MIFIDPRU 1.2 SNI MIFIDPRU investment firms

1A MIFIDPRU investment firm is an SNI MIFIDPRU investment firm if it satisfies the following conditions:

1. (1)

   its average AUM, as calculated in accordance with MIFIDPRU 4.7.5R is less than £1.2 billion;

2. (2)

   its average COH, as calculated in accordance with MIFIDPRU 4.10.19R is less than:

   1. (a)

      £100 million per day for cash trades; and

   2. (b)

      £1 billion per day for derivatives trades;

3. (3)

   its average ASA, as calculated in accordance with MIFIDPRU 4.9.8R is zero;

4. (4)

   its average CMH, as calculated in accordance with MIFIDPRU 4.8.13R is zero;

5. (5)

   it does not have permission for any of the following:4

   1. (a)

      4dealing on own account; or

   2. (b)

      4underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis;

6. (6)

   its on- and off-balance sheet total is less than £100 million;

7. (7)

   its total annual gross revenue from investment services and/or activities is less than £30 million, calculated as an average on the basis of the annual figures from the two-year period immediately preceding the given financial year;

8. (8)

   it has not been classified as a non-SNI MIFIDPRU investment firm due to the effect of MIFIDPRU 10.2 (Categorisation of clearing firms as non-SNI MIFIDPRU investment firms); 2

9. (9)

   its average DTF, as calculated in accordance with MIFIDPRU 4.15.4R, is zero; and2

10. (10)

    2it is not appointed to act as a depositary in accordance with FUND 3.11.10R(2) or COLL 6.6A.8R(3)(b)(i).

1Notwithstanding the calculation methodologies in MIFIDPRU 4, the firm must use the following for the purposes of the conditions in MIFIDPRU 1.2.1R:

1. (1)

   end-of-day values to calculate:

   1. (a)

      its average AUM under MIFIDPRU 1.2.1R(1);

   2. (b)

      its average COH under MIFIDPRU 1.2.1R(2);

   3. (c)

      its average ASA under MIFIDPRU 1.2.1R(3);

2. (2)

   intra-day values to assess its average CMH under MIFIDPRU 1.2.1R(4).

1. (1)

   1By way of derogation from MIFIDPRU 1.2.1R, a firm may use the alternative approach in (2) to measure:

   1. (a)

      its average AUM for the purposes of MIFIDPRU 1.2.1R(1); and/or

   2. (b)

      its average COH for the purposes of MIFIDPRU 1.2.1R(2).

2. (2)

   The alternative approach is to apply the methodologies in MIFIDPRU 4 for measuring average AUM and average COH, but with the following modifications:

   1. (a)

      the measurement must be performed over the immediately preceding 12 months; and

   2. (b)

      the exclusion of the 3 most recently monthly values does not apply.

3. (3)

   If a firm uses the derogation in (1), it must:

   1. (a)

      notify the FCA by submitting the form in MIFIDPRU 1 Annex 1R via the online notification and application system; and

   2. (b)

      apply the alternative approach for a continuous period of at least 12 months from the date specified in the firm’s notice in (a).

4. (4)

   If a firm ceases to apply the derogation in (1), it must notify the FCA by submitting the form in MIFIDPRU 1 Annex 1R via the online notification and application system.

1. (1)

   1Subject to (2), a firm must use the values recorded at the end of the last financial year for which accounts have been finalised and approved by its management body to assess each of the following conditions:

   1. (a)

      its on- and off-balance sheet total under MIFIDPRU 1.2.1R(6); and

   2. (b)

      its total annual gross revenue under MIFIDPRU 1.2.1R(7).

2. (2)

   The firm must use provisional accounts where its accounts have not been finalised and approved after 6 months from the end of the last financial year.

1. (1)

   1A firm may use the end-of-day value for average CMH instead of the intra-day value under MIFIDPRU 1.2.3R(2) if:

   1. (a)

      there is an error in record-keeping or in the reconciliation of accounts that incorrectly indicates that the firm has breached the zero threshold in MIFIDPRU 1.2.1R(4); and

   2. (b)

      the error is resolved before the end of the business day to which it relates.

2. (2)

   If a firm uses an end-of-day value under (1), it must notify the FCA immediately of:

   1. (a)

      the error;

   2. (b)

      the reasons that the error occurred; and

   3. (c)

      how the error has been corrected.

3. (3)

   The notification in (2) must be submitted via the online notification and application system using the form in MIFIDPRU 1 Annex 2R.

1A MIFIDPRU investment firm must assess the following conditions on the basis of the firm’s individual situation:

1. (1)

   average ASA under MIFIDPRU 1.2.1R(3);

2. (2)

   average CMH under MIFIDPRU 1.2.1R(4);

3. (3)

   average DTF under MIFIDPRU 1.2.1R(9);

4. (4)

   whether the firm has permission to deal on own account; 2

5. (5)

   whether the firm is a clearing member or an indirect clearing firm; and2

6. (6)

   2whether the firm is appointed to act as a depositary in accordance with FUND 3.11.10R(2) or COLL 6.6A.8R(3)(b)(i).

1. (1)

   1A MIFIDPRU investment firm must assess the conditions in (2) on the basis of the combined position of each of the following entities that form part of the same group as the firm:;

   1. (a)

      MIFIDPRU investment firms;

   2. (b)

      designated investment firms;

   3. (c)

      collective portfolio management investment firms; and

   4. (d)

      third country investment firms that carry on investment services and/or activities in the UK.

