RCB 1.1 Introduction to sourcebook

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

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 comply with Article 52(4)2of the UCITS Directive.

This sourcebook should be read together with the RCB Regulations.

This section refers to some of the other parts of the FCA Handbook and PRA Handbook9 which may be relevant to regulated covered bonds.

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

IFPRU investment firms 3which have exposures to covered bonds which meet the requirements set out in the provisions of 9article 129 of the EU CRR3 may benefit from reduced risk weights as set out in article 129 of the EUCRR3.

An insurer (which is not a UKSolvency II firm,4non-directive friendly society, incoming EEA firm or an incoming Treaty firm) may benefit from increased counterparty limits under INSPRU 2.1.22R (3)(b). An insurer which is a UKSolvency II firm is subject to the rules in the PRA Rulebook which transpose the Solvency II Directive and also to Solvency II Regulation (EU) 2015/35 of 10 October 2014.4

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.

1. (1)

   Issuers which are subject to an obligation to publish a prospectus under the Prospectus Directive are required by Article 3 of the PD Regulation to disclose risk factors. These requirements are set out in PR 2.3.1 EU and PR App 3.1.1 EU.

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.