Related provisions for GENPRU 2.2.12
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When considering whether a business unit is significant, the firm should take into account all relevant factors in the light of the firm's current circumstances and its plans for the future, including:(1) the risk profile of the unit; or(2) its use or commitment of a firm's capital; or(3) its contribution to the profit and loss account; or(4) the number of employees or approved persons in the unit; or(5) the number of customers of the unit; or(6) any other factor which makes the
The significant management function is the function of acting as a senior manager with significant responsibility for a significant business unit that:(1) carries on designated investment business or other activities not falling within (2) to (4);(2) effects contracts of insurance (other than contractually based investments);(2A) carries on credit-related regulated activity;1(3) makes material decisions on the commitment of a firm's financial resources, its financial commitments,
(1) Securitisation documentation should make clear, where applicable, that any repurchase of securitised exposures or securitisation positions by the originator or sponsor beyond its contractual obligations is not mandatory and may only be made at fair market value. In general, any such repurchase should be subject to a firm's credit review and approval process, which should be adequate to ensure that the repurchase complies with BIPRU 9.6.1 R.(2) If an originator or sponsor repurchases
(1) The support described in BIPRU 9.6.5 G (1) is permitted by BIPRU 9.6.1 R.(2) The support described in BIPRU 9.6.5 G (3) is not permitted by BIPRU 9.6.1 R.(3) The support described in BIPRU 9.6.5 G (2) may be permitted by BIPRU 9.6.1 R under the following conditions:(a) the fact that the firm may give it is expressly set out in the contractual and marketing documents for the securitisation;(b) the nature of the support that the firm may give is precisely described in the documentation;(c)
(1) Subject to BIPRU 3.2.35 R, and with the exception of exposures giving rise to liabilities in the form of the items referred to in BIPRU 3.2.26 R, a firm is not required to comply with BIPRU 3.2.20 R (Calculation of risk weighted exposures amounts under the standardised approach) in the case of the exposures of the firm to a counterparty which is its parent undertaking, its subsidiary undertaking or a subsidiary undertaking of its parent undertaking provided that the following
A firm must not apply the treatment in BIPRU 3.2.25 R to exposures giving rise to liabilities in the form of any of the following items:(1) in the case of a BIPRU firm, any tier one capital or tier two capital; and(2) in the case of any other undertaking, any item that would be tier one capital or tier two capital if the undertaking were a BIPRU firm.[Note: BCD Article 80(7), part]
For the purpose of BIPRU 3.2.25R (1)(e) (Prompt transfer of capital resources): 22(1) 2in the case of an undertaking that is a firm the requirement in BIPRU 3.2.25R (1)(e) for the prompt transfer of capital resources refers to capital resources in excess of the capital and financial resources requirements to which it is subject under the regulatory system; and2(2) 44[deleted](3) 4the FCA will consider the following criteria:(a) the speed with which funds can be transferred or
1A firm operating an MTF must have:(1) transparentand non-discretionary rules and procedures for fair and orderly trading;[Note:Article 14(1) of MiFID](2) objective criteria for the efficient execution of orders;[Note: Article 14(1) of MiFID](3) transparent rules regarding the criteria for determining the financial instruments that can be traded under its systems;[Note: Subparagraph 1 of Article 14(2) of MiFID](4) transparent rules, based on objective criteria, governing access
This chapter builds on the threshold condition referred to at COND 2.4 (Appropriate resources) by providing that a firm must meet, on a continuing basis, a basic solvency requirement. This chapter also builds on Principle 4 which requires a firm to maintain adequate financial resources by setting out prudential requirements for a firm according to what type of firm it is.
More generally, having adequate prudential resources gives the firm a degree of resilience and some indication to customers of creditworthiness, substance and the commitment of its owners. Prudential standards aim to ensure that a firm has prudential resources which can provide cover for operational and compliance failures and pay redress, as well as reducing the possibility of a shortfall in funds and providing a cushion against disruption if the firm ceases to trade.
