MIFIDPRU 7.1 Application

1. (1)

   1MIFIDPRU 7.3 (Risk, remuneration and nomination committees) does not apply to a non-SNI MIFIDPRU investment firm:

   1. (a)

      where the value of the firm’s on-balance sheet assets and off-balance sheet items over the preceding 4-year period is a rolling average of £100 million or less; or

   2. (b)

      where:

      1. (i)

         the value of the firm’s on-balance sheet assets and off-balance sheet items over the preceding 4-year period is a rolling average of £300 million or less; and

      2. (ii)

         the conditions in (2) are (where they are relevant to a firm) satisfied.

2. (2)

   The conditions referred to in (1)(b)(ii) are that the:

   1. (a)

      exposure value of the firm’s on- and off-balance sheet trading book business is equal to or less than £150 million; and

   2. (b)

      exposure value of the firm’s on- and off-balance sheet derivatives business is equal to or less than £100 million.

3. (3)

   For the purposes of paragraph (1), paragraph (4) applies where a non-SNI MIFIDPRU investment firm does not have monthly data covering the 4-year period referred to in that paragraph.

4. (4)

   Where this paragraph applies, a non-SNI MIFIDPRU investment firm must calculate the rolling averages referred to in paragraph (2) using the data points that it does have.

1. (1)

   1The amounts referred to in MIFIDPRU 7.1.4R must be calculated on an individual basis, and:

   1. (a)

      in the case of on-balance sheet assets, in accordance with the applicable accounting framework;

   2. (b)

      in the case of off-balance sheet items, using the full nominal value.

2. (2)

   The value of the on-balance sheet assets and off-balance sheet items in MIFIDPRU 7.1.4R(1)(a) and (b) must be the arithmetic mean of the assets and items over the preceding 4 years, based on monthly data points.

3. (3)

   A firm may choose the day of the month that it uses for the data points in (2), but once that day has been chosen the firm may only change it for genuine business reasons.

1. (1)

   1When calculating the amounts referred to in MIFIDPRU 7.1.4R(1)(a) and (b), a firm must use the total amount of its on-balance sheet assets and off-balance sheet items.

2. (2)

   A firm must calculate the exposure values referred to in MIFIDPRU 7.1.4R(2)(a) and (b) by adding together the following items:

   1. (a)

      the positive excess of the firm’s long positions over its short positions in all trading book financial instruments, using the approach specified for K-NPR in MIFIDPRU 4.12.2R to calculate the net position for each instrument; and

   2. (b)

      the exposure value of contracts and transactions referred to in MIFIDPRU 4.14.3R, calculated using the approach specified for K-TCD in MIFIDPRU 4.14.8R.

3. (3)

   Any amounts in foreign currencies must be converted into sterling using the relevant conversion rate.

4. (4)

   A firm must determine the conversion rate in (3) by reference to an appropriate market rate and must record which rate was chosen.

1. (1)

   1This rule applies to a non-SNI MIFIDPRU investment firm that did not meet the conditions in MIFIDPRU 7.1.4R(1)(a) or (b) but subsequently does.

2. (2)

   MIFIDPRU 7.3 (Risk, remuneration and nomination committees) ceases to apply to the firm in (1) if:

   1. (a)

      the firm has met the conditions in MIFIDPRU 7.1.4R(1)(a) or (b) for a continuous period of at least 6 months (or such longer period as may have elapsed before the firm submits the notification in (b)); and

   2. (b)

      the firm has notified the FCA that it has met the conditions in (a).

3. (3)

   The notification in (2)(b) must be submitted through the online notification and application system using the form in MIFIDPRU 7 Annex 3R.

1Where a non-SNI MIFIDPRU investment firm has met the conditions in MIFIDPRU 7.1.4R(1)(a) or (b) but then ceases to do so, it must comply with MIFIDPRU 7.3 within 6 months from the date on which the firm ceased to meet the conditions.

1. (1)

   1Where a non-SNI MIFIDPRU investment firm ceases to meet the conditions in MIFIDPRU 7.1.4R(1)(a) or (b), it must promptly notify the FCA.

2. (2)

   The notification in (1) must be submitted through the online notification and application system using the form in MIFIDPRU 7 Annex 3R.