Regulatory capital treatment of derivatives

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This Overview is a guide to the Financial Services content within the Regulatory capital treatment of derivatives subtopic, with links to appropriate materials.

The UK prudential regime for banks and designated investment firms

The Capital Requirements Directive 2013/36/EU (EU CRD IV) and the Capital Requirements Regulation (EU) 575/2013 (EU CRR) were the mechanism through which the EU implemented the global capital adequacy framework, Basel III.

Since the UK’s withdrawal from the EU, the UK prudential regime has been amended and developed in a number of ways. For information on the current regime, see Practice Note: The UK prudential regime for banks and designated investment firms.

Counterparty Credit Risk and Credit Valuation Adjustment

In outline, in-scope firms are required to hold capital equal to 8% of the aggregate amount of credit risk that it assumes, as measured in risk-weighted exposure amounts (RWEAs). RWEAs are intended to capture differences in the level of risk posed by different

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Latest Financial Services News

FSB names insurers for resolution planning and consults on RRP guidance

The Financial Stability Board (FSB) has published an updated list of insurers subject to recovery and resolution planning (RRP) requirements with seventeen insurers named, up from thirteen in 2024. The FSB has also launched a consultation on draft guidance to help authorities determine whether an insurer should be subject to RRP.  Finally, the FSB confirmed it will continue to rely on the International Association of Insurance Supervisors (IAIS) Holistic Framework to assess systemic risk in the insurance sector, rather than reinstating the annual identification of global systemically important insurers (G-SIIs). Responses are sought to the consultation by 6 February 2026.

FCA publishes 2024 Credit Rating Agency market share report

The Financial Conduct Authority (FCA) has published its fourth annual market share report for UK-registered credit rating agencies (CRAs) covering the 2024 calendar year. Issued under the UK CRA Regulation, the report lists registered CRAs, their market shares, and sector coverage. It reminds issuers and related third parties that when appointing two or more CRAs, they should consider including at least one CRA with no more than 10% of total market share. If they choose not to do so, they must record their decision. The publication facilitates that evaluation by issuers.

PRA publishes insurer-specific results of Life Insurance Stress Test 2025

The Prudential Regulation Authority (PRA) has published the insurer-specific results for the 2025 Life Insurance Stress Test (LIST 2025).  The results are contained in Annex 4 to the sector-wide findings published on 17 November 2025. Annex 4 sets out detailed outcomes for 11 participating UK life insurers, including changes in solvency capital requirement (SCR) coverage, SCR and Eligible Own Funds as of 31 December 2024 and the effects of management actions under the core stress scenario.

Financial Services—other developments (24/11/2025)

A round-up of other developments, which have not been covered in full by the LexisNexis Financial Services practical guidance team but may nevertheless be of interest.

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