Related provisions for BIPRU 7.8.20
1 - 20 of 76 items.
A firm which underwrites or sub-underwrites an issue of securities must, for the purposes of calculating its market risk capital component and its concentration risk capital component:(1) identify commitments to underwrite or sub-underwrite which give rise to an underwritingposition (see BIPRU 7.8.8R);(2) identify the time of initial commitment (see BIPRU 7.8.13R); and(3) calculate the net underwriting position (set out in BIPRU 7.8.17R), reduced net underwriting position or the
A firm must include the net underwriting position or reduced net underwriting position in whichever one or more of the following is or are relevant:(1) BIPRU 7.2.3R (1) where debt securities are being underwritten;(2) BIPRU 7.3.2R (1) where equities are being underwritten;(3) BIPRU 7.6.22R where warrants are being underwritten; and(4) BIPRU 7.5.3R where the equities, debt securities or warrants being underwritten are denominated in a foreign currency.
The net underwriting position or reduced net underwriting position arising from underwriting or sub-underwriting a rights or warrants issue should be calculated using the current market price of the underlying security for the purposes of the equity PRR or option PRR. However, the PRR will be limited to the value of the net underwriting position calculated using the initial issue price of the rights or warrants. Where there is no market price because the rights or warrants are
(1) For the purpose of BIPRU 7.8.2R (1), a firm has a commitment to underwrite or sub-underwrite an issue of securities where:(a) it gives a commitment to an issuer of securities to underwrite an issue of securities; or(b) (where BIPRU 7.8.12R (2) applies) it gives a commitment to a seller of securities to underwrite a sale of those securities;(c) it gives a commitment to a person, other than the issuer of securities or, if BIPRU 7.8.12R (2) applies, the seller of the securities,
(1) A firm that buys and sells securities before issue is dealing in the grey market for the purposes of BIPRU 7.8.(2) BIPRU 7.8 does not apply to a firm with respect to its dealings in the grey market unless the firm:(a) has an underwriting commitment to the issuer in respect of those securities; or(b) has a sub-underwriting commitment in respect of those securities and is using the grey market solely for the purpose of reducing that sub-underwriting commitment.(3) BIPRU 7.8
For the purposes of BIPRU 7.8, a firm must treat securities as being new for the purposes of the definition of underwriting if they are:(1) securities that, prior to the allotment following the underwriting, were not in issue; or(2) securities that do not fall within (1) but that have not previously been offered for sale or subscription to the public and have not been admitted to trading on a market operated by a recognised investment exchange or an overseas investment exchan
Subject to BIPRU 7.8.14R, the time of initial commitment is the earlier of:(1) (in the case of underwriting) the time the firm agrees with the issuer of securities to underwrite those securities; or(2) (in the case of underwriting falling under BIPRU 7.8.12R (2)) the time the firm agrees with the seller of securities to underwrite those securities; or(3) (in the case of sub-underwriting) the time the firm agrees with the person referred to BIPRU 7.8.8R (1)(c) to sub-underwrite
A firm must calculate a net underwriting position by adjusting the gross amount it has committed to underwrite for:(1) any sales or sub-underwriting commitments received that have been confirmed in writing at the time of initial commitment (but excluding any sales in the grey market as defined in BIPRU 7.8.10R (1));(2) any underwriting or sub-underwriting commitments obtained from others since the time of initial commitment;(3) any purchases or sales of the securities since the
(1) This rule deals with the treatment of short positions that arise when a firm commits to distribute securities that it is underwriting in an amount that exceeds the allocation to the firm made by the issuer of the securities being underwritten.(2) When calculating its net underwriting position, a firm may use an over-allotment option granted to it by the issuer of the securities being underwritten to reduce the short positions in (1).(3) A firm may also use an over-allotment
To calculate the reduced net underwriting position a firm must apply the reduction factors in the table in BIPRU 7.8.28R to the net underwriting position (calculated under BIPRU 7.8.17R) as follows:(1) in respect of debt securities, a firm must calculate two reduced net underwriting positions; one for inclusion in the firm'sinterest rate PRRspecific risk calculation (BIPRU 7.2.43R), the other for inclusion in its interest rate PRRgeneral market risk calculation (BIPRU 7.2.52R);
