MIFIDPRU 6.3 Core liquid assets

1Subject to MIFIDPRU 6.3.3R to MIFIDPRU 6.3.5R, a core liquid asset means any of the following, when denominated in pound sterling:

1. (1)

   coins and banknotes;

2. (2)

   short-term deposits at a UK-authorised credit institution;

3. (3)

   assets representing claims on or guaranteed by the UK government or the Bank of England;

4. (4)

   units or shares in a short-term MMF;

5. (5)

   units or shares in a third country fund that is comparable to a short-term MMF; and

6. (6)

   trade receivables, if the conditions in MIFIDPRU 6.3.3R are met.

1A firm may treat trade receivables as core liquid assets if:

1. (1)

   the firm is:

   1. (a)

      an SNI MIFIDPRU investment firm; or

   2. (b)

      a MIFIDPRU investment firm that does not have permission to carry on:

      1. (i)

         dealing on own account; or

      2. (ii)

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

2. (2)

   they are receivable within 30 days;

3. (3)

   they account for no more than one third of the requirement based upon the fixed overheads requirement in MIFIDPRU 6.2.1R(1);

4. (4)

   they are not used to meet the requirement for guarantees in MIFIDPRU 6.2.1R(2); and

5. (5)

   they are subject to a minimum haircut of 50%.

1. (1)

   1If a firm's relevant expenditure or guarantees are incurred in a currency other than pound sterling, the firm may also treat the following assets as liquid assets, when denominated in that currency:

   1. (a)

      coins and banknotes;

   2. (b)

      short-term deposits at a credit institution;

   3. (c)

      assets representing claims on or guaranteed by a central bank or government in a third country;

   4. (d)

      units or shares in a short-term MMF;

   5. (e)

      units or shares in a third country fund that is comparable to a short-term MMF; and

   6. (f)

      trade receivables, if the conditions in MIFIDPRU 6.3.3R are met.

2. (2)

   The assets in (1) must not account for more than the proportion of fixed overheads or guarantees that the firm incurs in that currency.

3. (3)

   This rule is subject to MIFIDPRU 6.3.5R.

1A firm must not treat any of the following as a core liquid asset:

1. (1)

   any asset that belongs to a client; and

2. (2)

   any other asset that is encumbered.