Citation, commencement and extent

1.—(1) These Regulations may be cited as the Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026.

(2) These Regulations come into force on 30th December 2026.

(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.

Amendment of Regulation (EU) No 575/2013 – Transitional provision for capital requirements relating to market risk

2. After Article 465 (own funds requirements) of of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 575/2013(Regulation (EU) No 648/20122), insert—

Article 465A Transitional provision for capital requirements relating to market risk

1. For the purpose of calculating their capital requirements for market risk, during the transitional period credit institutions and Part 4A investment firms must not apply the following provisions of the Market Risk: Internal Model Approach (CRR) Part of the PRA Rulebook(3)—

(a)rule 4.1 (transitionals);

(b)Article 325az (permission to use internal models) except for paragraph A1;

(c)Articles 325azx (material changes and extensions to permission) to 325bp (particular requirements for an internal default risk model); and

(d)Annexes 1 (standards for grant of an IMA permission) and 2 (material changes and extensions to internal models).

2. The Treasury may by regulations amend the definition of “transitional period” in paragraph 6(h) for the purpose of extending that period.

3. The power to make regulations under paragraph 2 is exercisable by statutory instrument.

4. A statutory instrument which contains regulations made under paragraph 2 is subject to annulment in pursuance of a resolution of either House of Parliament.

5. Regulations under paragraph 2 may—

(a)contain incidental, supplemental, consequential, transitional and saving provision; and

(b)may make different provision for different purposes.

6. In this Article—

(a)“credit institution” has the meaning given in section 417(1) of FSMA 2000(4);

(b)“FSMA 2000” means the Financial Services and Markets Act 2000;

(c)“Part 4A investment firm” means a person who—

(i)falls within the definition of “investment firm” in section 424A of FSMA 2000(5),

(ii)has a Part 4A permission to carry on a regulated activity which falls within the definition of “investment services and activities” in section 417(1) of FSMA 2000(6), and

(iii)is not a credit institution;

(d)“Part 4A permission” has the meaning given in section 55A(5) of FSMA 2000;

(e)“regulated activity” has the meaning given in section 22 of FSMA 2000(7);

(f)“the PRA” has the meaning given in section 417(1) of FSMA 2000(8);

(g)“the PRA Rulebook” means the rulebook published by the PRA containing rules made by that Authority under FSMA 2000 as those rules are amended from time to time;

(h)“transitional period” means the period beginning with 1st January 2027 and ending with 31st December 2027.”