Table: Net underwriting position reduction factors
This table belongs to BIPRU 7.8.27R
Underwriting timeline |
Debt |
Equity |
|
Time of initial commitment until working day 0 |
0% |
100% |
90% |
0% |
90% |
90% |
|
0% |
75% |
75% |
|
0% |
75% |
75% |
|
0% |
50% |
50% |
|
0% |
25% |
25% |
|
Working day 6 and onwards |
0% |
0% |
0% |
Table: Example of the reduced net underwriting position calculation
This table belongs to BIPRU 7.8.29G
Time |
Percentage reduction (see BIPRU 7.8.28R) |
||||
At initial commitment 9.00am Monday |
£100m gross amount is reduced by £20m due to sales/sub-underwriting commitments confirmed in writing at the time of initial commitment (see BIPRU 7.8.17R (1)) and (4)). |
= |
£80m |
90% |
£8m |
Post initial commitment 9.02am Monday |
Remaining £80m is reduced by £40m due to further sales, sub-underwriting commitments obtained and allocations granted (see BIPRU 7.8.17R (2) - (5)). |
= |
£40m |
90% |
£4m |
At the end of working day 1 |
Remaining £40m is reduced to £20m due to further sales. |
= |
£20m |
90% |
£2m |
End of working day 3 |
Remaining £20m is reduced to £5m due to further sales. |
= |
£5m |
75% |
£1.25 m |
End of working day 4 |
Remaining £5m is reduced to £2m due to further sales. |
= |
£2m |
50% |
£1m |
End of working day 5 |
Remaining £2m is reduced to £1m due to further sales. |
= |
£1m |
25% |
£0.75 m |
Start of working day 6 |
£1m remaining |
= |
£1m |
0% |
£1m |
Table: Calculation of net underwriting exposure
This table belongs to BIPRU 7.8.34R
Time |
Reduction factor to be applied to net underwriting position |
100% |
|
100% |
|
90% |
|
75% |
|
75% |
|
50% |
|
25% |
|
Working day 6 onwards |
0% |
A firm must take reasonable steps to establish and maintain such systems and controls to monitor and manage its underwriting and sub-underwriting business as are appropriate to the nature, scale and complexity of its underwriting and sub-underwriting business. In particular, a firm must have systems to monitor and control its underwritingexposures between the time of the initial commitment and working day one in the light of the nature of the risks incurred in the markets in
A firm should take reasonable steps to:(1) allocate responsibility for the management of its underwriting and sub-underwriting business;(2) allocate adequate resources to monitor and control its underwriting and sub-underwriting business;(3) satisfy itself that its systems to monitor exposure to counterparties will calculate, revise and update its exposure to each counterparty arising from its underwriting or sub-underwriting business;(4) satisfy itself of the suitability of each
Subject to BIPRU 7.10.53R (Model standards: Materiality), a VaR model should capture and accurately reflect all material risks arising on the underlying portfolio on a continuing basis insofar as those risks are within the scope of the VaR model permission. This should encompass general market risk and, to the extent that this comes within the scope of the VaR model permission, specific risk. A firm should ensure that the VaR model has sufficient risk factor granularity to be
(1) If a firm'sVaR model covers the calculation of PRR with respect to specific risk the firm must meet the VaR specific risk minimum requirements in addition to the other requirements of BIPRU 7.10.(2) The VaR model must explain the historical price variation in the portfolios concerned.(3) The VaR model must capture concentration in terms of magnitude and changes of composition of the portfolios concerned.(4) The VaR model must be robust to an adverse environment.(5) The VaR
This paragraph provides guidance on BIPRU 7.10.46R (3). Take as an example a VaR model based on a factor model or on a historical simulation model. The ability of the model to explain price variation could be demonstrated by a statistical comparison over the same period of time between actual price changes on the portfolio and the profit and loss impact of risk factors included within the model. A firm may wish to include an estimate of residual variation not explained by the
(1) Where a firm is subject to event risk that is not reflected in its VaR measure, because it is beyond the 10-day holding period and 99 percent confidence interval (low probability and high severity events), the firm must ensure that the impact of such events is factored into its internal capital assessment.(2) A firm'sVaR model must conservatively assess the risk arising from less liquid positions and positions with limited price transparency under realistic market scenarios.
