Financial Services And Markets Citation, commencement and interpretation 1 1 This Order may be cited as the Bank of England Act 1998 (Macro-prudential Measures) Order 2013 and comes into force on 1st April 2013. 2 In this Order— ... “ commercial property exposure ” means an exposure which is (to any extent) secured on land or other immoveable property being used primarily for commercial or non-residential purposes; “ consolidated basis ”, in relation to a measure, means on the basis that the undertaking to which the measure applies and one or more other undertakings are to be treated as a single undertaking; “ credit institution ” has the meaning given by Article 4(1)(1) of Regulation ( EU ) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation ( EU ) No 648/2012 ; “ excluded deposit taker ” means— a credit union within the meaning of section 31 of the Credit Unions Act 1979 , or a person with permission under Part 4A of FSMA 2000 to effect or carry out contracts of insurance as principal, “ exposure ” means an asset or off-balance sheet item; “ financial sector entity ” means any of the following— a credit institution, an investment firm, a financial institution within the meaning of Article 4(1)(26) of the capital requirements regulation, an ancillary services undertaking (meaning an undertaking the principal activity of which consists in owning or managing property, managing data-processing services or any other similar activity which is ancillary to the principal activity of one or more credit institutions, investment firms, insurance undertakings or reinsurance undertakings), an insurance undertaking, ... a reinsurance undertaking, ... an insurance holding company (meaning an undertaking which is not a mixed financial holding company the main business of which is to acquire and hold participating interests in subsidiary undertakings which are exclusively or mainly insurance undertakings or reinsurance undertakings , and which has at least one subsidiary undertaking which is an insurance undertaking or a reinsurance undertaking), “ financial sector exposure ” means— an exposure under, or which relates to, a contract with a financial sector entity, or an exposure to, or which relates to, the securities or other instruments issued by such an entity, ... “ FSMA cost benefit analysis ” means— an analysis of the costs (including the costs to business activity and the impact on economic growth) and the benefits of any change in rules made pursuant to Part 9A or section 192XA of the Financial Services and Markets Act 2000 ; and where those costs and benefits can reasonably be estimated, an estimate of those costs and benefits; “holding company” means a financial holding company or a mixed financial holding company; “ insurance undertaking ” has the meaning given in section 417(1) of the Financial Services and Markets Act 2000; “ investment firm ” has the meaning given by section 424A of FSMA 2000 ; ... ... “ participating interest ” has the meaning given by section 421A of FSMA 2000 ; “ PRA-authorised person ” has the meaning given by section 2B of FSMA 2000 ; ... “ reinsurance undertaking ” has the meaning given in section 417(1) of the Financial Services and Markets Act 2000; “ requirement ” includes a requirement to refrain from taking action; “ residential property exposure ” means an exposure which is (to any extent) secured on land or other immoveable property being used primarily for residential purposes; “ solo basis ”, in relation to a measure, means on the basis of the situation of the undertaking to which the measure applies; “ solvency 2 directive ” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II); “ subsidiary undertaking ” has the meaning given by section 420 of FSMA 2000; ... ... “ UK bank ” means a UK institution which has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits but which is not an excluded deposit taker; “ UK institution ” means an institution which is incorporated in, or formed under the law of, any part of the United Kingdom; “ UK investment firm ” means a UK institution which— has permission under Part 4A of FSMA 2000, is a PRA-authorised person by virtue of a designation under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 , and is an investment firm. Macro-prudential measures 2 1 The measures listed in the first column of the table (and any measure falling within a listed measure) are prescribed in relation to the regulator specified in the second column of the table. 2 Subject to paragraph (3), each of those measures may be applied on, or by reference to, a solo basis or on, or by reference to, a consolidated basis. Macro-prudential measures Macro-prudential measure Regulator To require UK banks , or their holding companies, to maintain additional own funds by reference to their residential property exposures, commercial property exposures or financial sector exposures or to impose requirements on UK banks , or their holding companies, by reference to the failure to maintain such additional own funds PRA To require UK investment firms which are PRA-authorised persons , or their holding companies, to maintain additional own funds by reference to their residential property exposures, commercial property exposures or financial sector exposures or to impose requirements on such UK investment firms , or their holding companies, by reference to the failure to maintain such additional own funds PRA To require UK banks , or their holding companies, to treat residential property exposures, commercial property exposures or financial sector exposures as if they gave rise to an increased level of risk specified by the FPC PRA To require UK investment firms which are PRA-authorised persons , or their holding companies, to treat residential property exposures, commercial property exposures or financial sector exposures as if they gave rise to an increased level of risk specified by the FPC PRA 3 Where a measure listed in the table is applied to the holding company of a UK bank or of a UK investment firm which is a PRA-authorised person, the measure may only be applied to that holding company on, or by reference to, a consolidated basis. Disapplication of procedural requirements 3 1 Paragraph (2) applies if— a the FPC has given a direction to the PRA under section 9H of the Act which specifies an increase in additional own funds or an increase in the level of risk that exposures specified in the direction are to be treated as giving rise to (“the first direction”), b the FPC subsequently revokes the first direction, and c immediately after that revocation the FPC gives another direction to the PRA under section 9H of the Act (“the subsequent direction”) which is in substance identical to the first direction except in relation to the increase specified in the direction. 2 To the extent that the PRA is implementing the subsequent direction, sections 138J and 138K of the Financial Services and Markets Act 2000 do not apply, but the PRA must undertake and publish, at the same time as the subsequent direction is implemented, a FSMA cost-benefit analysis to changes implemented pursuant to the subsequent direction. 3 For the purposes of this article, it is immaterial whether the increase is specified by reference to a figure, a proportion, a percentage or otherwise. Review 4 1 The Treasury must from time to time— a carry out a review of articles 1 to 3, b set out the conclusions of the review in a report, and c publish the report. 2 The report must in particular— a set out the objectives intended to be achieved by the regulatory system established by those articles, b assess the extent to which those objectives are achieved, and c assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved with a system that imposes less regulation. 3 The first report under this article must be published before the end of the period of five years beginning with the day on which this article comes into force. 4 Reports under this article are afterwards to be published at intervals not exceeding five years. Anne Milton David Evennett Two of the Lords Commissioners of Her Majesty's Treasury