PS6/26 – Recognised exchanges policy and transfer of main indices

Policy statement 6/26

• Related links

  • CP3/25 – Recognised exchanges policy and transfer of main indices
  • CP19/25 – CRR Definitions: restatement in PRA Rulebook

Published on
05 March 2026

1: Overview

1.1 This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses the PRA received to consultation paper (CP) 3/25 – Recognised exchanges policy and transfer of main indices. This PS also provides feedback to responses the PRA received to its subsequent CP19/25 – CRR Definitions: restatement in PRA Rulebook to the extent they relate to the PRA’s proposals in CP3/25.

1.2 The appendices to this PS contain the PRA’s final policy to CP3/25, as follows:

• PRA Rulebook: CRR Firms: Recognised Exchanges Instrument 2026 (Appendix 1);
• PRA Rulebook: CRR Firms: (CRR) Amendment Instrument 2026 (Appendix 2); and
• corresponding CRR rules (Appendix 3).

This PS also sets out the PRA’s final policy to delete supervisory statement (SS) 20/13 – Third country equivalence aspects of the credit risk provisions in the CRR, and recognised exchanges in its entirety.

1.3 This PS is relevant to PRA-authorised UK banks, building societies, Small Domestic Deposit Takers (SDDTs), SDDT consolidation entities, PRA-designated UK investment firms, and PRA-approved or PRA-designated financial or mixed financial holding companies.

Background

1.4 In CP3/25, the PRA proposed to:

• Introduce a new Recognised Exchanges (CRR) Part in the PRA Rulebook specifying conditions under Article 4(1)(72)(c) of the assimilated Capital Requirements Regulation No 575/2013 (CRR) for the purposes of identifying recognised exchanges (REs) or assets traded on such exchanges. This included proposals for firms to undertake the assessment of these conditions, and an amendment to the definition of ‘higher risk equity exposure’ that was included in the PRA’s near-final rules implementing the Basel 3.1 standards.
• Restate in the PRA Glossary the list of ‘main indices’ currently situated in Commission Implementing Regulation 2016/1646 (the Technical Standard or the TS).

The PRA also consulted on revoking SS20/13 and making consequential amendments to the:

• Counterparty Credit Risk (CRR) Part of the PRA Rulebook;
• Credit Risk Mitigation (CRR) Part of the PRA Rulebook; and
• SDDT – Interim Capital Regime Part of the PRA Rulebook.

1.5 Separately, in CP19/25, the PRA proposed to restate the vast majority of the CRR definitions in the PRA Rulebook. The proposals included consolidating the CRR definition of RE with the conditions the PRA proposed in CP3/25 into the Glossary Part of the Rulebook as a new definition. Among the responses the PRA received to CP19/25, one concerned its REs proposals in CP3/25. The responses to both CP3/25 and CP19/25 regarding the PRA’s REs proposals have been consolidated in this PS and are addressed together in Chapter 2.

1.6 In determining its policy, the PRA considered representations received in response to its consultation in CP3/25 and CP19/25, publishing an account of them and the PRA’s response (‘feedback’). Details of any significant changes are also published. In this PS, the ‘Summary of responses’ section contains a general account of the representations made in response to the CP and the ‘Feedback to responses’ chapter contains the PRA’s feedback.

1.7 In carrying out its policymaking functions, the PRA is required to have regard to various matters. In CP3/25, the PRA explained how it had regard to the most relevant of these matters in relation to the proposed policy. The ‘Changes to draft policy’ section of this chapter refers to that explanation, taking into account consultation responses where relevant.

Summary of responses

1.8 The PRA received three responses to CP3/25, all of which concerned its proposed REs policy. As noted above, one response to CP19/25 addressed the PRA’s REs proposals in CP3/25. The names of respondents to CP3/25 who consented to their names being published are set out in Appendix 4.

1.9 Respondents generally welcomed the PRA’s proposals and flexibility for banks to recognise exchanges for their own purposes. One respondent fully endorsed the proposals. However, three respondents made a number of observations and requested certain amendments to the REs policy, which are set out in Chapter 2.

