The U.K. Prudential Regulation Authority has published a report on the extent of proprietary trading by PRA-authorized deposit takers and investment firms incorporated in the U.K. Restrictions on proprietary trading (being the trading of financial instruments or commodities as principal by banks or investment firms) were introduced for ring-fenced retail banks in the wake of the 2008 financial crisis and came into force in January 2019. However, the U.K. decided not to impose a complete ban on proprietary trading for all banks, as had been seen in other countries, such as the U.S. under the Volcker Rule. Instead, the PRA was mandated to produce a report under the Financial Services (Banking Reform) Act 2013, with a view to informing the U.K. Parliament of the need for any further restrictions on proprietary trading.

The PRA's report concludes that further restrictions on proprietary trading should not be imposed at this time. Going forward, the PRA notes that certain policy measures that are currently being implemented, for instance the fundamental review of the trading book, would improve the treatment of some proprietary trading risks in banks. The PRA also intends to continue monitoring a number of indicators that could suggest a growth in the risks arising from proprietary trading activity.

View the PRA's Proprietary Trading Review.

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