On 16 February 2024, a Statement of Policy (SoP) came into force, giving the Bank of England (BoE) the power to temporarily restrict or prohibit discretionary payments to employees or shareholders of recognised UK CCPs in severe circumstances. In a continued discussion with relevant market players, the bank has published its feedback to the responses it received for a consultation paper on the SoP.
Some concerns raised by respondents included the duration of the restrictions, the proportionality of the approach, and the wish for further public guidance on the bank’s approach to exercising the power.
Taking the responses into account, minor changes have been made to the final policy text. The BoE clarified that five years is the maximum – not minimum – duration of the restriction or prohibition of discretionary payments, and that it would be applied only during severe circumstances, and not as part of the bank’s regular supervisory response. The BoE has also considered the impact that restricted discretionary payments could have on a CCP’s ability to hire and retain key staff.