A firm is expected ultimately to move towards full revaluation of option positions. For portfolios containing path dependent options, an instantaneous price shock applied to a static portfolio will be acceptable provided that the risks not captured by such an approach are not material. Where a risk is immaterial and does not justify further capital resources, that immaterial risk should still be documented.
A firm with a complex portfolio is expected to demonstrate greater sophistication in its modelling and risk management than a firm with a simple portfolio. For example, a firm will be expected to consider, where necessary, varying degrees of liquidity for different risk factors, the complexity of risk modelling across time zones, product categories and risk factors. Some trade-off is permissible between the sophistication and accuracy of the model and the conservatism of underlying
(1) A firm must frequently conduct a rigorous programme of stress testing. The results of these tests must be reviewed by senior management and reflected in the policies and limits the firm sets.(2) The programme must particularly address:(a) concentration risk;(b) illiquidity of markets in stressed market conditions;(c) one way markets;(d) event and jump to default risks;(e) non linearity of products;(f) deep out of the money positions;(g) positions subject to the gapping of
A firm must have processes in place to ensure that its VaR model has been adequately validated by suitably qualified parties independent of the development process to ensure that it is conceptually sound and adequately captures all material risks. This validation must be conducted when the VaR model is initially developed and when any significant changes are made to the VaR model. The validation must also be conducted on a periodic basis but especially where there have been any
(1) In addition to regulatory backtesting programs, testing for model validation should be carried out using additional tests which may include for example:(a) testing carried out using hypothetical changes in portfolio value that would occur were end of day positions to remain unchanged;(b) testing carried out for longer periods than required for the regular backtesting programme (for example, 3 years);(c) testing carried out using confidence intervals other than the 99 percent
A firm must periodically and actively identify all the worst case scenarios that are relevant to its portfolio. Scenarios used must be appropriate to test the effect of adverse movements in market volatilities and correlations and the effect of any change in the assumptions underlying the VaR model. Scenarios involving low probability market events must nevertheless be plausible.
Backtesting conducted only at a whole portfolio level using a single measure of profit and loss has limited power to distinguish an accurate VaR model from an inaccurate one. Backtesting should therefore be regarded as an additional safeguard rather than a primary validation tool. Such testing does however form the basis of the FSA'splus factor system. The test has been chosen as the basis of the backtesting regime because of its simplicity. A firm will therefore be expected to
If a firm'sVaR model permission covers specific risk, the firm must validate its VaR model through backtesting aimed at assessing whether specific risk is being accurately captured. This backtesting must be carried out in accordance with the provisions of its VaR model permission. If the VaR model permission provides for this backtesting to be performed on the basis of relevant sub-portfolios, these must be chosen in a consistent manner.
Specific risk backtesting involves the backtesting of a standalone specific riskVaR measure against a profit and loss series determined by reference to exposure risk factors categorised as specific risk. Alternatively specific risk backtesting may take the form of regular backtesting of trading books and portfolios that are predominantly exposed to risk factors categorised as specific risk. The precise requirements for specific risk backtesting will be specified in the firm'sVaR
A firm must also perform backtesting against a clean hypothetical profit and loss figure with respect to each business day. A clean hypothetical profit and loss figure for a business day means the clean profit and loss figure that would have occurred for that business day if the portfolio on which the VaR number for that business day is based remained unchanged.
A firm must, no later than the number of business days after the end of each quarter specified in the VaR model permission for this purpose, submit, in respect of that quarter, a report to the FSA about the operation of the VaR model, the systems and controls relating to it and any changes to the VaR model and those systems and controls. Each report must outline as a minimum the following information in respect of that quarter:(1) methodological changes and developments to the
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) arranging (bringing about) dealsininvestments and4making arrangements with a view to transactions in investments;44(2A) arranging a home finance transaction;4(3) managing investments;(4) assisting in the administration and performance of a contract of insurance;(5) safeguarding and administering investments;(6) sending dematerialised instructions;(7)
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) dealing in investments as agent;(3) arranging (bringing about) deals in investments and making arrangements with a view to transactions in investments;(4) managing investments;(5) safeguarding and administering investments; and(6) advising on investments.
