BIPRU 1.1 Application

BIPRU applies to a firm in relation to the whole of its business, except where a particular provision provides for a narrower scope.

Subject to BIPRU 1.1.7 R, a BIPRU firm means a firm that is:[deleted]

1. (1)

   a building society; or

2. (2)

   a bank; or

3. (3)

   a full scope BIPRU investment firm; or

4. (4)

   a BIPRU limited licence firm; or

5. (5)

   a BIPRU limited activity firm.

None of the following is a BIPRU firm and each of the following is excluded from each of the categories of BIPRU investment firm listed in BIPRU 1.1.6 R (3) to BIPRU 1.1.6R (5) and BIPRU 1.1.18 R (2) to (4):

1. (1)

   an incoming EEA firm;

2. (2)

   an incoming Treaty firm;

3. (3)

   any other overseas firm;

4. (4)

   an ELMI;

5. (5)

   an insurer; and

6. (6)

   an ICVC.

A firm falling within BIPRU 1.1.6 R (3) to BIPRU 1.1.6R (5) is a BIPRU investment firm. A BIPRU investment firm includes a UCITS investment firm that is not excluded under BIPRU 1.1.7 R.

A limited activity firm means (as specified by Article 20(3) of the Capital Adequacy Directive (Exemptions from operational risk)) a CAD investment firm that satisfies the following conditions:

1. (1)

   it meets the criteria in (a) or the criteria in (b):

   1. (a)

      it deals on own account only:

      1. (i)

         for the purpose of fulfilling or executing a client order; or

      2. (ii)

         for the purpose of gaining entrance to a clearing and settlement system or a recognised investment exchange or designated investment exchange when acting in an agency capacity or executing a client order; or

   2. (b)

      it satisfies the following conditions:

      1. (i)

         it does not hold client money or securities in relation to investment services that it provides and is not authorised to do so;

      2. (ii)

         the only core investment service it undertakes is dealing on own account;

      3. (iii)

         it has no external customers in relation to investment services it provides; and

      4. (iv)

         the execution and settlement of its transactions in relation to investment services it provides takes place under the responsibility of a clearing institution and are guaranteed by that clearing institution;

2. (2)

   (in the case of a CAD investment firm that is a BIPRU investment firm) its base capital resources requirement is €730,000;

3. (3)

   (in the case of a CAD investment firm that is an EEA firm) it is subject to the CRD implementation measures of its Home State for Article 9 of the Capital Adequacy Directive (Initial capital requirement of €730,000); and

4. (4)

   (in the case of any other CAD investment firm) its base capital resources requirement would be €730,000 if it had been a BIPRU investment firm on the basis of the assumptions in BIPRU 1.1.14 R (3)(a) and BIPRU 1.1.14 R (3)(b).

A limited licence firm means (as specified by Article 20(2) of the Capital Adequacy Directive (Exemptions from operational risk)) a CAD investment firm that is not authorised to:

1. (1)

   deal on own account; or

2. (2)

   provide the investment services of underwriting or placing financial instruments (as referred to in point 4 of Section A of Annex I of the ISD) on a firm commitment basis.

A CAD full scope firm means a CAD investment firm that is not a limited activity firm or a limited licence firm.

1. (1)

   In accordance with Article 3(1)(b) of the Capital Adequacy Directive, a person is a CAD investment firm if it falls into (2) or (3).

2. (2)

   A person whose head office is in an EEA State is a CAD investment firm if it is an investment firm that is subject to the requirements imposed by the ISD but excludes the following:

   1. (a)

      a bank, a building society or an ELMI;

   2. (b)

      a credit institution;

   3. (c)

      a local; and

   4. (d)

      an exempt CAD firm.

3. (3)

   An investment firm whose head office is not in an EEA State is a CAD investment firm if it would have fallen into (2) if:

   1. (a)

      its head office had been in an EEA State; and

   2. (b)

      it had carried on all its business in the EEA and had obtained whatever authorisations for doing so are required under the ISD.

In accordance with Article 3(1)(b)(iii) of the Capital Adequacy Directive (Definitions), an exempt CAD firm means an investment firm that satisfies the following conditions:

1. (1)

   it would have been a CAD investment firm if exempt CAD firms were not excluded from the definition; and

2. (2)

   the only core investment service for which it is authorised is receiving and transmitting orders from investors (as referred to in Section A of Annex I of the ISD) without holding money or securities belonging to its clients in relation to investment services it provides and for that reason itmay not at any time place itself in debt with those clients.

1. (1)

   A BIPRU limited licence firm means a limited licence firm that falls into (4).

2. (2)

   A BIPRU limited activity firm means a limited activity firm that falls into (4).

3. (3)

   A full scope BIPRU investment firm means a CAD full scope firm that falls into (4).

