The Bank of England Act 1998 (Macro-prudential Measures) (Amendment) Order 2021

EXPLANATORY NOTE

(This note is not part of the Order)

This Order makes amendments to:

• the Bank of England Act 1998 (Macro-prudential Measures) Order 2013 (S.I. 2013/644, the “2013 Order”),

• the Bank of England Act 1998 (Macro-prudential Measures) Order 2015 (S.I. 2015/909, the “2015 Order”),

• the Bank of England Act 1998 (Macro-prudential Measures) (No.2) Order 2015 (S.I. 2015/905, the “2015 No.2 Order”), and

• the Bank of England Act 1998 (Macro-prudential Measures) Order 2016 (S.I. 2016/1240, the “2016 Order”),

together the “Orders”.

Article 2 makes amendments in relation to macro-prudential measures already prescribed by the 2013 Order. Article 2(4) to (7) allow the Financial Policy Committee (“FPC”) to direct the Prudential Regulation Authority (“PRA”) to apply the measures prescribed in the 2013 Order to the holding companies of UK banks and of UK investment firms which are PRA-authorised persons. The measures prescribed in the 2013 Order may be applied to holding companies on a consolidated basis (i.e. in respect of the whole group of companies) or on a sub-consolidated basis (i.e. in respect of a sub-group of companies).

Article 3 makes amendments to the 2015 Order.

Article 4 makes amendments in relation to macro-prudential measures already prescribed by the 2015 No.2 Order. Article 4(2) amends the definition of “consolidated basis.” Article 4(2) and (3) update the definition of “total exposure measure” for the purposes of a direction issued by the FPC so that it is defined by reference to PRA rules. Article 4(4) to (6) allow the FPC to direct the PRA to apply the measures prescribed in the 2015 No.2 Order to the holding companies of UK banks and of UK investment firms. The measures prescribed in the 2015 No.2 Order can be applied to holding companies on a consolidated basis or on a sub-consolidated basis. Article 4(7) allows the FPC to specify how the total exposure measure is to be determined for the purposes of a measure specified in article 4(1) of the 2015 No.2 Order.

Articles 2(2)(a), 3(2) and (3), 4 and 5 make amendments to the effect that existing procedural requirements in the Orders also apply when implementing macro-prudential measures pursuant to rules made under section 192XA of the Financial Services and Markets Act 2000 (c. 8).

A full impact assessment has not been produced for this instrument, as no, or no significant, impact on the private, voluntary or public sector is foreseen. A de minimis impact assessment is available from HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.