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) dealing in investments as agent;(3) arranging (bringing about) deals in investments and making arrangements with a view to transactions in investments;(4) managing investments;(5) safeguarding and administering investments;(6) sending dematerialised instructions; and(7) advising on investments.
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) dealing in investments as agent;(3) arranging (bringing about) deals in investments and4making arrangements with a view to transactions in investments;4(3A) arranging a home finance transaction;4(3B) 5operating a multilateral trading facility;(4) advising on investments;(5) entering into a home finance transaction;44(6) administering a home finance
The exclusions in this group apply to certain regulated activities involving certain contracts of insurance. The exclusions and the regulated activities to which they apply are as follows.(1) The first exclusion of this kind relates to certain activities carried on by a provider of non-motor goods or services related to travel in connection with general insurance contracts only. The contracts must be for five years duration or less and have an annual premium of no more than 500.
1This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as agent;(2) arranging (bringing about) deals in investments and making arrangements with a view to transactions in investments;(3) managing investments;(4) safeguarding and administering investments;(5) establishing, operating or winding up a collective investment scheme; and(6) advising on investments.
For the purpose of GENPRU 2 Annex 7 (Admissible assets in insurance), and also in relation to permitted links,1 a derivative or quasi-derivative is approved if:(1) it is held for the purpose of efficient portfolio management (INSPRU 3.2.6 R to INSPRU 3.2.7 R) or reduction of investment risk (INSPRU 3.2.8 R to INSPRU 3.2.13 G);(2) it is covered (INSPRU 3.2.14 R to INSPRU 3.2.33 G); and(3) it is effected or issued:(a) on or under the rules of a regulated market; or(b) off-market
A derivative or quasi-derivative is held for the purpose of efficient portfolio management if the firm reasonably believes the derivative or quasi-derivative (either alone or together with any other covered transactions) enables the firm to achieve its investment objectives by one of the following (or, in relation to permitted links, in a manner which includes but is not limited to)1:(1) generating additional capital or income in one of the ways described in INSPRU 3.2.7 R; or(2)
The second purpose of cover is that it prevents excessive gearing in the investment portfolio by the use of options and their equivalent. A firm is required to cover all obligations under an admissible transaction including obligations that would arise only at the option of the firm, e.g. the liability to pay the exercise price under a bought option.
(1) This paragraph sets out guidance on assessing the adequacy of a rating system's discriminative power (see BIPRU 4.3.30 R (3) on the meaning of discriminative power).(2) A firm should be able to explain the performance of its rating systems against its chosen measure (or measures) of discriminative power. In making this comparison a firm should rely primarily on actual historic default experience where this is available. In particular, a firm should be able to explain:(a) the
A firm must also use other appropriate quantitative validation tools and comparisons with relevant external data sources. The analysis must be based on data that is appropriate to the portfolio, is updated regularly, and covers a relevant observation period. A firm's internal assessments of the performance of its rating systems must be based on as long a period as possible.[Note:BCD Annex VII Part 4 point 112]
In the case of a retail exposure, a value adjustment resulting from significant perceived decline in credit quality falling within BIPRU 4.3.63 R (3) need not necessarily be taken as an indication of unlikeliness to pay if a firm employs formulaic portfolio provisioning based on a number of days overdue for its retail exposures. However, if such an exposure reaches the compulsory days past due indicator for the purposes of the definition of default it should automatically be deemed
While the qualitative requirements in BIPRU 4 are important for all portfolios, they are of even greater importance in those cases where a firm lacks sufficient historical data to calibrate or validate its estimates of PD, LGD or conversion factors on the basis of proven statistical significance, sometimes referred to as low default portfolios.
