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You are viewing the version of the document as on 2022-03-18.

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    2022-03-18

MIFIDPRU 5.9 The ‘hard’ limits on concentration risk

MIFIDPRU 5.9.1R
  1. (1)

    1Whilst an exposure exceeding the concentration risk soft limit has persisted for 10 business days or less, a firm’s EV for the individual client or group of connected clients must not exceed 500% of the firm’s own funds.

  2. (2)

    Whilst a firm has one or more exposures exceeding the concentration risk soft limit that have persisted for more than 10 business days, the aggregate EVEs for all such exposures must not exceed 600% of the firm’s own funds.

MIFIDPRU 5.9.2G
  1. (1)

    1An exposure exceeding the concentration risk soft limit persists for as long as the overall exposure exceeds the concentration risk soft limit, irrespective of whether the constituent parts that make up that total exposure change over the duration of that total exposure.

  2. (2)

    For the purpose of MIFIDPRU 5.9.1R(2), the 600% limit applies to the aggregate of all individual EVEs for excesses that have persisted for more than 10 business days, irrespective of whether the individual concentrated exposures are connected to one another.

  3. (3)

    The 10 business day period referred to in MIFIDPRU 5.9.1R runs from the start of the business day on which the excess occurred.

MIFIDPRU 5.9.3R

1If a firm breaches the requirement in MIFIDPRU 5.9.1R, it must notify the FCA without delay of:

  1. (1)

    the amounts of the exposure or exposures which give rise to the breach;

  2. (2)

    the name or names of the clients concerned; and

  3. (3)

    any steps which the firm or any other person has taken or intends to take to rectify the breach and prevent any future potential occurrence.

MIFIDPRU 5.9.4R

1A firm must make the notification referred to in MIFIDPRU 5.9.3R using Part B of the form in MIFIDPRU 5 Annex 1R, and must submit it using the online notification and application system.