2. (2)

   The relevant conditions are:

   1. (a)

      where a MIFIDPRU investment firm has metrics for AUM,3 average AUM under MIFIDPRU 1.2.1R(1);

   2. (b)

      where a MIFIDPRU investment firm has metrics for COH,3 average COH under MIFIDPRU 1.2.1R(2);

   3. (c)

      the on- and off-balance sheet total under MIFIDPRU 1.2.1R(6); and

   4. (d)

      total annual gross revenue under MIFIDPRU 1.2.1R(7).

3. (3)

   When measuring the combined total annual gross revenue under (2)(d), the firm may exclude any double counting that arises in respect of gross revenues generated within the group.

4. (4)

   When calculating the contribution of the following to the combined position of the group, the firm must:

   1. (a)

      for a collective portfolio management investment firm, include only amounts that are attributable to the investment services and/or activities that fall within COLL 6.9.9R (4) to COLL 6.9.9R (6) or FUND 1.4.3R (3) to FUND 1.4.3R (6); and

   2. (b)

      for a third country investment firm:

      1. (i)

         include only amounts that are attributable to the investment services and/or activities that are carried on by the third country investment firm in the UK; and

      2. (ii)

         apply the definitions of AUM and COH as if the references to “MiFID business” in those definitions included the investment services and/or activities in (i).

1. (1)

   1This rule applies to a non-SNI MIFIDPRU investment firm that subsequently satisfies all the conditions in MIFIDPRU 1.2.1R.

2. (2)

   The firm in (1) shall be reclassified as an SNI MIFIDPRU investment firm only if:

   1. (a)

      the firm satisfies the relevant conditions for a continuous period of at least 6 months (or any longer period that has elapsed before the firm submits the notification in (b)); and

   2. (b)

      the firm notifies the FCA that it satisfies the conditions in (a).

3. (3)

   The notification in (2)(b) must be submitted via the online notification and application system using the form in MIFIDPRU 1 Annex 3R.

1Where a MIFIDPRU investment firm no longer satisfies all the conditions set out in MIFIDPRU 1.2.1R, it ceases to be an SNI MIFIDPRU investment firm with immediate effect, except where MIFIDPRU 1.2.15R applies.

1. (1)

   1Where a MIFIDPRU investment firm exceeds one or more of the thresholds in (2), but continues to satisfy all other conditions in MIFIDPRU 1.2.1R, it ceases to be an SNI MIFIDPRU investment firm 3 months after the date on which it first exceeded the relevant threshold.

2. (2)

   The relevant thresholds are:

   1. (a)

      the average AUM threshold in MIFIDPRU 1.2.1R(1);

   2. (b)

      either or both of the average COH thresholds in MIFIDPRU 1.2.1R(2);

   3. (c)

      the on- and off-balance sheet total threshold in MIFIDPRU 1.2.1R(6); and

   4. (d)

      the total annual gross revenue threshold in MIFIDPRU 1.2.1R(7).

1. (1)

   1If a MIFIDPRU investment firm ceases to satisfy one of the conditions in MIFIDPRU 1.2.1R, it must promptly notify the FCA.

2. (2)

   The notification in (1) must be submitted via the online notification and application system using the form in MIFIDPRU 1 Annex 4R.

1. (1)

   1Subject to (2) and (3), the following provisions do not apply to an SNI MIFIDPRU investment firm:

   1. (a)

      MIFIDPRU 7.3 (Risk, remuneration and nomination committees);

   2. (b)

      the provisions in SYSC 19G (MIFIDPRU Remuneration Code) which are not listed in SYSC 19G.1.6R(2).

2. (2)

   Subject to (4) and (5), if a non-SNI MIFIDPRU investment firm satisfies the conditions in MIFIDPRU 1.2.1R to be classified as an SNI MIFIDPRU investment firm, the provisions in (1) will cease to apply only:

   1. (a)

      6 months after the date on which the firm first satisfied those conditions (or after any longer period that has elapsed before the firm submits the notification in (b)(ii)); and

   2. (b)

      provided that the firm:

      1. (i)

         continued to satisfy the conditions throughout the period in (a); and

      2. (ii)

         has notified the FCA under MIFIDPRU 1.2.13R(2)(b).

3. (3)

   Subject to (4) and (5), if an SNI MIFIDPRU investment firm no longer satisfies the conditions in MIFIDPRU 1.2.1R to be classified as an SNI MIFIDPRU investment firm, it must:

   1. (a)

      notify the FCA immediately in accordance with MIFIDPRU 1.2.16R of the date on which it ceased to satisfy the conditions; and

   2. (b)

      comply with the provisions in (1) within 12 months from the date on which the firm ceased to satisfy the conditions.

4. (4)

   MIFIDPRU 7.3 (Risk, remuneration and nomination committees) does not apply to a non-SNI MIFIDPRU investment firm if the firm meets the conditions in MIFIDPRU 7.1.4R.

5. (5)

   The provisions listed in SYSC 19G.1.1R(4) do not apply to a non-SNI MIFIDPRU investment firm if the firm meets the conditions in SYSC 19G.1.1R(2).