirements Regulation (Amendment) Regulations 2021

The Capital Requirements Regulation (Amendment) Regulations 2021 were made on 22 September and come into force on 1 January 2022: see here or here (pdf). The accompanying explanatory memorandum is available here (pdf). The primary purpose of the Regulations is to revoke provisions within the Capital Requirements Regulation ((EU) No. 575/2013), part of retained EU law in the UK, in order that they can be replaced by rules made by the Prudential Regulation Authority.

Kiribati: company and insolvency law reform

The Republic of Kiribati - as it became known on gaining independence from the United Kingdom forty years ago - is to reform its company and insolvency laws. Draft Bills have been published, including a Companies Bill and a Company Insolvency Bill: see, respectively, here (pdf) and here (pdf). The Bills are accompanied by a consultation paper: see here (pdf). The new Companies Bill, when enacted, will enable companies with a single shareholder to be formed and will abolish the current minimum capital requirements.

BCBS publishes Consolidated Basel Framework

The Basel Committee on Banking Supervision has published a consolidated version of its standards, titled The Basel Framework, containing the full set of standards that it has issued: see here. This version of the Framework has been published for consultation purposes because, as the BCBS separately explains, its production revealed some inconsistencies between standards as well as ambiguities that needed to be addressed, some through policy changes. The BCBS decided that it was best to consult on all such changes as part of the launch of the Consolidated Framework. The Framework is briefly explained in the below video (or on this page if the video below does not work).

IOSCO final report: equity capital raising - conflicts of interest and associated conduct risks

Following a consultation earlier this year, the International Organisation of Securities Commissions has now published its final report Conflicts of interest and associated conduct risks during the equity capital raising process: see here (pdf). The report identifies various risks and contains non-binding guidance for IOSCO members.

Finalising the Basel III reforms

The Basel Committee oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), has endorsed the Committee's final Basel III reforms: see here. A high level summary of the Basel III reforms is available here (pdf). A video recording of the press conference at which GHOS approval was announced is available below and the accompanying press release is available here:

BCBS publishes twelfth update on Basel III implementation

The Basel Committee on Banking Supervision has published its twelfth update on the implementation of the Basel III regulatory reforms: see here (pdf). The update notes, amongst other things, that all of the 27 jurisdictions comprising the Basel Committee have final risk-based capital rules, LCR regulations and capital conservation buffers in force.

UK: FCA policy statement (and final rules) - remuneration in CRD IV firms

The Financial Conduct Authority has published a policy statement explaining the changes its has made to its Handbook in order to implement guidelines from the European Banking Authority on the implementation of the remuneration requirements in the Capital Requirements Directive IV: see here (pdf).

BCBS final standard - TLAC holdings

The Basel Committee on Banking Supervision has today published a final standard on the regulatory capital treatment of banks' holdings of total loss-absorbing capacity (TLAC) instruments: see here (pdf). A short overview of the standard is available here.

UK: FPC publishes financial stability report - risks begin to crystalise

The Financial Policy Committee published its first financial stability report for 2016 today: see here (pdf). An executive summary is available here (pdf). The outlook for financial stability is challenging following the referendum on EU membership, and the FPC concludes that some risks have begun to crystalise. It has recommended to the Prudential Regulation Authority that the UK countercyclical capital buffer rate is reduced from 0.5% to 0%.

UK: Treasury Committee inquiry into bank capital standards

In an announcement last Friday, the chairman of the House of Commons Treasury Committee, the Rt Hon Andrew Tyrie MP, announced that the Committee would soon begin an inquiry into bank capital standards: see here. This follows the Committee's publication of a letter (here, pdf), from the Governor of the Bank of England to the Committee, concerning the disagreement between Sir John Vickers (chairman of the Independent Commission on Banking) and the Financial Policy Committee over the implementation of the systemic risk buffer.

BCBS update on Basel III implementation

The Basel Committee on Banking Supervision has published its ninth update on the implementation of the Basel III regulatory reforms: see here (pdf). The update notes that all of the 27 jurisdictions comprising the Basel Committee have final risk-based capital rules in place, and all but two members have published final LCR regulations. Members are now turning to the implementation of the leverage ratio, the systemically important banks framework and the net stable funding ratio.

UK: The Solvency 2 Regulations 2015

The Solvency 2 Regulations 2015 were laid before Parliament yesterday: see here or here (pdf). The Regulations implement, in part, Directive 2009/138/EC (“the Solvency 2 Directive”).  For further information see: explanatory memorandum (pdf) | impact assessment (pdf) | transposition note (pdf) |.

BCBS update on Basel III implementation and capital requirements for bank exposures to central counterparties

The Basel Committee on Banking Supervision has published an update regarding implementation of the Basel III regulatory reforms: see here (pdf). The Committee has also published its final standard Capital requirements for bank exposures to central counterparties: see here (pdf).

UK: The Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014

The Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 were laid before Parliament yesterday. An explanatory memorandum is available here (pdf). The Regulations implement in part the provisions relating to capital buffers in Directive 2013/36/EU; they also make amendments to the Bank of England Act 1998 to specify the procedure for notifying proposed macro-prudential measures under Article 458 of Regulation (EU) No 575/2013.

China: State Council approves removal of minimum capital requirements for certain companies

The State Council announced yesterday that it had approved plans to remove the minimum capital requirements for certain limited liability companies, one-person limited liability companies and joint-stock companies with limited liability: see here.

BCBS identifies sound practices for bank capital planning

The Basel Committee on Banking Supervision has published a paper titled A Sound Capital Planning Process: Fundamental Elements - Sound practices: see here (pdf). The paper does not provide new capital planning guidance but instead presents examples of sound practices, based on observations at banks. A section in the paper deals with internal control and governance. In this section it is noted that there is considerable variation in how banks structure their capital planning processes; examples of board of directors involvement in capital planning are also included.