If a firm uses data that is pooled across institutions it must be able to demonstrate to the FSA that:(1) the rating systems and criteria of other firms in the pool are similar to its own;(2) the pool is representative of the portfolio for which the pooled data is used; and(3) the pooled data is used consistently over time by the firm for its permanent estimates.2[Note:BCD Annex VII Part 4 point 57]
(1) If a firm is managing investments on behalf of a client, it must provide the client with a periodic statement in a durable medium unless such a statement is provided by another person.(2) If the client is a retail client, the periodic statement must include such of the periodic information as is applicable. [Note: article 41(1) and (2) of the MiFID implementing Directive]
(1) In the case of a retail client, the periodic statement must be provided once every six months, except in the following cases:(a) if the retail client so requests, the periodic statement must be provided every three months;(b) if the retail client elects to receive information about executed transactions on a transaction-by-transaction basis (COBS 16.3.3 R) and there are no transactions in derivatives or other securities giving the right to acquire or sell a transferable security
(1) If the client elects to receive information about executed transactions on a transaction-by-transaction basis, a firmmanaging investments must provide promptly to the client, on the execution of a transaction, the essential information concerning that transaction in a durable medium.(2) If the client is a retail client, the firm must send him a notice confirming the transaction and containing such of the information identified in column (1) of the table in COBS 16 Annex 1R
(1) If a firm:(a) manages investments for a retail client; or(b) operates a retail client account that includes an uncovered open position in a contingent liability transaction,it must report to the retail client any losses exceeding any predetermined threshold, agreed between it and the retail client.(2) The firm must report:(a) no later than the end of the business day in which the threshold is exceeded; or(b) if the threshold is exceeded on a non-business day, the close of
A firm may employ different approaches to different portfolios where the firm itself uses different approaches internally. A firm must, if it uses different approaches in accordance with the previous sentence, be able to demonstrate to the FSA that the choice is made consistently and is not determined by regulatory arbitrage considerations.[Note:BCD Annex VII Part 1 point 17]
The risk weighted exposure amounts must be calculated according to the following formula:risk-weighted exposure amounts = RW * exposure value;where:(1) risk weight (RW) = 190% for private equity exposures in sufficiently diversified portfolios;(2) risk weight (RW) = 290% for exchange traded equity exposures; and(3) risk weight (RW) = 370% for all other equity exposures.[Note:BCD Annex VII Part 1 point 19]
The expected loss amounts1 for equity exposures must be calculated according to the following formula:(1) expected loss amount = EL × exposure value; and(2) the EL values must be the following:(a) expected loss (EL) = 0.8% for private equity exposures in sufficiently diversified portfolios;(b) expected loss (EL) = 0.8% for exchange traded equity exposures; and(c) expected loss (EL) = 2.4% for all other equity exposures.[Note:BCD Annex VII Part 1 point 32]
A firm must make use of other quantitative validation tools and comparisons with external data sources. The analysis must be based on data that are appropriate to the portfolio, are updated regularly, and cover a relevant observation period. A firm's internal assessments of the performance of its models must be based on as long a period as possible.[Note:BCD Annex VII Part 4 point 121]
Part II RAO Investments |
Part III RAO Investments |
||
1. |
Reception and transmission of orders in relation to one or more financial instruments |
Article 252 |
Article 76-81, 83-85, 89 |
2. |
Execution of orders on behalf of clients |
Article 14, 21 |
A Article 76-81, 83-85, 89 |
3. |
Dealing on own account |
Article 14 |
Article 76-81, 83-85, 89 |
4. |
Portfolio management |
Article 37 (14, 21, 25 - see Note 1) 2 |
Article 76-81, 83-85, 89 |
5. |
Investment advice |
Article 53 |
Article 76-81, 83-85, 89 |
6. |
Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis |
Article 14, 21 |
Article 76-81, 83-85, 89 |
7. |
Placing of financial instruments without a firm commitment basis |
Article 21, 25 |
Article 76-81, 83-85, 89 |
8. |
Operation of Multilateral Trading Facilities |
Article 25B (see Note 2) |
Article 76-81, 83-85, 89 |
Ancillary services |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management |
Article 40, 45, 64 |
Article 76-81, 83-85, 89 |
2. |
Granting credits or loans to an investor to allow him to carry out a transaction in one or more of the relevant instruments where the firm granting the credit or loan is involved |
||
3. |
Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings |
Article 14, 21, 25, 53, 64 |
Article 76-80, 83-85, 89 |
4. |
Foreign exchange services where these are connected with the provision of investment services |
Article 14, 21, 25, 53, 64 |
Article 83-85, 89 |
5. |
Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments |
Article 53, 64 |