Changes to draft policy

1.10 This PS takes account of how the policy advances the PRA objectives and of significant matters that the PRA had regard to. These are as set out in CP3/25, with the following changes:

• a minor edit to the PRA Rulebook: CRR Firms: Recognised Exchanges Instrument 2026 to clarify the intended policy scope as explained in paragraph 2.10;
• a minor edit to the PRA Rulebook: CRR Firms: Recognised Exchanges Instrument 2026 to provide additional clarity as to the required assessment of an exchange’s clearing and settlement mechanism as explained in paragraph 2.11;
• non-substantive amendments to the PRA Rulebook: CRR firms: (CRR) Amendment Instrument 2026 that proposed changes to the definition of a ‘higher risk equity exposure’ to improve the clarity of the definition;
• minor amendments to the PRA Rulebook: CRR firms: (CRR) Amendment Instrument 2026 to revise the definition of main index that the instrument inserts into the Glossary Part, in order to reflect recent changes in the index market; and
• the proposed consequential amendments to the SDDT Regime – Interim Capital Regime Part, as set out in Appendix 2 of CP3/25, are not included given the PRA’s decision not to make final rules that give effect to the Interim Capital Regime (ICR).footnote [1]

The PRA does not consider these changes to be ‘significant’ for the purposes of sections 138J(5) and 138K(4) of the Financial Services and Markets Act (FSMA) 2000.

1.11 When making rules, the PRA is required to comply with several legal obligations. In CP3/25, the PRA published its explanation of why the rules proposed by the CP were compatible with its objectives and with its duty to have regard to the regulatory principles.footnote [2] The minor changes to the draft policy outlined in paragraph 1.10 above do not materially change the policy the PRA consulted on in CP3/25. Therefore, the PRA objectives analysis, opinion on the impact of its proposals on mutuals, and consideration of ‘have regards’ remain the same as set out in CP3/25.

1.12 The PRA considers its Cost Benefit Analysis (CBA) in CP3/25 remains relevant and appropriate, as the proposals have not materially changed and no persuasive evidence was received to suggest that the associated costs were underestimated.

1.13 When making CRR rules or rules applying to certain holding companies, the PRA must also publish a summary of the purpose of the proposed rules.footnote [3] The purpose of the rules under the new Recognised Exchanges (CRR) Part is to specify conditions under Article 4(1)(72)(c) CRR for the purpose of identifying REs or assets traded on such exchanges. The purpose of the amendments to the Glossary Part is to: (i) amend the definition of ‘higher risk equity exposure’; and (ii) restate the definition of main index from the TS in the PRA Rulebook.

Implementation

1.14 The implementation date for the PRA’s rules specifying conditions under Article 4(1)(72)(c) CRR and the revocation of SS20/13 will be Wednesday 1 July 2026.footnote [4]

1.15 The implementation date for the PRA’s rules specifying the definition of ‘higher risk equity exposure’, the restating of the main indices list, and the consequential amendments to the Counterparty Credit Risk (CRR) and Credit Risk Mitigation (CRR) Parts will be Friday 1 January 2027.footnote [5]

1.16 Unless otherwise stated, any remaining references to EU or assimilated legislation refer to the version of that legislation that forms part of assimilated law.footnote [6]

2: Feedback to responses

2.1 Before making any proposed rules, the PRA is required by FSMA to have regard to any representations made to it in response to the consultation, and to publish an account, in general terms, of those representations and its feedback to them.footnote [7]

2.2 The PRA has considered the representations received in response to the CP (including the response received to CP19/25 in connection with the REs proposals in CP3/25). This chapter sets out the PRA’s feedback to those responses, and its final decisions.

2.3 The sections below have been structured along the same lines as the proposals in CP3/25. The responses have been grouped as follows:

• definition of REs; and
• transfer of main indices list to the PRA Rulebook.

Definition of REs

Conditions for the purposes of identifying REs or assets traded on such exchanges

2.4 In CP3/25, the PRA proposed conditions for the purposes of identifying REs or assets traded on such exchanges under Article 4(1)(72)(c) UK CRR. In particular, under the PRA’s proposal, an overseas investment exchange can qualify as an RE where, based on a two-stage assessment, firms are satisfied that two conditions are met:

• an exchange and market structure condition; and
• in respect of the relevant asset that is traded or listed on that exchange, a liquidity condition.

