Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

RCB 1.1 Introduction to sourcebook

Application

RCB 1.1.1GRP

1This sourcebook applies to issuers and owners in relation to regulated covered bonds.

Purpose

RCB 1.1.2GRP

The general purpose of this sourcebook is to set out the guidance, directions and rules made by the FCA under the RCB Regulations. Those regulations enable bonds to be issued which qualify under COLL 5.2.11R(5A) and 5.6.7R(3A) for a concession from the general spread of risk requirements in respect of transferable securities5.

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RCB 1.1.3GRP

This sourcebook should be read together with the RCB Regulations.

Other relevant provisions

RCB 1.1.4GRP

This section refers to some of the other parts of the FCA Handbook and PRA Handbook8 which may be relevant to regulated covered bonds.

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RCB 1.1.5GRP

Investors in regulated covered bonds may be able to take advantage of different regulatory treatments depending on what type of investor they are.

RCB 1.1.6GRP

IFPRU investment firms 3which have exposures to covered bonds which meet the requirements set out in the provisions of 8article 129 of the UK CRR6 may benefit from reduced risk weights as set out in article 129 of the UK CRR6.

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RCB 1.1.7GRP

An insurer (which is not a UK Solvency II firm5 or a non-directive friendly society5) may benefit from increased counterparty limits under INSPRU 2.1.22R (3)(b). An insurer which is a UK Solvency II firm is subject to the rules in the PRA Rulebook which transposed the Solvency II Directive and also to the5 Solvency II Regulation (EU) 2015/35 of 10 October 2014.4

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RCB 1.1.8GRP

UCITS schemes and non-UCITS retail schemes may benefit from less onerous spread requirements and increased investment limits under COLL 5.2.11 R and COLL 5.6.7 R.

RCB 1.1.9GRP
  1. (1)

    Issuers which are subject to an obligation to publish a prospectus under the Prospectus Regulation are required by Chapter II of the PR Regulation to disclose risk factors. These requirements are set out in PRR 2.3.1UK and PRR App 2.1.1UK, where there is a link to the relevant Annexes of the PR Regulation.7

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  2. (2)

    In complying with these obligations, issuers should consider disclosing the risk that actions by a regulatory authority in relation to the issuer may adversely affect the ability of the issuer to meet its obligations to investors or the ability of the owner to meet its guarantee obligations to investors. An example of such action may include restricting the issuer's ability to transfer further assets to the asset pool.