FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime. This is FCA's second policy statement on the investment firms regime and it aims to streamline the prudential requirements for solo-regulated investment firms in the UK (FCA investment firms). The new regime represents a major change for FCA investment firms and is expected to take effect in January 2022, subject to the Treasury making the necessary secondary legislation under the Financial Services Act. FCA intends to publish another consultation sometime in the beginning of August, followed by a policy statement summarizing the feedback received and bringing together all the final rules in the fourth quarter of 2021.
This policy statement follows CP21/7, the feedback period for which ran from April 19, 2021 to May 28, 2021. In this consultation, FCA had sought views on the remaining aspects on own funds requirements (such as the Fixed Overheads Requirement), the basic liquid assets requirement, the remuneration requirements, the Internal Capital and Risk Assessment (ICARA) process, and the draft reporting and notification templates. The policy statement addresses the feedback received with respect to the the liquid assets requirement reporting (MIF007), the ICARA process reporting (MIF007), group capital test reporting (MIF006), remuneration reporting (MIF008), and proportionality, among others. FCA received 63 responses to CP21/7, with most respondents supporting the proposals. In some cases, respondents requested clarifications on the application of rules, though, in a small number of cases, they opposed the proposals or suggested changes to the proposed rules.
In general, FCA has implemented the proposals as consulted on while making amendments to provide more clarity in response to some of the feedback received. As the near-final legal instrument does not differ significantly from the version in CP21/7, FCA considers that the original cost-benefit analysis remains appropriate. Appendix 1 of the policy statement presents the near-final text of the Investment Firms Prudential Regime Instrument 2021. This instrument is expected to come into force on January 01, 2022, with certain exceptions that come into force on December 01, 2021.
Related Links
Keywords: Europe, UK, Securities, IFPR, Investment Firms, Regulatory Capital, Reporting, Liquidity Risk, Proportionality, ICARA, K-Factor Regime, FCA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards