4.1 Chapter 4 in DP1/21 discussed options for how a simpler regime for the smallest banks and building societies could be designed. It covered: how firms in scope of the regime could be determined; the development of prudential requirements under the regime; arrangements for how firms could transition out of it; and how the regime might evolve over time.
Determining firms in scope of a simpler regime
Scope
4.2 Determining which firms should be in scope of the simpler regime was considered as the first key design choice. DP1/21 stated that the basis for determining whether a firm is in scope would ideally be simple, objective, and transparent. It suggested that scope criteria could be based on a combination of size, international activity, trading book activity, use of internal models, resolvability, and highly risky forms of business activity. The DP posed the following question:
Q6: What other criteria could be used to determine banks and building societies in scope of a simpler prude
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