PRA could be more flexible on matching adjustment collateral

Rigid view forces repapering of trades with no benefit for policyholders


The position of the UK regulator on managing collateral in matching adjustment (MA) portfolios is at risk of adding to firms’ costs without enhancing the security of policyholders.

The Prudential Regulation Authority (PRA) set out requirements for derivatives and collateral within a Solvency II matching adjustment (MA) portfolio in a March 28 letter, making clear that derivatives relating to assets held partly in MA portfolios and partly outside will have to be split.

The PRA also said collatera

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