PRA sets new conditions for recognised exchanges under CRR
The Prudential Regulation Authority (PRA) has published new rules defining conditions for recognised exchanges applicable to CRR firms. These rules, made under the Financial Services and Markets Act 2000, come into force on July 1, 2026.
New criteria for market recognition
The Prudential Regulation Authority (PRA) has established new conditions for an investment exchange to be recognised under the Capital Requirements Regulation (CRR).
These conditions are divided into market structure and asset liquidity.
The market structure requires an exchange to facilitate financial instrument trading, be authorised and supervised, function regularly, and operate under non-discretionary rules for its operation, access, and instrument admission.
It must also have robust clearing and settlement mechanisms consistent with international standards and apply similar margining practices to CRR Annex II contracts.
The asset liquidity condition mandates that traded asset values are determinable via widely disseminated market prices or an easy-to-calculate formula.
Additionally, the exchange must provide an active and sizable market for outright sales, demonstrated by low bid-ask spreads, high trading volume, diverse market participants, and robust infrastructure.
These detailed criteria ensure the integrity and stability of markets relevant to CRR firms.
Application and regulatory powers
These new rules apply directly to all CRR firms and CRR consolidation entities, reinforcing the PRA's prudential oversight within the UK financial system.
The instrument, formally cited as the PRA Rulebook: CRR Firms: Recognised Exchanges Instrument 2026, was made by order of the Prudential Regulation Committee.
The PRA exercised its powers under various sections of the Financial Services and Markets Act 2000, including sections 137G (general rules) and 137T (general supplementary powers), as well as Article 4(1)(72)(c) of the assimilated Capital Requirements Regulation No 575/2013.
This legislative backing ensures the comprehensive implementation of the new framework, which comes into force on July 1, 2026.