2.5 Respondents supported the proposed exchange and market structure condition. However, one respondent remarked that the requirement that the exchange applies margining practices consistent with international standards is not relevant in the context of trading equity securities. The PRA notes that this requirement, as drafted, applies only to derivatives (in particular, to contracts listed in Annex II of CRR), and not equity securities.footnote [8] The respondent also noted that the requirement for a robust clearing mechanism applies to derivatives but not equity securities. The PRA notes that clearing is not limited to derivatives but also applies to equity securities. An overseas exchange will satisfy the relevant requirement where it has a robust clearing and settlement mechanism – consistent with international standards, where these apply – for the relevant asset (including equity securities).

2.6 Two respondents noted that it is unclear how to interpret the results of firms’ assessment if not all securities on an exchange meet the asset liquidity condition. It is unlikely that every security traded on an exchange will meet the liquidity condition. The PRA clarifies that an overseas exchange will qualify as an RE only in respect of a particular asset that is traded or listed on that exchange. For example, if there are 100 securities traded on an exchange that satisfies the exchange and market structure condition, 40 of which meet the liquidity condition while 60 do not, then the exchange will qualify as an RE only in respect of the 40 securities that meet the liquidity condition (alternatively put, not all 100 securities need to meet the liquidity condition for the exchange to be treated as an RE). However, collateral eligibility (or other preferential capital treatment) would not apply to those securities that do not meet the liquidity condition.

2.7 Three respondents noted that the asset liquidity condition duplicates existing collateral liquidity assessments in the capital framework (under Articles 194(3)(b) and 285(3)(b) of CRR).footnote [9] One respondent further added that, in the context of collateral eligibility, this condition should require proof of an active, liquid bid. This suggestion contrasted to the PRA’s proposed requirement for historical evidence of market breadth and depth (as proven by low bid-ask spreads, high trading volume, and a large and diverse number of market participants). The respondent argued that requiring proof of an active, liquid bid would avoid duplication with existing assessments of collateral liquidity under the Internal Model Method for counterparty credit risk. The respondent also argued that this would ensure the collateral eligibility threshold is lower than that for extending the margin period of risk of a netting set in the presence of less liquid collateral. The PRA notes that the asset liquidity condition was deliberately designed to be aligned with existing liquidity assessments under the prudential framework where possible. Where overlaps occur, the assessment process will be more efficient and proportionate for both purposes. The PRA further notes that, in the context of collateral eligibility, the asset liquidity condition has limited scope.footnote [10] Therefore, the PRA considers the proposed collateral eligibility threshold a proportionate and prudent condition for firms to benefit from broader RE availability.

2.8 One respondent noted that assessing the asset liquidity condition would be incremental work as firms are likely to rely on the repurchase test rather than the criteria in the proposed conditionfootnote [11] for determining whether assets are acceptable for liquidity purposes. Another respondent suggested that limiting eligibility to assets meeting the asset liquidity condition could cause positions to move in and out of RE status due to variances in liquidity. The respondent noted this would create a burdensome need for firms to continually monitor asset liquidity. One respondent further requested that the PRA remove the asset liquidity condition. The PRA maintains its position that it expects the incremental burden from this test to be limited, and it is essential to safeguard firms’ safety and soundness against reliance on illiquid assets. This is because, as respondents also acknowledge (see paragraph 2.7), firms already assess asset liquidity under current prudential requirements (eg for credit risk mitigation purposes). By design, that assessment will fulfil some, but not necessarily all, of the assessment required for REs. Additionally, the PRA’s policy introduces a permissive change, which firms may choose not to exercise if the costs associated with assessing the proposed conditions exceed the benefits.

2.9 One respondent suggested that the PRA maintain a list of exchanges, and that this includes, for example, the Financial Conduct Authority’s (FCA) Designated Investment Exchanges and the European Securities and Markets Authority’s (ESMA) list of REs. PRA engagement with firms indicated that the REs provisions affect a limited number of firms, some of which are already familiar with exchange functioning through their operations and routinely assess liquidity requirements (eg when accepting collateral). The PRA considers that for these purposes, maintaining such a list in rules is unlikely to be dynamic or responsive to market events. The PRA considers the proposed policy better meets its primary objective of safety and soundness and is both proportionate and an efficient and economic use of resources. The PRA further notes that the FCA’s Designated Investment Exchanges or those on the ESMA list could qualify as REs under the proposed policy subject to the proposed conditions being met.

