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MIFIDPRU 5.2 Monitoring obligation

MIFIDPRU 5.2.1R

1A firm must monitor and control its concentration risk using sound administrative and accounting procedures and robust internal control mechanisms.

MIFIDPRU 5.2.2G

1MIFIDPRU 5.2.1R requires a firm to monitor and control all sources of concentration risk. This is not limited to trading book exposures, but also includes any concentration in assets not recorded in a trading book (for example, trade debts) and off-balance sheet items. It also includes any concentration risk that may arise from the following:

  1. (1)

    the location of client money;

  2. (2)

    the location of custody assets;

  3. (3)

    a firm’s own cash deposits; and

  4. (4)

    earnings.