Prudential Regulation Authority Rulebook

2B.1

The conditions referred to in (1)(b) and (2)(b) of the definition of small third country CRR firm and in (2)(b) of the definition of small CRR firm are the following:

1. (1) Subject to 2B.2, the size of the on- and off- balance-sheet trading book business of the firm’s branch operation in the UK was less than or equal to both £44 million and 5% of the total assets of the firm, on the basis of the assessment set out in Article 94(3) of Chapter 3 of Trading Book (CRR) Part:
   1. (a) on the last day of at least one of the preceding three months, and
   2. (b) on the last day of at least six of the preceding twelve months;
2. (2) The overall net foreign-exchange position of the firm’s branch operation in the UK, calculated using the method set out in Article 352 of CRR, does not exceed 3.5% of the firm’s own funds and, subject to 2B.2, did not on average exceed 2% of the firm’s own funds:
   1. (a) in one or more of the preceding three months, and
   2. (b) in six or more of the preceding twelve months,
   3. as determined in accordance with 2B.3;

1. (3) The firm’s branch operation in the UK does not hold positions in commodities or commodity derivatives;
2. (4) The firm’s branch operation in the UK does not provide clearing, transaction settlement, custody or correspondent banking services to a UK bank, a building society, or a non-UK credit institution, including by acting as an intermediary for a UK bank, a building society, or a non-UK credit institution to access the facilities or services of:
   1. (a) a payment system, CSD, third-country CSD, SSS or central counterparty in which the firm is a direct or indirect participant or member, or
   2. (b) an exchange, other trading facility, clearing house or any other financial market utility or infrastructure, either directly or indirectly,
3. except that the firm’s branch operation in the UK may provide clearing, transaction settlement, custody or correspondent banking services in sterling to a UK bank, building society or non-UK credit institution that is a member of the firm’s immediate group; and
4. (5) The firm’s branch operation in the UK is not an operator of a payment system.

2B.2

The criteria in 2B.1(1)(a) and 2B.1(2)(a) do not apply in respect of a third country CRR firm that was not a firm on the last day of the preceding month and the criteria in 2B.1(1)(b) and 2B.1(2)(b) do not apply in respect of a third country CRR firm that was not a firm on the last day of each of the preceding six months.

2B.3

For the purpose of 2B.1(2), the overall net foreign-exchange position of a firm’s branch operation in the UK does not on average exceed 2% of the firm’s own funds in a given month if the arithmetic mean of the daily overall net foreign-exchange positions of the firm’s branch operation in the UK over the course of the month is less than or equal to 2% of the firm’s own funds on the last day of the month.