2.10 One respondent suggested a minor drafting edit to clarify that, as per the policy intention, UK regulated markets are not in scope of this policy. The PRA agrees with this suggestion and has amended the draft rules accordingly.

2.11 Having considered the responses, the PRA has decided to maintain its proposal regarding conditions for the purposes of identifying REs or assets traded on such exchanges under Article 4(1)(72)(c) UK CRR as consulted on in CP3/25. However, the PRA has made two minor adjustments to its draft rules to provide additional clarity to firms. These include minor drafting edits to clarify:

• the intended policy scope as set out in paragraph 2.10; and
• that the assessment of an overseas exchange’s clearing and settlement mechanism should include its operational robustness.

2.12 The PRA considers that its proposed policy is a dynamic and flexible approach to the recognition of overseas exchanges, while prudently reflecting the risks related to market structures and asset liquidity. Furthermore, the PRA notes that in linking RE status to asset liquidity, the policy enables firms’ assessments to align with market demand and respond dynamically to changes in liquidity levels that may pose prudential risks. By requiring both: (i) an assessment of exchange and market structure; and (ii) an assessment of asset liquidity, the PRA expects that eligible REs will be expanded beyond current levels.footnote [12] This, in turn, will increase the availability to UK firms of a risk-sensitive prudential treatment for eligible assets and support UK competitiveness.

Implementation and evaluation of the REs policy

2.13 In CP3/25, the PRA proposed that firms undertake the assessment of the specified conditions themselves, and that the PRA evaluate firms’ implemented approaches through post-implementation thematic reviews. It also proposed that the rules specifying conditions under Article 4(1)(72)(c) UK CRR come into effect on Wednesday 1 July 2026.

2.14 One respondent suggested that assessments of the proposed conditions could also take place on an industry-wide basis using professional industry resources. One respondent questioned why banks could not apply for recognitions immediately after completing their assessments, instead of waiting until July 2026.

2.15 Having considered the responses, the PRA has decided to maintain its implementation and evaluation proposals for the REs policy as consulted on in CP3/25. The PRA notes that firms may rely on industry-wide assessments, but would remain accountable for ensuring that these assessments are both accurate and kept up to date. The PRA also clarifies that the policy does not require firms to apply to the PRA for recognition of exchanges or assets. Rather, once the policy takes effect, firms may treat an asset as listed or traded on an RE if they are satisfied that the market structure and asset liquidity conditions are met.

Amendment to the definition of higher risk equity exposure

2.16 In CP3/25, the PRA proposed to amend the definition of a ‘higher risk equity exposure’ that will receive a 400% risk weight under the standardised approach for credit risk following its implementation of the Basel 3.1 standards.footnote [13] This would have the effect that, for the purpose of the listing condition, an equity exposure would only be classified as a ‘higher risk equity exposure’ if it is not listed on an exchange that meets the criteria pertaining to the exchange and market structure.

2.17 The PRA did not receive any responses in relation to this proposal. The PRA has decided to maintain its proposal to amend the definition of ‘higher risk equity exposure’ (with non-substantive changes to the rule instrument for clarificatory purposes) that will be implemented alongside the broader implementation of the Basel 3.1 standards on Friday 1 January 2027.

Transfer of main indices list to the PRA Rulebook

2.18 In CP3/25, the PRA proposed to restate the main index definition into the Glossary Part. The definition is currently set out in the TS, which has been revoked by HMT with effect from Friday 1 January 2027. The list of main indices is used in the credit risk mitigation framework to determine: (i) collateral eligibility under the financial collateral simple method; and (ii) preferential haircuts under the financial collateral comprehensive method.

