Related provisions for BIPRU 13.5.5
1The following words or terms throughout IPRU-INV 5 appearing in bold (other than headings and titles) are to have the meanings given to them below if not inconsistent with the subject or context. If a defined term is italicised the definition appearing in the main Handbook Glossary applies.
Term |
Meaning |
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accounting reference date |
means: |
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(a) |
the date to which a firm's accounts are prepared in order to comply with the relevant Companies Act legislation. In the case of a firm not subject to Companies Act legislation, the equivalent date selected by the firm; and |
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(b) |
in the case of an OPS firm which is not subject to the relevant Companies Act legislation, the date to which the accounts of the OPS in respect of which the firm acts are prepared. |
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annual expenditure |
has the meaning given in IPRU-INV 5.5.1 (Determination). |
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category a body |
means: |
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(a) |
the government or central bank of a zone a country; or |
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(b) |
EU or Euratom (the European Atomic Energy Community); or |
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(c) |
the government or central bank of any other country, provided the receivable in question is denominated in that country's national currency. |
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category b body |
means: |
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(a) |
the European Investment Bank (EIB) or a multi-lateral development bank; or |
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(b) |
the regional government or local authority of a zone a country; or |
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(c) |
an investment firm or credit institution authorised in a zone a country; or |
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(d) |
a recognised clearing house or exchange; or |
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(e) |
an investment firm or credit institution authorised in any other country, which applies a financial supervision regime at least equivalent to the Capital Adequacy Directive. |
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counterparty |
means any person with or for whom a firm carries on regulated business or an ancillary activity. |
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counterparty risk requirement |
has the meaning given in IPRU-INV 5.11.1R (Counterparty risk requirement). |
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expenditure based requirement |
means the requirement calculated in accordance with IPRU-INV 5.9.1R (Expenditure based requirement). |
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financial resources |
has the meaning given in IPRU-INV 5.2.3R (Financial resources). |
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financial resources requirement |
has the meaning given in IPRU-INV 5.4.1R (Determination of requirement). |
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financial resources rules |
has the meaning given in IPRU-INV 5.2. |
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financial return |
means quarterly financial return or monthly financial return as the case may be. |
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foreign exchange position |
has the meaning given in IPRU-INV 5.14.1R (Foreign exchange requirement). |
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investment |
means a designated investment in the main Glossary. |
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investment business |
means designated investment business in the main Glossary. |
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investment firm |
has the meaning given to investment firm in the main Glossary except that it excludes persons to which MiFID does not apply as a result of articles 2 or 3 of MiFID. |
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Note: An investment firm is not necessarily a firm for the purposes of the rules. |
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investment manager |
means a person who, acting only on behalf of a customer, either: |
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(a) |
manages an account or portfolio in the exercise of discretion; or |
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(b) |
has accepted responsibility on a continuing basis for advising on the composition of the account or portfolio. |
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liquid capital |
has the meaning given in IPRU-INV 5.3.1R (Calculation of own funds and liquid capital). |
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liquid capital requirement |
has the meaning given in IPRU-INV 5.4.4R (Liquid capital requirement). |
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non-retail client |
means a professional client or an eligible counterparty. |
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OPS or occupational pension scheme |
means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect in relation to one or more descriptions or categories of employment so as to provide benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or respect of earners with qualifying service in an employment of any such description or category. |
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OPS firm |
means: |
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(a) |
a firm which: |
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(i) |
carries on OPS activity but not with a view to profit; and |
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(ii) |
is one or more of the following: |
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(A) |
a trustee of the occupational pension scheme in question; |
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(B) |
a company owned by the trustees of the occupational pension scheme in question; |
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(C) |
a company which is: |
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(I) |
an employer in relation to the occupational pension scheme in question in respect of its employees or former employees or their dependants; or |
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(II) |
a company within the group which includes an employer within (I); or |
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(III) |
an administering authority subject to the Local Government Superannuation Regulations 1986; or |
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(b) |
a firm which: |
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(i) |
has satisfied the requirements set out in (a) at any time during the past 12 months; but |
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(ii) |
