In September 2020 we published guides about a new prudential framework that was being proposed for MiFID investment firms and including Principal Brokers and Matched Principal Brokers, MiFID Authorised Investment Managers and firms categorised as Exempt CAD Firms for prudential purposes.
The Financial Conduct Authority (FCA) have now released the first of three consultation papers on how the new UK Investment Firms Prudential Regime (IFPR) will be implemented (CP20/24). This covers:
- how firms will be categorised;
- what counts as capital;
- what consolidation group requirements will apply;
- capital requirements (K-factors) for firms which deal on own account;
- what concentration risk monitoring and capital will be required; and
- regulatory reporting.
The consultation closes on Friday 5 February 2021 and a Policy Statement will then be issued.
As mentioned above, this consultation paper will be followed by two more at the beginning of Q2 and Q3 next year. These will cover the remaining areas, such as other capital requirements, liquidity, capital assessments (ICARA & SREP), remuneration, risk management & governance, and disclosures.
We recommend that you review the consultation paper (and the detailed draft rules contained in it) then carry out a gap analysis compared to your current preparations.
This new regime represents a major change for investment firms and it is vital that you understand and adequately prepare for the change. To help we held a webinar on Tuesday 19 January to go through the main issues raised:
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