2.19 The PRA did not propose any changes to the current list of main indices and did not receive any industry feedback on its proposal. The PRA has therefore decided to broadly maintain its proposal and restate the list of main indices as a new definition in the Glossary Part. However, the PRA has decided to make minor amendments to the list of main indices to reflect changes in the index market since the TS was implemented. Most of these changes are updates to reflect the renaming of indices. However, the PRA has also made the following amendments:

• The ‘S&P NZX 15 Index’ was discontinued in 2018. The PRA has decided to replace this index with the ‘S&P NZX 10’. The PRA considers this index is the closest comparator to the discontinued index that is consistent with the intended risk appetite when the TS was implemented and that, as a result, this change advances its primary objective of safety and soundness.
• ‘MSCI Russia Index’ was discontinued in 2023. For clarity, the PRA has decided to remove this index from the list of main indices and not replace it.
• The PRA has decided to remove the Russian Traded Index (now known as the RTS), from the list of main indices and not replace it. The PRA notes that liquidity in Russian indices has fallen significantly following Russia’s invasion of Ukraine in 2022 and considers that this change advances its primary objective of safety and soundness.

2.20 The PRA does not consider that these changes materially alter the impact of its policy relative to its proposals in CP3/25. This policy will be implemented alongside the broader implementation of the Basel 3.1 standards on Friday 1 January 2027.

Consequential amendments

2.21 In CP3/25, the PRA proposed amendments to the Counterparty Credit Risk (CRR) Part, the Credit Risk Mitigation (CRR) Part and the SDDT – Interim Capital Regime Part of the PRA Rulebook. It also proposed to revoke SS20/13, which is redundant.footnote [14] These amendments are consequential to the PRA’s REs policy proposals and the proposal to restate the list of main indices into the PRA Rulebook.

2.22 The PRA did not receive any responses on these proposals and will be adopting them as consulted on in CP3/25, except for the consequential amendments to the SDDT Regime – Interim Capital Regime Part. Given the implementation dates for the SDDT capital regime and the consequential amendments outlined in paragraph 2.20 are now the same, those proposals are no longer needed.

1. The implementation dates for the SDDT capital regime and the Basel 3.1 standards are the same. Firms that opted into the ICR will therefore be required to implement either the full Basel 3.1 standardsor the simplified capital regime for SDDTs on 1 January 2027.
2. Section 138J(2)(d) of FSMA.
3. Section 144D(2)(a) of FSMA.
4. HM Treasury (HMT) has revoked the following provisions of the TS with effect from that same date (1 July 2026): (i) in Part 2 (PRA), Article 2 (recognised exchanges); and (ii) in Annex II (recognised exchanges), Part 2 (PRA). See the Financial Services and Markets Act 2023 (Commencement No.12 and Saving Provisions) Regulations 2026.
5. The definition of main index is currently set out in the TS, which has been revoked by HMT with effect from Friday 1 January 2027.
6. For further information please see Transitioning to post-exit rules and standards.
7. Sections 138J(3) and 138J(4) of FSMA.
8. Regardless, the PRA notes that the Principles for Financial Market Infrastructures (PFMI) require Central Counterparties (CCP) to cover their credit exposures to their participants for all products (not limited to derivatives) through an effective margin system.
9. Also refer to the table of revoked CRR provisions and their corresponding PRA rules for the PRA rules replacing Articles 194(3)(b) and 285(3)(b) after their revocation from the CRR on 1 January 2027 pursuant to the Financial Services and Markets Act 2023 (Commencement No.12 and Saving Provisions) Regulations 2026.
10. The asset liquidity condition only applies to certain unrated debt securities (Article 197(4) CRR) and non-main index equities or convertible bonds (Article 198(1)(a) CRR).
11. The asset liquidity condition mirrors existing requirements under Articles 7(5) and (6) of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook. The relevant provisions of Article 7(6) for these purposes are those that apply to assets admitted to trading in an organised venue, which is not an RE.
12. However, the PRA does not envisage that crypto exchanges or crypto assets would currently meet all the exchange and market structure or asset liquidity conditions and therefore qualify under this policy at this time.
13. Under the PRA’s implementation of the Basel standards, equity exposures must either be assigned a 400% or a 250% risk weight under the standardised approach to credit risk. Firms will be required to apply the higher 400% risk weight to exposures to businesses that are less than five years old and are not listed on an RE.
14. SS20/13 set out REs that the PRA considered as qualifying under the CRR before the (pre-EU exit) adoption by the European Commission of the TS that set out REs.