is no longer able to comply with those requirements because of a change in the control or ownership of the employer referred to in (a)(ii) during that period. |
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otc derivative |
means interest rate and foreign exchange contracts covered by Annex III to the previous version of the Banking Consolidation Directive (i.e. Directive (2000/12/EC) and off balance sheet contracts based on equities which are not traded on a recognised or designated investment exchange or other exchange where they are subject to daily margin requirements, excluding any foreign exchange contract with an original maturity of 14 calendar days or less. |
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other assets requirement |
has the meaning given in IPRU-INV 5.17.1R (Other assets requirement). |
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own funds |
has the meaning given in IPRU-INV 5.3.1R and IPRU-INV 5.3.2R, as applicable. |
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own funds requirement |
has the meaning given in IPRU-INV 5.4.3R and IPRU-INV 5.4.4R (Own funds requirement), as applicable. |
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permitted business |
means regulated activity which a firm has permission to carry on. |
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position risk requirement |
has the meaning given in IPRU-INV 5.11.1R (Position risk requirement). |
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prescribed subordinated loan agreement |
means the subordinated loan agreement prescribed by the appropriate regulator for the purposes of IPRU-INV 5.6.4R. |
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qualifying capital instrument |
means that part of a firm's capital which is a security of indeterminate duration, or other instrument, that fulfils the following conditions: |
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(a) |
it may not be reimbursed on the bearer's initiative or without the prior agreement of the appropriate regulator; |
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(b) |
the debt agreement must provide for the firm to have the option of deferring the payment of interest on the debt; |
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(c) |
the lender's claims on the firm must be wholly subordinated to those of all non-subordinated creditors; |
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(d) |
the documents governing the issue of the securities must provide for debt and unpaid interest to be such as to absorb losses, whilst leaving the firm in a position to continue trading; and |
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(e) |
only fully paid-up amounts shall be taken into account. |
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qualifying capital item |
means that part of a firm's capital which has the following characteristics: |
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(a) |
it is freely available to the firm to cover normal banking or other risks where revenue or capital losses have not yet been identified; |
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(b) |
its existence is disclosed in internal accounting records; and |
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(c) |
its amount is determined by the management of the firm and verified by independent auditors, and is made known to, and is monitored by, the FCA. |
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Note: Verification by internal auditors will suffice until such time as EU provisions making external auditing mandatory have been implemented. |
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qualifying property |
has the meaning given in IPRU-INV 5.7.1R (Qualifying property and qualifying amount defined). |
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qualifying subordinated loan |
has the meaning given in IPRU-INV 5.6 (Qualifying subordinated loans). |
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qualifying undertaking |
has the meaning given in IPRU-INV 5.7.3R (Qualifying undertakings). |
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readily realisable investment |
means a unit in a regulated collective investment scheme, a life policy or any marketable investment other than one which is traded on or under the rules of a recognised or designated investment exchange so irregularly or infrequently: |
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(a) |
that it cannot be certain that a price for that investment will be quoted at all times; or |
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(b) |
that it may be difficult to effect transactions at any price which may be quoted. |
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regulated business |
means designated investment business in the main Glossary. |
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relevant foreign exchange items |
means: |
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(a) |
all assets less liabilities, including accrued interest, denominated in the currency (all investments at market or realisable value); |
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(b) |
any currency future, at the nominal value of the contract; |
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(c) |
any forward contract for the purchase or sale of the currency, at the contract value, including any future exchange of principal associated with currency swaps; |
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(d) |
any foreign currency options at the net delta (or delta-based) equivalent of the total book of such options; |
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(e) |
any non-currency option, at market value; |
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(f) |
any irrevocable guarantee; |
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(g) |
any other off-balance sheet commitment to purchase or sell an asset denominated in that currency. |
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reporting currency |
means the currency in which the firm's books of account are maintained. |
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specified trustee business |
1. |
means any investment business carried on in the UK by a trustee firm, but excluding each of the following activities: |
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(a) |
Dealing or arranging deals in investments |
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(i) |
where the deal is transacted or arranged by a trustee firm with or through a PTP; or |
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(ii) |
where the dealing or arranging is done in the course of, or is incidental to, an activity of management falling within paragraph (b) below; or |
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(iii) |
where the trust is a unit trust scheme and the deal is or the arrangements are made with a view to either an issue or sale of units in such a scheme to, or a redemption or repurchase or conversion of such units or a dealing in investments for such a scheme carried out by with or through, the operator or on the instructions of the operator; or |
