Prudential Regulation Authority Consults On Contractual Stays In Financial Contracts Governed By Third-Country Law

On May 26, 2015, the PRA published a consultation paper on contractual stays in financial contracts governed by non-EEA law. The consultation paper proposes a new rule to be included in the PRA rulebook that would require the contractual adoption of UK resolution stays in certain financial contracts governed by the laws of a jurisdiction outside the EEA. The rule would apply to PRA regulated banks and investment firms, prohibiting firms from creating new obligations or materially amending existing obligations under a financial contract governed by third-country law, unless there is agreement in writing with the counterparty to the contract concerning stays in resolution. The rule's aim is to reduce risks of contagion from the failure of a firm and to support orderly resolution...

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