SS20/13 set out REs that the PRA considered as qualifying under the CRR before the (pre-EU exit) adoption by the European Commission of the TS that set out REs.

Under the PRA’s implementation of the Basel standards, equity exposures must either be assigned a 400% or a 250% risk weight under the standardised approach to credit risk. Firms will be required to apply the higher 400% risk weight to exposures to businesses that are less than five years old and are not listed on an RE.

However, the PRA does not envisage that crypto exchanges or crypto assets would currently meet all the exchange and market structure or asset liquidity conditions and therefore qualify under this policy at this time.

The asset liquidity condition mirrors existing requirements under Articles 7(5) and (6) of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook. The relevant provisions of Article 7(6) for these purposes are those that apply to assets admitted to trading in an organised venue, which is not an RE.

The asset liquidity condition only applies to certain unrated debt securities (Article 197(4) CRR) and non-main index equities or convertible bonds (Article 198(1)(a) CRR).

Also refer to the table of revoked CRR provisions and their corresponding PRA rules for the PRA rules replacing Articles 194(3)(b) and 285(3)(b) after their revocation from the CRR on 1 January 2027 pursuant to the Financial Services and Markets Act 2023 (Commencement No.12 and Saving Provisions) Regulations 2026.

Regardless, the PRA notes that the Principles for Financial Market Infrastructures (PFMI) require Central Counterparties (CCP) to cover their credit exposures to their participants for all products (not limited to derivatives) through an effective margin system.

Sections 138J(3) and 138J(4) of FSMA.

For further information please see Transitioning to post-exit rules and standards.

The definition of main index is currently set out in the TS, which has been revoked by HMT with effect from Friday 1 January 2027.

HM Treasury (HMT) has revoked the following provisions of the TS with effect from that same date (1 July 2026): (i) in Part 2 (PRA), Article 2 (recognised exchanges); and (ii) in Annex II (recognised exchanges), Part 2 (PRA). See the Financial Services and Markets Act 2023 (Commencement No.12 and Saving Provisions) Regulations 2026.

Section 144D(2)(a) of FSMA.

Section 138J(2)(d) of FSMA.

The implementation dates for the SDDT capital regime and the Basel 3.1 standards are the same. Firms that opted into the ICR will therefore be required to implement either the full Basel 3.1 standardsor the simplified capital regime for SDDTs on 1 January 2027.

Appendices

• Appendix 1: PRA Rulebook: CRR Firms: Recognised Exchanges Instrument 2026 (PDF 0.1MB)
• Appendix 2: PRA Rulebook: CRR Firms: (CRR) Amendment Instrument 2026 (PDF 0.2MB)
• Appendix 3: Corresponding CRR rules (PDF 0.2MB)
• Appendix 4: Respondents to CP3/25 who have consented to the publication of their names (PDF 0.1MB)

Other prudential regulation releases

[Prudential Regulation // Note

25 September 2026

The PRA held a captive insurance industry...

The PRA held a captive insurance industry roundtable](/prudential-regulation/publication/2026/august/pra-holds-captive-insurance-industry-roundtable)

[Prudential Regulation // PRA Regulatory Digest

03 August 2026

PRA Regulatory Digest – July 2026

PRA Regulatory Digest – July 2026](/prudential-regulation/regulatory-digest/2026/july-2026)

[Prudential Regulation // Policy statement

29 July 2026

PS18/26 – Solvency UK: Post-implementation...

PS18/26 – Solvency UK: Post-implementation reporting and disclosure amendments and Own Funds permissions...](/prudential-regulation/publication/2026/july/solvency-uk-policy-statement)

[Prudential Regulation // Consultation paper

29 July 2026

LIAF02/26 – Low Impact Amendments Finalisation...

LIAF02/26 – Low Impact Amendments Finalisation July 2026](/prudential-regulation/publication/2026/july/low-impact-amendments-finalisation-july-2026)

View more Other prudential regulation releases

Back to top