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SYSC 1.5 Significant SYSC firm

Purpose

SYSC 1.5.1G
  1. (1)

    1The purpose of SYSC 1.5 is to set out the definition of a significant SYSC firm.

  2. (2)

    The following governance requirements in SYSC apply by reference to the term significant SYSC firm:

    1. (a)

      SYSC 4.3A.6R on the limitations in the number of directorships;

    2. (b)

      SYSC 4.3A.8R on the nomination committee; and

    3. (c)

      SYSC 7.1.18R and SYSC 7.1.18AAR on the risk committee.

  3. (3)

    MIFIDPRU investment firms are not subject to SYSC 4.3A.8R or SYSC 7.1.18R, and should refer instead to MIFIDPRU 7.3.

  4. (4)

    The definition of significant SYSC firm is also relevant in determining whether a firm is an enhanced scope SMCR firm for the purposes of the senior managers and certification regime.

Definition of a significant SYSC firm

SYSC 1.5.2R

1A firm is a significant SYSC firm if it meets one or more of the following conditions:

  1. (1)

    its total assets exceed £530 million;

  2. (2)

    its total liabilities exceed £380 million;

  3. (3)

    the annual fees and commission income it receives in relation to the regulated activities carried on by the firm exceeds £160 million in the 12-month period immediately preceding the date the firm carries out the assessment under this rule;

  4. (4)

    the client money that it receives or holds exceeds £425 million; and

  5. (5)

    the assets belonging to its clients that it holds in the course of, or in connection with, its regulated activities exceeds £7.8 billion.

SYSC 1.5.3R
  1. (1)

    1This rule defines some of the terms used in SYSC 1.5.2R.

  2. (2)

    “Total assets” means the firm’s total assets:

    1. (a)

      as set out in the most recent relevant report submitted to the FCA under SUP 16.12 (Integrated Regulatory Reporting); or

    2. (b)

      (where the firm carries out the assessment under SYSC 1.5.4R at any time after the date of its most recent report in (a)) as the firm would report to the FCA in accordance with the relevant report, as if the reporting period for that report ended on the date of the assessment.

  3. (3)

    “Total liabilities” means the firm’s total liabilities:

    1. (a)

      as set out in the most recent relevant report submitted to the FCA under SUP 16.12 (Integrated Regulatory Reporting); or

    2. (b)

      (where the firm carries out the assessment under SYSC 1.5.4R at any time after the date of its most recent report in (a)) as the firm would report to the FCA in accordance with the relevant report, as if the reporting period for that report ended on the date of the assessment.

  4. (4)

    “client money” means client money that a firm receives or holds in the course of, or in connection with, all of the regulated activities that it carries on:

    1. (a)

      as set out in the most recent client money and client asset report submitted to the FCA under SUP 16.12 (Integrated Regulatory Reporting); or

    2. (b)

      (where the firm carries out the assessment under SYSC 1.5.4R at any time after the date of its most recent report in (a)) as the firm would report to the FCA in accordance with the relevant report, as if the reporting period for that report ended on the date of the assessment.

  5. (5)

    “Assets belonging to its clients” means the assets to which the custody rules apply:

    1. (a)

      as set out in the most recent client money and client asset report submitted to the FCA under SUP 16.12 (Integrated Regulatory Reporting); or

    2. (b)

      (if the firm carries out the assessment under SYSC 1.5.4R at any time after the date of its most recent report in (a)) as the firm would report to the FCA in accordance with the relevant report, as if the reporting period for that report ends on the date the assessment is carried out.

SYSC 1.5.4R

1A firm must assess regularly whether it becomes a significant SYSC firm.

SYSC 1.5.5R
  1. (1)

    1If a firm, at any time, becomes aware that it is likely to become a significant SYSC firm, it must forthwith make arrangements to establish and have in place sound, effective and comprehensive strategies, processes and systems to achieve compliance with the requirements that apply to a significant SYSC firm.

  2. (2)

    The firm in (1) must comply with the requirements that apply to a significant SYSC firm on the expiry of a period of 3 months from the date it meets any one of the conditions in SYSC 1.5.2R.

SYSC 1.5.6R

1If a firm that is a significant SYSC firm ceases to meet any of the conditions in SYSC 1.5.2R, it must continue to comply with the rules and requirements applicable to a significant SYSC firm until the first anniversary of the date on which the firm ceased to be a significant SYSC firm.

SYSC 1.5.7G

1The FCA may, on a case-by-case basis, require a firm which does not meet any of the conditions in SYSC 1.5.2R to comply with the rules and requirements that apply to a significant SYSC firm if the FCA considers it appropriate to do so to meet its strategic objective or to advance one or more of its operational objectives under the Act.

SYSC 1.5.8G
  1. (1)

    1A firm may apply to the FCA under section 138A of the Act to waive any one or more of the conditions in SYSC 1.5.2R if it believes that one or more of the governance requirements in (2) that apply to a significant SYSC firm may be disproportionate. In its application for a waiver, the FCA expects the firm to demonstrate that it should not be considered as significant, taking into account the size, nature, scope and complexity of its activities, any membership of a group and the internal organisation of that group.

  2. (2)

    The governance requirements referred to in (1) are:

    1. (a)

      SYSC 4.3A.6R on the limitations in the number of directorships;

    2. (b)

      SYSC 4.3A.8R on the nomination committee; or

    3. (c)

      SYSC 7.1.18 R on the risk committee.

  3. (3)

    The effect of such waiver is that the firm would not be a significant SYSC firm only for the purpose of the particular governance requirement in (2) that the waiver is expressed to apply to. For the avoidance of doubt, such a firm would still be a significant SYSC firm for the purpose of the other rules in the FCA Handbook that apply to a significant SYSC firm, except where expressly otherwise provided for.