The Prudential Regulation Authority’s Policy Statement on Domestic Liquidity Sub-Groups
The PRA has now published its policy statement and final rules in PS26/21 on domestic liquidity sub-groups (“DoLSub”) and the relevant permission process.
The PRA has confirmed that it expects firms to apply for their NSFR and/or LCR DoLSub permissions under these new revised rules “at the earliest opportunity”, so that firms’ DoLSub can be in place by 1st January 2022, when the current DoLSub framework under Article 8 of onshored CRR is revoked and replaced by the revised DoLSub rules.
Whilst addressing a couple of the concerns raised by the respondents to its earlier consultation paper (CP19/21), Statement of Policy on liquidity and funding permissions (the “SoP”), the PRA has for the most part maintained the enhanced, and in some cases more onerous, conditions under which a firm would qualify for a DoLSub permission for the purposes of the net stable funding ratio (“NSFR”), the liquidity coverage ratio (“LCR”) and the relevant application requirements. Banks and PRA regulated investment firms with existing Article 8 permissions, or those firms who want to apply for one to ensure the NSFR applies on a domestic group basis, rather than an individual basis, will need to start engaging with the PRA now if they are going to achieve a DoLSub within the very limited timeframe.