Article 76-81, 83-85, 89 |
6. |
Services related to underwriting |
Article 25, 53, 64 |
Article 76-81, 83-85, 89 |
7. |
Investment services and activities as well as ancillary services of the type included under Section A or B of Annex I related to the underlying of the derivatives included under Section C 5, 6, 7 and 10-where these are connected to the provision of investment or ancillary services. |
Article 14, 21, 25, 25B, 37, 53, 64 |
Article 83 and 84 |
Note 1. A firm may also carry on these other activities when it is managing investments.2 |
|||
Note 2. A firm operating an MTF under article 25B does not need to have a permission covering other regulated activities, unless it performs other regulated activities in addition to operating an MTF. |
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1Activities set out in Article 5(2) and (3) of the UCITS Directive
Table 2A: UCITS Directive activities |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
The management of UCITS in the form of unit trusts / common funds or of investment companies; this includes the function mentioned in Annex II of the UCITS Directive (see Note 2). |
Articles 14, 21, 25, 37, 51, 53, 64 |
Articles 76-81, 83-85, 89 |
2. |
Managing portfolios of investments, including those owned by pension funds, in accordance with mandates given by investors on a discretionary, client-by-client basis, where such portfolios include one or more of the instruments listed in Section C 3of Annex I 3to MiFID3. 33 |
Articles 14, 21, 25, 37, 53, 64 |
Articles 76-81, 83-85, 89 |
3. |
Investment advice concerning one or more of the instruments listed in Section C3of Annex I 3to MiFID3. 3 |
Articles 53, 64 |
Articles 76-81, 83-85, 89 |
4. |
Safekeeping and administration services in relation to units of collective investment undertakings. |
Articles 40, 45, 64 |
Articles 76-81, 83-85, 89 |
Note 1. A UCITS management company can only exercise passport rights under the UCITS Directive (article 2(13)(h) of MiFID3). A UCITS management company can only be authorised to carry on the non-core services set out in rows (3) and (4) of Table 2A if it is also authorised to carry on the activity set out in row (2) of the table. 33 |
|||
Note 2. The functions set out in Annex 2 to the UCITS Directive are: |
|||
1. |
Investment management. |
||
2. |
Administration: |
||
a. |
legal and fund management accounting services; |
||
b. |
customer inquiries; |
||
c. |
valuation and pricing (including tax returns); |
||
d. |
regulatory compliance monitoring; |
||
e. |
maintenance of unit-holder register; |
||
f. |
distribution of income; |
||
g. |
unit issues and redemptions; |
||
h. |
contract settlements (including certificate dispatch); |
||
i. |
record keeping. |
||
3. |
Marketing. |
||
In addition to the requirements in LR 9.8 (Annual financial report), a closed-ended investment fund must include in its annual financial report:(1) a statement (including a quantitative analysis) explaining how it has invested its assets with a view to spreading investment risk in accordance with its published investment policy; (2) a statement, set out in a prominent position, as to whether in the opinion of the directors, the continuing appointment of the investment manager
A valuation required by LR 15.6.3 R must:(1) either:(a) be made in accordance with the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors; or(b) where the valuation does not comply in all applicable respects with the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors, include a statement which sets out a full explanation of such non-compliance; and(2) be carried out by an external
In addition, certain other activities carried on in relation to rights under contracts of insurance are regulated activities. These are where the activity is carried on in relation to:(1) life policies, where the regulated activities concerned are:(a) dealing in investments as principal (see PERG 2.7.5 G);(b) managing investments (see PERG 2.7.8 G);(c) safeguarding and administering investments (see PERG 2.7.9 G); and(d) agreeing to carry on any of those activities (see PERG 2.7.21
The regulated activity of managing investments includes several elements.(1) First, a person must exercise discretion. Non-discretionary portfolio management (where the manager buys and sells, as principal or agent, on the instructions of some other person) is not caught by this activity, although it may be caught by a different regulated activity such as the activity of dealing in investments as principal or dealing in investments as agent. The discretion must be exercised in
The activity of safeguarding and administering investments belonging to another is regulated, as is providing a service under which a person undertakes to arrange on a continuing basis for others actually to carry out the safeguarding and administering. In each case, both the elements of safeguarding and administering must be present before a person will be said to carry on the activity.(1) Safeguarding is acting as custodian of the property, for example, holding any documents
A transaction in an OTC derivative under COLL 5.2.20 R (1) (b) must be:(1) with an approved counterparty; a counterparty to a transaction in derivatives is approved only if the counterparty is:(a) an eligible institution or an approved bank; or(b) a person whose permission (including any requirements or limitations), as published in the FSA Register, or whose Home State authorisation, permits it to enter into the transaction as principal off-exchange;(2) on approved terms; the