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(iv) |
where the trustee firm, being a bare trustee (or, in Scotland, a nominee) holding investments for another person, is acting on that person's instructions; or |
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(v) |
where any arrangements do not or would not bring about the transaction in question. |
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(b) |
Managing investments |
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(i) |
where the trustee firm has no general authority to effect transactions in investments at discretion; or |
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(ii) |
if and to the extent that all day-to-day decisions in relation to the management of the investments or any discrete part of the investments are or are to be taken by a PTP; or |
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(iii) |
if and to the extent that investment decisions in relation to the investments or any discrete part of the investments are or are to be taken substantially in accordance with the advice given by a PTP; or |
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(iv) |
where the trustee firm is a personal representative or executor and is acting in that capacity; or |
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(v) |
where the trust is a unit trust scheme and all day-to-day investment decisions in the carrying on of that activity are or are to be taken by the operator of the scheme. |
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(c) |
Investment advice |
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(i) |
where the relevant advice: |
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(A) |
does not recommend the entry into any investment transaction or the exercise of any right conferred by any investment to acquire, dispose of, underwrite or convert such an investment; and |
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(ii) |
if and to the extent that the relevant advice is in substance the advice of a PTP; or |
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(iii) |
where the relevant advice is given by the trustee firm acting in the capacity of personal representative or executor. |
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(d) |
Establishing, operating or winding up a collective investment scheme including acting as trustee of an authorised unit trust scheme but only to the extent that such activities do not otherwise constitute specified trustee business. |
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(e) |
Any trustee activity undertaken as trustee of an issue of debentures or government or public securities: |
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(i) |
where the issue is made by a company listed on a recognised investment exchange or on a designated investment exchange (or by a wholly-owned subsidiary of such a company); or |
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(ii) |
where the issue is listed or traded either on a recognised investment exchange or on a designated investment exchange or on the Société de la Bourse de Luxembourg; or |
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(iii) |
where the issue is made by a government, local authority or international organisation; or |
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(iv) |
where the aggregate amounts issued (pursuant to the trust deed or any deed supplemental thereto and ignoring any amounts redeemed, repurchased or converted) exceed the sum of £10,000,000. |
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2. |
For the purpose of this definition of "specified trustee business": |
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(a) |
a transaction is entered into through a person if that person: |
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(i) |
enters into it as agent; or |
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(ii) |
arranges for it to be entered into as principal or agent by another person and the arrangements are such that they bring about the transaction in question; |
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(b) |
investment transaction means a transaction to purchase, sell, subscribe for or underwrite a particular investment and "investment decision" means a decision relating to an investment transaction; |
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(c) |
debentures means any securities falling within article 77 of the RAO; |
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(d) |
government or public securities means any securities falling within article 78) of the RAO; |
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(e) |
government, local authority or international organisation means: |
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(i) |
the government of the United Kingdom, of Northern Ireland, or of any country or territory outside the United Kingdom; |
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(ii) |
a local authority in the United Kingdom or Anywhere; or |
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(iii) |
an international organisation the members of which include the United Kingdom or another EEA State. |
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(f) |
in determining the size of an issue of debentures or government or public securities made in a currency other than sterling, the amount of the issue shall be converted into sterling at the exchange rate prevailing in London on the date of issue. |
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total capital requirement |
has the meaning given in IPRU-INV 5.4.5R (Total capital requirement). |
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trading book |
in relation to a firm's business or exposures, means: |
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(a) |
its proprietary positions in financial instruments: |
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(i) |
which are held for resale and/or are taken on by the firm with the intention of benefiting in the short term from actual and/or expected differences between their buying and selling prices or from other price or interest-rate variations; |
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(ii) |
arising from matched principal broking; |
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(iii) |
taken in order to hedge other elements of the trading book; |
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(b) |
exposures due to unsettled securities transactions, free deliveries, OTC derivative instruments, repurchase agreements and securities lending transactions based on securities included in (a)(i) to (iii) above, reverse repurchase agreements and securities borrowing transactions based on securities included in (a)(i) to (iii) above; and |
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(c) |
