Related provisions for INSPRU 3.1.59
The guidance in relation to the recognition requirements in the sections of REC 2 listed in Column A of the table below applies to an RAP in relation to the equivalent RAP recognition requirements listed in Column C and (if shown) with the modifications in Column B.
Table: Guidance on RAP recognition requirements
Column A REC 2 guidance which applies to an RAP |
Column B Modification to REC 2 guidance for an RAP |
Column C Relevant RAP recognition requirement |
REC 2.2.2 G to REC 2.2.7 G (Relevant circumstances and Outsourcing) |
Reg 13 |
|
REC 2.3.3 G to REC 2.3.9 G (Financial resources) |
Reg 14 |
|
REC 2.4.3 G to REC 2.4.6 G (Suitability) |
In addition to the matters set out in REC 2.4.3 G to REC 2.4.6 G, the FCA3 will have regard to whether a key individual has been allocated responsibility for overseeing the auction platform of the UK recognised body. 3 |
Reg 15 |
REC 2.5.3 G to REC 2.5.20 G (Systems and controls and conflicts) and REC 2.5A (Guidance on Public Interest Disclosure Act: Whistleblowing) |
Reg 16 and 17(2)(f)1 |
|
REC 2.6.26 G to REC 2.6.34 G (Safeguards for investors) |
Reg 17 |
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REC 2.7.3 G to REC 2.7.4 G (Access to facilities) |
The FCA3 shall have regard to whether an RAP provides access to bid at auctions only to those persons eligible to bid under article 18 of the auction regulation. 3 |
Reg 17(2)(a) and1 20 |
REC 2.8.3 G to REC 2.8.4 G (Settlement and clearing services) |
Reg 17(2)(d) and 21 |
|
REC 2.9.3 G to REC 2.9.4 G (Transaction recording) |
Reg 17(2)(e) |
|
REC 2.10.3 G to REC 2.10.4 G (Financial crime and market abuse) |
Reg 17(2)(g) |
|
REC 2.11.3 G to REC 2.11.4 G (Custody) |
REC 2.11.4 G is replaced with the following for an RAP: Where an RAP arranges for other persons to provide services for the safeguarding and administration services of assets belonging to users of its facilities, it will also need to satisfy the RAP recognition requirement in regulation 17(2)(h) of the RAP regulations (see REC 2A.2.1 UK). |
Reg 17(2)(h) |
REC 2.12.11 G to REC 2.12.12 G (Availability of relevant information) |
REC 2.12.11 G to REC 2.12.12 G are replaced with the following for an RAP: In determining whether appropriate arrangements have been made to make relevant information available to persons engaged in dealing in emissions auction products2 the FCA3 may have regard to: (1) the extent to which auction bidders are able to obtain information in a timely fashion about the terms of those emissions auction products2 and the terms on which they will be auctioned, either through accepted channels for dissemination of information or through other regularly and widely accessible communication media; (2) what restrictions, if any, there are on the dissemination of relevant information to auction bidders; and (3) whether relevant information is, or can be, kept to restricted groups of persons in such a way as to facilitate or encourage market abuse. An RAP does not need to maintain its own arrangements for providing information on the terms of emissions auction products2 to auction bidders where it has made adequate arrangements for other persons to do so on its behalf or there are other effective and reliable arrangements for this purpose. 2322 |
Reg 17(2)(c) |
REC 2.13.3 G to REC 2.13.6 G (Promotion and maintenance of standards) |
Reg 18 |
|
REC 2.14.3 G to REC 2.14.6 G (Rules and consultation) |
Reg 19 |
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REC 2.15.3 G to REC 2.15.6 G (Discipline) |
Reg 22 |
|
REC 2.16.3 G to REC 2.16.4 G (Complaints) |
Reg 23 |
Assets and Off-Balance Sheet Items |
Risk Factor |
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Assets |
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Cash at bank and in hand and equivalent items |
NIL |
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Assets secured by acceptable collateral including deposits and certificates of deposit with lending institutions |
NIL |
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Amount due from trustees of authorised unit trusts or depositaries of authorised contractual schemes |
NIL |
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Note 1 |
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This only applies to firms who are authorised unit trust managers in relation to authorised unit trusts or authorised contractual scheme managers in relation to authorised contractual schemes they manage. |
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Amount due from depositaries of ICVCs |
NIL |
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Note 2 |
|||||
This only applies to firms who are authorised corporate directors in relation to ICVCs they operate |
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Other receivables due from or explicitly guaranteed by or deposits with category a bodies |
NIL |
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Other receivables due from or explicitly guaranteed by or deposits with category b bodies |
1.6% |
||||
Pre-payments and accrued income (see paragraph 10 of IPRU-INV 5.8.2R) |
8% |
||||
NIL |
|||||
Deferred acquisition cost asset |
NIL |
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All other assets |
8% |
||||
OFF-BALANCE SHEET ITEMS |
|||||
Full Risk Items e.g. |
|||||
Charges granted against assets |
8% x counterparty weight (see IPRU-INV 5.14.1R) |
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Guarantees given |
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Medium Risk Items e.g. |
|||||
Undrawn credit facilities granted by the firm with an original maturity of more than one year |
4% x counterparty weight (see IPRU-INV 5.14.1R) |
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Low Risk Items e.g. |
|||||
Undrawn credit facilities granted by the firm with an original maturity of one year or less |
NIL |
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Note |
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(1) |
In determining the appropriate other assets requirement (OAR) for guarantees given in a group context, a firm should follow the calculation below: |
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(a) |
Categorise the guarantee agreements into: |
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(i) |
those with the character of credit substitutes; or |
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(ii) |
those not having the character of credit substitutes; or |
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(iii) |
agreements to provide guarantees. |
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(b) |
Calculate the weighted value. |
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(i) |
For guarantees falling under (1)(a)(i), the weighted value will be 100% of the estimated current year liability under the guarantee. |
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(ii) |
For guarantees falling under (1)(a)(ii) the weighted value will be 50% of the estimated current year liability under the guarantee. |
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(iii) |
For guarantees falling under (1)(a)(iii), the weighted value will be nil. |
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(c) |
The OAR is calculated as: |
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Weighted value x 8% x counterparty weighting (IPRU-INV 5.14.1R) |
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(2) |
For the purpose of this requirement, in assessing whether the guarantee has the characteristics of a credit substitute the following factors should be considered: |
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(a) |
do the agreements allow for periodic or ad-hoc calling of funds; |
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(b) |
have the guarantees been drawn upon on a regular basis; |
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(c) |
do firms in the group rely on such guarantees to meet their working capital or regulatory capital requirements? |
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(3) |
Where a firm is part of a group including other FCA regulated entities which together have entered into cross-group guarantee arrangements which give rise to an OAR, the estimate of the potential liability under the guarantee may be apportioned between the regulated entities for the purpose of calculating each firm's OAR. |