(1) Implementation of the IRB approach as referred to in BIPRU 4.2.18 R must be carried out within a reasonable period of time as set out in the IRB permission.(2) The implementation must be carried out subject to strict conditions determined by the appropriate regulator and set out in the IRB permission.(3) A firm must not use the flexibility under BIPRU 4.2.18 R selectively with the purpose of achieving reduced minimum capital requirements in respect of those IRB exposure classes
(1) To the extent that its IRB permission permits this, a firm permitted to use the IRB approach in the calculation of risk weighted exposure amounts and expected loss amounts3 for one or more IRB exposure classes may apply the standardised approach in accordance with this rule.3(2) A firm may apply the standardised approach to the IRB exposure class referred to in BIPRU 4.3.2 R (1) (Sovereigns) where the number of material counterparties is limited and it would be unduly burdensome
For the purposes of BIPRU 4.2.26 R (4), the equity exposureIRB exposure class of a firm must be considered material if its aggregate value, excluding equity exposures incurred under legislative programmes as referred to in BIPRU 4.2.26 R (8) but including exposures in a CIU treated as equity exposures in accordance with BIPRU 4.9.11 R to BIPRU 4.9.15 R,4 exceeds, on average over the preceding year, 10% of the firm'scapital resources. If the number of those equity exposures is
A firm that benefits from exceptional government intervention must ensure that:(1) variable remuneration is strictly limited as a percentage of net revenues when it is inconsistent with the maintenance of a sound capital base and timely exit from government support;(2) it restructures remuneration in a manner aligned with sound risk management and long-term growth, including when appropriate establishing limits to the remuneration of3members of its management body; and3(3) no
A firm must ensure that guaranteed variable remuneration is not part of prospective remuneration plans.3 A firm must not award, pay or provide guaranteed variable remuneration unless:3(1) 3it is exceptional;(2) 3it occurs in the context of hiring new Remuneration Code staff;3(3) 3the firm has a sound and strong capital base; and3(4) 3it is limited to the first year of service.[Note:3article 94(1)(d) and (e) of CRD and Standard 11 of the FSB Compensation Standards]3
(1) Deferred remuneration paid in shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares. Deferred remuneration paid in cash should also be subject to performance criteria.(2) The appropriate regulator would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred
(1) A firm must ensure that any measurement of performance used to calculate variable remuneration components or pools of variable remuneration components: (a) includes adjustments for all types of current and future risks, taking into account the cost and quantity of the capital and the liquidity required; and (b) takes into account the need for consistency with the timing and likelihood of the firm receiving potential future revenues incorporated into current earnings. (2) A
(1) A firm must ensure that a substantial portion, at least 50%, of any variable remuneration consists of an appropriate balance of: (a) shares or equivalent ownership interests, subject to the legal structure of the firm concerned, or share-linked instruments or equivalent non-cash instruments for a non-listed firm; and(b) where appropriate, capital instruments which are eligible for inclusion at stage B1 of the calculation in the capital resources table, where applicable, adequately
(1) Regarding SYSC 19C.3.47R (3), the 50% minimum threshold for instruments must be applied equally to the non-deferred and the deferred components; in other words, firms must apply the same chosen ratio between instruments and cash for their total variable remuneration to both the upfront and deferred components. (2) This simplified example illustrates the operation of (1). The variable remuneration of a material risk taker (X) is 100, and by SYSC 19C.3.49R (3) X is required
For a dormant fund account operator, unless2 any of SUP App 2.4.1 R, SUP App 2.5.1 R, SUP App 2.5.3 R or SUP App 2.6.1 R applies, if a firm's circumstances change, such that its capital resources have fallen, or are expected to fall, below the level advised in individual capital guidance1 given to the firm by the FCA2 , then, consistent with PRIN 2.1.1 RPrinciple 11 (Relations with regulators), a firm should inform the appropriate regulator of this fact as soon as practicable,
If a defined term does not appear in the IPRU(INV) glossary below, the definition appearing in the main HandbookGlossary applies.
financial resources |
a firm’s financial resources as calculated in accordance with IPRU(INV) 12.3 (Calculation of financial resources). |
financial resources requirement |
an amount of financial resources that a firm must hold as set out in IPRU(INV) 12.2 (Financial resources requirements). |
(1) BIPRU 14.2 deals with the calculation of the capital requirement for CCR for trading book positions arising from financial derivative instruments, securities financing transactions and long settlement transactions. The approaches used to calculate exposure values and risk weighted exposure amounts for these positions are largely based on the approaches applicable to non-trading book positions (BIPRU 3, BIPRU 4, BIPRU 5 and BIPRU 13). However, there are some treatments that
The directions in IPRU-INV 4.4.1D to IPRU-INV 4.4.5D and IPRU-INV 4.5.1D are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective that members’ agents1 have adequate financial resources to support, and keep and preserve adequate accounting records in respect of their business at Lloyd's.
The capital conservation plan must include the following(1) the MDA; (2) estimates of income and expenditure and a forecast balance sheet;(3) measures to increase the capital ratios of the firm; and(4) a plan and timeframe for the increase of own funds with the objective of meeting the combined buffer. [Note: article 142(2) of CRD]
(1) This chapter seeks to protect the interests of credit unions' members in respect of loans to members under section 11 of the Credit Unions Act 1979 or article 28 of the Credit Unions (Northern Ireland) Order 19852. Principle 4 requires credit unions to maintain adequate financial resources3.(2) [deleted]3
A UK recognised body is not required to give notice of civil legal proceedings or information about them to the FCA1under REC 3.12.1 R, where:1(1) the amount of damages claimed would not significantly affect that UK recognised body's financial resources, if the claim were successful;(2) the claim would not have a significant adverse effect on the reputation and standing of that body, if that claim were successful; and (3) the claim does not relate to that body's regulatory fu
A firm must hold capital calculated in accordance with BIPRU 14.2.13 Ragainst the CCR arising from exposures arising in the trading book due to the following:(1) free deliveries (where BIPRU 14.4 requires it to be treated as an exposure);(2) financial derivative instruments and credit derivatives;(3) repurchase agreements, reverse repurchase agreements, securities or commodities lending or borrowing transaction based on securities or commodities included in the trading book;(4)
'Rating philosophy' describes the point at which a rating system sits on the spectrum between the stylised extremes of a point in time (PiT) rating system and a through-the-cycle (TTC) rating system. To explain these concepts:(1) PiT: a firm seeks to explicitly estimate default risk over a fixed period, typically one year. Under such an approach, the increase in default risk in a downturn results in a general tendency for migration to lower grades. When combined with the fixed
The term "variable scalar" is used to describe approaches in which the outputs of an underlying, relatively PiT, rating system are transformed to produce final PD estimates used for regulatory capital requirements that are relatively non-cyclical. Typically, this involves basing the resulting requirement on the long run default rate of the portfolio or its segments.