The Prudential Regulation Authority (PRA) has published a consultation proposing new Rulebook conditions for an investment exchange to qualify as a “recognised exchange” under Article 4(1)(72)(c) of the UK Capital Requirements Regulation, with a particular focus on enabling firms to use assets traded on non-UK exchanges for credit risk mitigation, liquidity risk, and market and counterparty credit risk purposes. The package also proposes to restate the existing list of “main indices” in the PRA Rulebook without policy change. A new Recognised Exchanges (CRR) Part would set two sets of criteria: exchange and market structure requirements (including authorisation and ongoing supervision, operation on every business day, non-discretionary trading and access rules, robust clearing and settlement consistent with international standards, and margining practices consistent with international standards for Annex II CRR contracts) and, alongside this, asset liquidity conditions mirroring the Liquidity Coverage Ratio (CRR) Part requirements for assets admitted to trading in an organised venue that is not a recognised exchange. Firms would be responsible for assessing whether exchanges and assets meet the criteria, with the PRA planning post-implementation thematic reviews to test consistency and issuing further interpretive guidance if needed. Consequential changes include revocation of supervisory statement 20/13, amendments across relevant Rulebook Parts, and a proposed amendment to the Basel 3.1 near-final definition of “higher risk equity exposures” so the listing condition for the 400% risk weight would depend on the exchange meeting the exchange and market structure criteria. Responses are due by 18 June 2025. The PRA proposes an implementation date of 1 July 2026 for the recognised exchange conditions and the revocation of SS20/13, while the Basel 3.1-related changes would be introduced alongside the wider Basel 3.1 implementation.

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