Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 374 report information sustainability report Governance review review statements Annual Report 2022 Supervision and regulation (continued) Bank Levy and FSCS Market infrastructure regulation of market participants with effect from 2022. Access to the clearing services of The BRRD established a requirement for In recent years, regulators as well as certain Central Clearing Counterparties EU member states to set up a pre-funded global-standard setting bodies such as the (CCPs) used by Group entities is currently resolution financing arrangement with International Organisation of Securities permitted under temporary equivalence funding equal to 1% of covered deposits Commissions (IOSCO) have focused on and recognition regimes and decisions in by 31 December 2024 to cover the costs improving transparency and reducing risk the UK and EU. If not extended or made of bank resolutions. The UK has in markets, particularly risks related to permanent, the EU’s equivalence decision implemented this requirement by way of a over-the-counter (OTC) derivative for UK Central Clearing Counterparties tax on the balance sheets of banks known transactions. This focus has resulted in a (CCPs), and exemption for certain as the ‘Bank Levy’. variety of new regulations across the G20 intragroup transactions from the EMIR countries and beyond that require or In addition, the UK has a statutory derivatives clearing and margin obligations, encourage on-venue trading, clearing, compensation fund called the Financial both due to expire at the end of June 2025, posting of margin and disclosure of pre- Services Compensation Scheme (FSCS), could also have operational and financial trade and post-trade information. which is funded by way of annual levies on impacts on the Group, as could the most authorised financial services firms. In particular, the Markets in Financial removal of temporary recognition of non- Instruments Directive and Markets in Structural reform UK CCPs by the UK. EMIR is currently Financial Instruments Regulation In the UK, the Financial Services (Banking undergoing a review process in the EU (collectively referred to as MiFID II) have Reform) Act 2013 put in place a framework which may result in changes to the affected many of the markets in which the for ring-fencing certain operations of large intragroup transactions exemption, Group operates, the instruments in which banks. Ring-fencing requires, among other potentially making it easier to rely on. it trades and the way it transacts with things, the separation of the retail and However, the review is in its very early market counterparties and other smaller deposit-taking business activities stages so it is not yet certain what changes customers. MiFID II is currently undergoing of UK banks into a legally distinct, may result from it. a review process in both the EU and the operationally separate and economically US regulators have imposed similar rules UK, including as part of the EU’s ongoing independent entity, which is not permitted as the EU with respect to the mandatory focus on the development of a stronger to undertake a range of activities. This on-venue trading and clearing of certain Capital Markets Union and the UK’s regime was independently reviewed in derivatives, and post-trade transparency, Wholesale Markets Review. 2021, with the final report published in as well as in relation to the margining of Regulation of benchmarks March 2022. The review recommended OTC derivatives. US regulators have that HM Treasury should review the The EU and UK Benchmarks Regulation finalised certain aspects of their rules with practicalities of aligning the ring-fencing apply to the administration, contribution respect to their application on a cross- and resolution regimes, amongst other and use of benchmarks within the EU and border basis, including with respect to their things, and the government has stated the UK, respectively. Financial institutions registration requirements in relation to within the EU or the UK, as applicable, are that it intends to issue a public call for non-US swap dealers and security-based evidence on this issue in the first quarter of prohibited from using benchmarks unless swap dealers. The regulators may adopt 2023 and to consult on reforms to the their administrators are authorised, further rules, or provide further guidance, ring-fencing regime in mid 2023 in line with registered or otherwise recognised in the regarding cross-border applicability. In the recommendations in the independent EU or the UK, respectively. The FCA has December 2017, the CFTC and the also been working to phase out use of review. European Commission recognised the LIBOR, with GBP LIBOR ceasing to be US regulation places further substantive trading venues of each other’s jurisdiction published in its original form from the end limits on the activities that may be to allow market participants to comply with of 2021 and synthetic versions of GBP conducted by banks and holding mandatory on-venue trading LIBOR being made available only for a companies, including foreign banking requirements while trading on certain limited period of time. Similarly, USD LIBOR organisations such as the Group. The venues recognised by the other will cease to be published in its current ‘Volcker Rule’, which was part of the DFA jurisdiction. In December 2022, the CFTC form in June 2023 and other LIBOR and and which came into effect in the US in extended temporary relief that would IBOR rates are also being wound down. 2015, prohibits banking entities from permit trading venues and market Global regulators in conjunction with the undertaking certain proprietary trading participants located in the UK to continue industry have developed and are activities and limits such entities’ ability to to rely on this mutual recognition continuing to develop alternative sponsor or invest in certain private equity framework following the withdrawal of the benchmarks and risk-free rate fallback funds and hedge funds (in each case UK from the EU. arrangements, including updates to broadly defined). As required by the rule, Certain participants in US swap markets existing, as well as new, applicable the Group has developed and are required to register with the CFTC as legislation. implemented an extensive compliance and ‘swap dealers’ or ‘major swap participants’ monitoring programme addressing Regulation of the derivatives market and/or, with the SEC as ‘security-based proprietary trading and covered fund The European Market Infrastructure swap dealers’ or ‘major security-based activities (both inside and outside of the Regulation (EMIR) has introduced swap participants’. Such registrants are US). requirements designed to improve subject to CFTC and/or SEC regulation transparency and reduce the risks and oversight. Entities required to register associated with the derivatives market. as swap dealers and/or security-based EMIR has operational and financial impacts swap dealers are subject to business on the Group, including by imposing new conduct, record-keeping and reporting collateral requirements on a broader range requirements under either or both CFTC