fees, commission, interest and dividends, and margin on exchange-traded derivatives which are directly related to the items included in (a) and (b) above. |
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trustee activity |
means, in relation to a firm, any activity undertaken in the course of or incidental to the exercise of any of its powers, or the performance of any of its duties, when |
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unit trust manager |
means the manager of a unit trust scheme. |
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zone b country |
means a country which is not a Zone A country in the Glossary. |
Table: FCA-prescribed senior management responsibilities
FCA-prescribed senior management responsibility |
Explanation |
Equivalent PRA-prescribed senior management responsibility |
Part One (applies to all firms) |
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(1) Responsibility for the firm's performance of its obligations under the senior management regime |
The senior management regime means the requirements of the regulatory system applying to relevant authorised persons insofar as they relate to SMF managers performing designated senior management functions, including SUP 10C (FCA senior management regime for approved persons in relevant authorised persons). This responsibility includes: (1) compliance with conditions and time limits on approval; (2) compliance with the requirements about the statements of responsibilities (but not the allocation of responsibilities recorded in them);4 (3) compliance by the firm with its obligations under section 60A of the Act (Vetting of candidates by relevant authorised persons); and4 4(4) compliance by the firm with the requirements in SYSC 22 (Regulatory references) so far as they relate to the senior management regime, including the giving of references to another firm about an SMF manager or former SMF manager. |
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(2) Responsibility for the firm's performance of its obligations under the employee certification regime |
The employee certification regime means the requirements of sections 63E and 63F of the Act (Certification of employees) and all other requirements of the regulatory system about the matters dealt with in those sections, including:4 4(1) SYSC 5.2 (Certification Regime); 4(2) the requirements in SYSC 22 (Regulatory references) so far as they relate to the employee certification regime, including the giving of references to another firm about a certification employee or former certification employee; and |
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(3) Responsibility for compliance with the requirements of the regulatory system about the management responsibilities map |
This responsibility does not include allocating responsibilities recorded in it |
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(4) Overall responsibility for the firm's policies and procedures for countering the risk that the firm might be used to further financial crime |
(1)2 This includes the function in SYSC 6.3.8R (firm must allocate to a director or senior manager overall responsibility within the firm for the establishment and maintenance of effective anti-money laundering systems and controls), if that rule applies to the firm. (2)2 The firm may allocate this FCA-prescribed senior management responsibility to the MLRO but does not have to. (3)2 If the firm does not allocate this FCA-prescribed senior management responsibility to the MLRO, this FCA-prescribed senior management responsibility includes responsibility for supervision of the MLRO. |
None |
2(4A) Acting as the firm’swhistleblowers’ champion |
The whistleblowers’ champion’s allocated responsibilities are set out in SYSC 18.4.4R |
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Part Two (applies to all firms except for small CRR firms and credit unions) |
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(5) Responsibility for: (a) leading the development of; and (b) monitoring the effective implementation of; policies and procedures for the induction, training and professional development of all members of the firm'sgoverning body. |
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(6) Responsibility for monitoring the effective implementation of policies and procedures for the induction, training and professional development of all persons performing designated senior management functions on behalf of the firm other than members of the governing body. |
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(7) Responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; the internal audit function, in accordance with SYSC 6.2 (Internal Audit) |
This responsibility includes responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; a person approved to perform the PRA's Head of Internal Audit designated senior management function for the firm. |
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(8) Responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; the compliance function in accordance with SYSC 6.1 (Compliance ). |
This responsibility includes responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; the person performing the compliance oversight function for the firm. |
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(9) Responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; the risk function, in accordance with SYSC 7.1.21R and SYSC 7.1.22R (Risk control). |
This responsibility includes responsibility for: (a) safeguarding the independence of; and (b) oversight of the performance of; a person approved to perform the PRA's Chief Risk designated senior management function for the firm. |
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(10) Responsibility for overseeing the development of and implementation of the firm's remuneration policies and practices in accordance with SYSC 19D (Remuneration Code) |
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Part Three (applies in specified circumstances) |
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(11) Overall responsibility for the firm's compliance with CASS |
(A) This responsibility only applies to a firm to which CASS applies. (B) A firm may include in this FCA-prescribed senior management responsibility whichever of the following functions apply to the firm: (a) CASS 1A.3.1R (certain CASS compliance functions for a CASS small firm); (b) CASS 1A.3.1AR (certain CASS compliance functions for a CASS medium firm or a CASS large firm); (c) CASS 11.3.1R (certain CASS compliance functions for certain CASS small debt management firms); or (d) CASS 11.3.4R (certain CASS compliance functions for a CASS large debt management firm); but it does not have to. (C) If the firm does not include the functions in (B) in this FCA-prescribed senior management responsibility, this FCA-prescribed senior management responsibility includes responsibility for supervision of the person performing the functions in (B) that apply to the firm. |
None |
Allocation of overall responsibility for a firm’s activities, business areas and management functions