(1) A UCITS scheme may invest up to 20% in value of the scheme property in shares and debentures which are issued by the same body where the investment policy of that scheme as stated in the most recently published prospectus is to replicate the composition of a relevant index which satisfies the criteria specified in COLL 5.2.33 R (Relevant indices).(2) The limit in (1) can be raised for a particular UCITS scheme up to 35% in value of the scheme property, but only in respect
If a firm ceases to be a participant firm part way through a financial year of the compensation scheme:(1) it will remain liable for any unpaid levies which the FSCS has already made on the firm; and(2) the FSCS may make a levy upon it (which may be before or after the firmhas ceased to be a participant firm, but must be before it ceases to be an authorised person) for the costs which it would have been liable to pay had the FSCS made a levy on all participant firms at the time
(1) The parent undertaking of an investment firm authorised under MiFID shall not be required to aggregate its holdings with the holdings which such investment firm manages on a client-by-client basis within the meaning of Article 4(1), point 9, of MiFID, provided that:(a) the investment firm is authorised to provide such portfolio management;(b) it may only exercise the voting rights attached to such shares under instructions given in writing or by electronic means or it ensures
Undertakings whose registered office is in a third country which would have required authorisation in accordance with Article 5 (1) of the UCITS directive or with regard to portfolio management under point 4 of section A of Annex 1 to MiFID if it had its registered office or, only in the case of an investment firm, its head office within the Community, shall be exempted from aggregating holdings with the holdings of its parent undertaking under this rule provide that they comply
A common platform firm must establish, implement and maintain an adequate business continuity policy aimed at ensuring, in the case of an interruption to its systems and procedures, that any losses are limited, the preservation of essential data and functions, and the maintenance of its regulated activities, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of its regulated activities.[Note: article 5(3) of the MiFID implementing
(1) A firm must take reasonable steps to ensure that a personal recommendation, or a decision to trade, is suitable for its client.(2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client's:(a) knowledge and experience in the investment field relevant to the specific type of designated investment or service;(b) financial situation; and(c) investment objectives;so as to enable the firm to make the
(1) If a firm makes a personal recommendation or manages investments for a professional client in the course of MiFID or equivalent third country business, it is entitled to assume that, in relation to the products, transactions and services for which the professional client is so classified, the client has the necessary level of experience and knowledge for the purposes of COBS 9.2.2R (1)(c).(2) If the service consists of making a personal recommendation to a per se professional
The activities of persons appointed under a power of attorney are excluded under article 38 of the Regulated Activities Order, from the regulated activity of managing investments, if specified conditions are satisfied. The exclusion only applies where a person is not carrying on insurance mediation or reinsurance mediation and is subject to further limitations discussed below2. In addition, the following exclusions (outlined in PERG 2.9) apply in specified circumstances where
A person who agrees to carry on certain other regulated activities (which is itself a regulated activity see PERG 2.7.21 G) does not require authorisation where the person concerned is an overseasperson and the agreement is reached as a result of a legitimate approach (see PERG 2.9.12 G). For this exclusion to apply, the agreement must be one to arrange deals, manage investments, assist in the administration and performance of a contract of insurance, safeguard and administer
(1) This rule does not apply in respect of government and public securities.(2) Not more than 20% in value of the scheme property is to consist of deposits with a single body.(3) Not more than 10% in value of the scheme property is to consist of transferable securities or money-market instruments issued by any single body subject to COLL 5.6.23 R (Schemes replicating an index).(4) In applying (3) certificates representing certain securities are to be treated as equivalent to the
Units in a scheme do not fall within COLL 5.6.10 R if that scheme is managed or operated by (or, if it is an ICVC, has as its ACD) the authorised fund manager of the investing non-UCITS retail scheme or by an associate of that authorised fund manager, unless:(1) the prospectus of the investing authorised fund clearly states that the property of that investing fund may include such units; and(2) the conditions in COLL 5.2.16 R (Investment in other group schemes) are complied w