Consultation on the Basel III Prudential Roadmap: large exposures and general matters

1    Executive summary

1.1    Overview

This consultation is part of our work on the implementation of the Basel Framework, as set out in Section 2.2 ‘Background’.

It focuses on:

  • general matters
  • market risk, trading book and counterparty credit risk
  • large exposures
  • securitisation
  • capital and ratios

1.2    What is proposed and why?

General matters (Section 3.1)

To date, our work has focussed on implementing the PS9/24 near-final rulebook (PS9/24 Rulebook), published in September 2024 as part of the Prudential Regulation Authority’s (PRA) policy statement PS9/24 Implementation of the Basel 3.1 standards near-final part 2 (PS9/24).

This part of the work on Basel III implementation has been impacted by the changing PRA regulations, which include:

It is proposed that where we say we will follow the UK, we build on the latest PRA rules, including PS19/25 amendments. Similarly, we will publish a list of relevant PRA policy documents, with links to the latest versions in the latest relevant PRA position statement.

We will pause consideration of other PRA publications until 2028.

This will give us and industry a stable set of Codes and guidance, including for prudential reporting and Pillar 2.

It also means deferring review of the PRA’s implementation of outstanding proposals on Large Exposures, which it has committed to finalise in 2026.

Market risk, trading book and counterparty credit risk (Section 3.2)

The PRA has significantly revised its rules for these risks.

Our Roadmap Consultation suggested a simpler approach, as these risks are minimal in Jersey.

We propose largely retaining current rules, with only consequential amendments linked to changes in risk-weight determination.

We will monitor developments through Pillar 2 and prudential reporting, which will be covered in our H1 2026 consultation.

Large exposures (Section 3.3)

We intend to closely align with the PRA rulebook set out in PS 14/25. This aligns with our Basel III Prudential Roadmap (jerseyfsc.org) consultation (Roadmap Consultation), reflecting the positive feedback received during the consultation and bilateral discussions.

The main differences (between our rules and the PRA rules) are:

  • the restrictions are applied to the net exposure, taking into account credit risk mitigation, (drawing on capital adequacy rules), instead of applying to the gross exposure as we currently specify
  • the PRA has exemptions for low-risk exposures, including sovereigns, whereas we have no exemptions currently
  • for exposures to banks, exposures up to £139 million are not subject to restrictions, regardless of the bank’s capital base, higher than the $50 million permitted under our current money-market concession rules

PS 14/25 is broadly consistent with the Basel Framework, which means some UK exemptions (that we did not have) have been removed.

Our main proposed change is to amend the PRA’s approach for approving intra-group exposures, to provide greater flexibility by drawing on our existing Concession Limits framework.

We welcome feedback on the detailed proposals, particularly on where simplifications or modifications are needed to address competitive disadvantages.

The PRA’s work on Large Exposures is still ongoing, with further consultation expected in 2026, particularly on collateral recognition. As noted above, we will defer consideration of this until 2028.

Securitisation (Section 3.4)

Our Roadmap Consultation did not address securitisation, but subsequent dialogue has highlighted that securitisation exposures may become material. No concerns have been raised about following the roadmap’s high-level approach, starting from the UK framework.

We intend to follow PS19/25 closely but welcome feedback on the detailed proposals, particularly where simplifications or modifications are needed to address competitive disadvantages.

Capital and ratios (Section 3.5)

We have already completed work on the definition of capital, capital minima and the capital conservation buffers. We now intend to make only consequential amendments to consolidate new or varied requirements, principally to include the output floor requirement and the systemic buffer, in line with our Basel III Prudential Roadmap: Advanced approaches, systemic importance, the Net Stable Funding Ratio and the leverage ratio (jerseyfsc.org) consultation paper, issued in August 2025 (August 2025 Consultation).

Read the full consultation on the Basel III Prudential Roadmap: large exposures and general matters.