4. (4)

   A limited licence firm, limited activity firm or CAD full scope firm falls into (4) if:

   1. (a)

      it is a firm; and

   2. (b)

      its head office is in the United Kingdom and it is not otherwise excluded from the definition of BIPRU firm under BIPRU 1.1.7 R.

BIPRU investment firm are divided into the following classes for the purposes of the calculation of the base capital resources requirement and for the purpose of any other provision of the Handbook that applies this classification:

1. (1)

   a UCITS investment firm;

2. (2)

   a BIPRU 50K firm;

3. (3)

   a BIPRU 125K firm; and

4. (4)

   a BIPRU 730K firm.

A BIPRU 125K firm means a BIPRU investment firm that satisfies the following conditions:

1. (1)

   it does not:

   1. (a)

      deal on own account; or

   2. (b)

      underwrite issues of financial instruments (as referred in Section A of Annex I of the ISD) on a firm commitment basis;

2. (2)

   it holds clients' money or securities in relation to investment services it provides or is authorised to do so;

3. (3)

   it offers one or more of the following services (all as referred to in Section A of Annex I of the ISD):

   1. (a)

      reception and transmission of investors' orders for financial instruments; or

   2. (b)

      the execution of investors' orders for financial instruments; or

   3. (c)

      the management of individual portfolios of investments in financial instruments; and

4. (4)

   it is not a UCITS investment firm.

A BIPRU 50K firm means a BIPRU investment firm that satisfies the following conditions:

1. (1)

   it satisfies the conditions in BIPRU 1.1.19 R (1)and (3);

2. (2)

   it does not hold clients' money or securities in relation to investment services it provides and it is not authorised to do so; and

3. (3)

   it is not a UCITS investment firm.

A BIPRU investment firm that is not a UCITS investment firm, a BIPRU 50K firm or a BIPRU 125K firm is a BIPRU 730K firm.

A firm also falls into one of the categories of BIPRU investment firm listed in BIPRU 1.1.6 R (3)to (5) or BIPRU 1.1.18 R if its Part IV permission contains a requirement that it comply with the rules in GENPRU and BIPRU applicable to that category of firm. If a firm is subject to such a requirement and it would otherwise also fall into another category of BIPRU investment firm it does not fall into that other category.

1. (1)

   Dealing on own account means (for the purpose of GENPRU and BIPRU) the service of dealing in any financial instruments for own account as referred to in point 2 of Section A of theAnnex to the ISD, subject to (2) and (3).

2. (2)

   In accordance with Article5(2) of the Capital Adequacy Directive (Definition of dealing on own account), a CAD investment firm that executes investors' orders for financial instruments and holds such financial instruments for its own account does not for that reason deal on own account if the following conditions are met:

   1. (a)

      such position only arise as a result of the CAD investment firm's failure to match investors' orders precisely;

   2. (b)

      the total market value of all such positions is no higher than 15% of the CAD investment firm's initial capital;

   3. (c)

      (in the case of a BIPRU investment firm) it complies with the main BIPRU firm Pillar 1 rules and BIPRU 10 (Concentration risk);

   4. (d)

      (in the case of a CAD investment firm that is an EEA firm) it complies with the CRD implementation measures of its Home State for Articles 18 and 20 (Minimum capital requirements) and 28 (Large exposures) of the Capital Adequacy Directive;

   5. (e)

      (in the case of any other CAD investment firm) it would comply with the rules in (2)(c) if it had been a BIPRU investment firm on the basis of the assumptions in BIPRU 1.1.14 R (3)(a) and BIPRU 1.1.14R (3)(b); and

   6. (f)

      such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction in question.

3. (3)

   In accordance with Article 5(2) of the Capital Adequacy Directive, the holding of non-trading book positions in financial instruments in order to invest capital resources is not dealing on own account for the purposes referred to in BIPRU 1.1.18 R.

For the purposes of the definitions in BIPRU 1.1, a person does any of the activities referred to in BIPRU 1.1 if:

1. (1)

   it does that activity anywhere in the world; or

2. (2)

   if its permission includes that activity; or

3. (3)

   (in the case of an EEA firm) it is authorised by its Home State regulator to do that activity; or

4. (4)

   (if the carrying on of that activity is prohibited in a state or territory without an authorisation in that state or territory) that firm has such an authorisation.

For the purposes of the definitions in BIPRU 1.1, a person offers any of the services referred to in BIPRU 1.1.19 R (3)if:

1. (1)

   it offers that service anywhere in the world; or

2. (2)

   any of BIPRU 1.1.24 R (1) to BIPRU 1.1.24R (4) apply.

For the purposes of the definitions in BIPRU 1.1, a person has an authorisation to do any of the activities referred to in BIPRU 1.1 if any of BIPRU 1.1.24 R (2) to (4) apply.