CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

CRD IV for Investment Firms
CP13/6
Leverage
4.39 A key backstop included in CRD IV is the leverage ratio. There are some national discretions
in this area. Article 499(3) of the CRR permits the FCA to allow firms to submit their leverage
ratio based on a quarterly point-in-time calculation, as opposed to three monthly calculations
averaged over the quarter, until 31 December 2017.
4.40 We propose to allow this time limited concession, as we note that requiring monthly calculations
would impose additional cost on firms while providing little additional data around a group
of firms which we generally do not deem to have systemic prudential impact. Further, the
calculation of the leverage ratio is significantly more complex than an asset to equity ratio.
Firms may not have this data readily available, and so this transitional arrangement allows firms
to improve their data quality during this time.
Q17: Do you agree with the approach of allowing firms to
report a quarterly leverage ratio as opposed to a three
monthly ratio averaged for the quarter? If not, please
explain why not and propose alternative approaches and
the rationale for those approaches.
Recognised exchanges, regulated markets and third-country stock exchanges
Recognised exchanges
4.41 Several provisions in the Regulation refer to a ‘recognised exchange’ as a condition to grant
certain treatments. ESMA is tasked with developing ITSs to specify ‘recognised exchanges’
regarding those provisions listed in article 197(8)(b) of the CRR by 31 December 2014.
4.42 However, until the ESMA ITSs are in place, we propose to publish an interim list of recognised
exchanges that in our view meet the conditions in the definition of ‘recognised exchange’
in Article 4.1(72) of the CRR. This interim list is based on the current list of UK Recognised
Investment Exchanges (UK RIE) which at present includes:
• ICE Futures Europe;
• BATS Trading Limited;
• ICAP Securities & Derivatives Exchange Limited;
• LIFFE Administration and Management;
• London Stock Exchange PLC; and
• The London Metal Exchange Limited.
4.43 Our understanding is that firms in the investment sector prudentially regulated by the FCA trade
primarily on UK exchanges. However, if any of these firms were to trade significant volumes on
overseas exchanges (i.e. in other Member States and/or third countries), we invite such firms to
propose including those exchanges in the FCA list of recognised exchanges. These proposals
would have to adequately detail how these exchanges meet the conditions in the definition of
recognised exchanges in Article 4.1(72) of the CRR and the business case for such inclusion.
Financial Conduct Authority July 2013
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