ELM 5.5 Rules for making calculations

Except as otherwise provided for in ELM, a firm must, for the purposes of the ELM financial rules, translate assets and liabilities denominated in a foreign currency into the firm's base currency using the closing mid market rate of exchange.

Except as otherwise provided for in ELM, and subject to ELM 5.5.3 R, a firm must determine amounts included in the calculations required by the ELM financial rules in accordance with the accounting principles and rules which the firm would apply if it were drawing up financial statements under the Companies Act 1985 (and Companies Act 2006 (as applicable))2 including those accounting principles and rules contained in the United Kingdom Statements of Standard Accounting Practice (SSAPs) and Financial Reporting Standards (FRSs) or, where applicable, international accounting standards1 effective at the relevant time.

A firm must determine amounts included in the calculations required by the ELM financial rules in such a way as to reflect the substance and not merely the legal form of the underlying transactions and balances.

A firm must value assets, liabilities and positions on a prudent and consistent basis, as well as having regard to the liquidity of the investment concerned and any special factors which may adversely affect the closure of the position. This rule does not override the valuation requirements in ELM 3.3.2 R (Valuation of qualifying liquid assets).