- Latest available (Revised)
- Original (As made)
This is the original version (as it was originally made).
14.—(1) A ring-fenced body is prohibited from incurring a financial institution exposure unless at least one of the exemptions set out in paragraphs (2) to (6) or in articles 15 to 19 applies, and, for the avoidance of doubt, provided that one of these exemptions applies in relation to a particular exposure, it is irrelevant whether the conditions for any other exemption are satisfied by that exposure.
(2) A ring-fenced body may incur a financial institution exposure if the sole or main purpose of the transaction giving rise to the exposure (by itself or in combination with other transactions) is to limit the extent to which—
(a)the ring-fenced body,
(b)any subsidiary undertaking of the ring-fenced body,
(c)any sponsored structured finance vehicle of the ring-fenced body,
(d)any conduit vehicle of the ring-fenced body, or
(e)any combination of the undertakings referred to in sub-paragraphs (a), (b), (c) and (d),
will be adversely affected by any of the factors specified in paragraph (3).
(3) The specified factors are—
(a)changes in interest rates, exchange rates or commodity prices;
(b)changes in any index of retail prices or of residential or commercial property prices;
(c)changes in any index of the price of shares;
(d)default risk.
(4) A ring-fenced body may incur a financial institution exposure where the relevant financial institution concerned is a member of the same group as the ring-fenced body, provided that—
(a)the exposure concerned is not prohibited under rules made by the FCA or the PRA under the Act; and
(b)the exposure arises as a result of—
(i)a commercial transaction conducted on arm’s length terms, or
(ii)a holding of shares or other securities issued by a subsidiary undertaking of the ring-fenced body.
(5) A ring-fenced body may incur a financial institution exposure in the course of buying, selling or subscribing for investments for the purposes of a transaction falling within paragraph (2).
(6) A ring-fenced body may incur a financial institution exposure where—
(a)the exposure concerned is a payment exposure, and
(b)the ring-fenced body has complied with any rules made or requirements imposed by the FCA or the PRA under the Act in relation to payment exposures.
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Explanatory Memorandum sets out a brief statement of the purpose of a Statutory Instrument and provides information about its policy objective and policy implications. They aim to make the Statutory Instrument accessible to readers who are not legally qualified and accompany any Statutory Instrument or Draft Statutory Instrument laid before Parliament from June 2004 onwards.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:
Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:
Click 'View More' or select 'More Resources' tab for additional information including: