Related provisions for SUP 16.12.3B
21 - 40 of 221 items.
3Where a group includes one or more BIPRU firms and one or more IFPRU investment firms which has permission under article 19 of the UK CRR45 (Exclusion from the scope of prudential consolidation) from the FCA not to be included in the supervision on a consolidated basis of the group of which it is a member, consolidated supervision under BIPRU 8 applies to those IFPRU investment firms and the BIPRU firms.
(1) If a group includes more than one firm, a single Annual Financial Crime Report may be submitted, and so satisfy the requirements of all firms in the group.(2) Such a report should contain the information required from all the relevant firms, meet all relevant due dates, indicate all the firms on whose behalf it is submitted and give their firm reference numbers (FRNs). The obligation to report under SUP 16.23.4R remains with the individual firm.
For the purposes of the rules in this chapter, a firm's
group means the firm and: (1) any UK parent institution1 in the group which is a financial holding company, a credit
institution, or an investment
firm;
(2) any credit
institution,
investment
firm or financial institution which is a subsidiary either of the firm or of the firm'sUK
A firm may, having first notified the FCA in writing, exclude from its group the following: (1) any entity the total assets of which are less than the smaller of the following two amounts: (a) 10 million euros; or (b) 1% of the total assets of the group's parent or the undertaking that holds the participation;
provided that the total assets of such entities do not collectively breach these limits. (2) any entity the inclusion of which within the group
(1) The FCA may require a firm to provide information about the position in the group of any undertaking excluded from the consolidation under rule 14.2.5. (2) An exclusion under rule 14.2.5(2) would normally be appropriate when an entity would be excluded from the scope of consolidation under the relevant UK generally accepted accounting principles.
Article 400(2) of the UK CRR2 permits the FCA to fully or partially exempt exposures incurred by a firm to intra-group undertakings that meet the specified criteria from the limit stipulated in article 395(1) of the UK CRR2 in relation to a firm's group of connected clients that represent its wider group. The FCA will consider exempting non-trading book and trading book exposures to intra-group undertakings if specified conditions throughout IFPRU 8.2 are met.
The FCA expects that applications for exemptions under article 400(2)(c) of the UK CRR1 will be for firms established in the UK where the intra-group undertakings to which they have exposures meet the criteria for the core UK group in article 113(6) of the UK CRR1, except for article 113(6)(d) (established in the UK1).
(1) Core UK groupeligible capital is equal to the sum of the following amounts for each member of the core UK group and the firm (the sub-group):(a) for ultimate parent undertaking of the sub-group, the amount calculated in line with article 6 of the UK CRR2 (or other prudential requirements that apply);(b) for any other member of the sub-group, the amount calculated in line with article 6 of the UK CRR2 (or other prudential requirements that apply) less the book value of the
The FCA will assess core UK group and non-core large exposure group applications against article 400(2)(c) on a case-by-case basis. The FCA will only approve this treatment for non-core large exposure group undertakings where the conditions in article 400(2)(c) are met. A firm should note that the FCA will still make a wider judgement whether it is appropriate to grant this treatment even where the conditions in article 400(2)(c) are met.
Article 43 applies to non-real time and solicited real time financial promotions made by, or on behalf of,1 a company ('C') to persons who, in broad terms, are:(1) members or creditors of C or a group member of C ('G');(2) entitled to a relevant investment issued by C or G;(3) entitled to become a member of C or G;(4) entitled to have transferred to them title to a relevant investment issued by C or G.The financial promotion must relate only to relevant investments issued or to
Article 59 imposes certain conditions.(1) The financial promotion must be an inducement and not be an invitation or amount to advice to acquire or dispose of an investment.(2) The inducement must not relate to any investment other than shares or debentures or alternative debentures3 issued, or to be issued, by1 the company making the financial promotion (or a member of its group) or warrants relating to or certificates representing such shares or debentures or alternative debentures.3(3)
Article 69 is somewhat1 similar to article 59 in the conditions it imposes (see PERG 8.21.12 G). There1 are two main differences between article 69 and article 59.1(1) Article 69 does not apply to unsolicited real time financial promotions.(2) The requirement in article 59 that the financial promotion be accompanied by accounts or a report is replaced in article 69. It is replaced by a requirement that shares or debentures or alternative debentures3 of the company or another body
In the FCA's opinion, companies whose securities are permitted to be traded or dealt in on a relevant market should be able to make good use of the article 69 exemption. But such companies will need to ensure that they meet the specific requirements in article 69(3). In very general terms, a financial promotion will comply with these requirements if:1(1) the only reason it is a financial promotion is that it contains or is accompanied by1 an inducement about certain investments
A requirement common to the exemptions in articles 59, 67 and 69 is that the financial promotions must not relate to investments other than those issued, or to be issued,1 by the company or a member of its group. The FCA is aware that there is concern about comments made in company statements or briefings. This is that they may be held to be inducements to acquire or dispose of, or exercise rights conferred by, an investment issued by a third party. For example, traded options
(1) A firm must apply the requirements of this section at group, parent undertaking and subsidiary undertaking levels, including those subsidiaries established in a country or territory which is outside the United Kingdom3.(2) Paragraph (1) does not limit SYSC 12.1.13R(2)(dA) (which relates to the application of the dual-regulated firms Remuneration Code within UK consolidation groups and non-UK sub-groups3). 2
SYSC 12.1.13R(2)(dA) requires the firm to ensure that the risk management processes and internal control mechanisms at the level of any UK consolidation group or non-UK sub-group3 of which a firm is a member, comply with the obligations in this section on a consolidated basis (or sub-consolidated basis). In the FCA’s view, the application of this section at group, parent undertaking and subsidiary undertaking levels in SYSC 19D.3.1R(1) is in line with 3 the application of systems
(1) Deferred remuneration paid in:(a) 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;(b) cash should also be subject to performance criteria.(2) The FCA would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with the ratio
(1) Subject to (2) to (7), the rules in SYSC 19D Annex 1.1R to 1.6R apply in relation to the prohibitions on dual-regulated firms Remuneration Code staff being remunerated in the ways specified in:(a) SYSC 19D.3.44R (guaranteed variable remuneration);(b) SYSC 19D.3.59R (1deferred variable remuneration);(c) SYSC 19D.3.61R(2) (performance adjustment – clawback); and(d) SYSC 19D Annex 1.10R (replacing payments recovered or property transferred).(2) Paragraph (1) applies only to those
(1) Sections 137H and 137I of the Act enable the FCA to make rules that render void any provision of an agreement that contravenes specified prohibitions in the dual-regulated firms Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision.(2) SYSC 19D.3.66R and SYSC 19D.3.67R (together with SYSC 19D Annex 1) are:(a) rules referred to in (1) that render void provisions of an agreement that contravene
In complying with CASS 7.13.8 R and CASS 7.13.10 R, a firm should consider, as appropriate, together with any other relevant matters:(1) the capital of the CRD credit institution or bank;(2) the amount of client money placed, as a proportion of the CRD credit institution or bank's capital and deposits, and, in the case of a qualifying money market fund, compared to any limit the fund may place on the volume of redemptions in any period;(3) the extent to which client money that
Notwithstanding the requirement at CASS 7.13.22 R a firm must limit the funds that it deposits or holds with a relevant group entity or combination of such entities so that the value of those funds do not at any point in time exceed 20 per cent of the total of all the client money held by the firm under CASS 7.13.3R6.[Note: article 4(3) first sub-paragraph of the MiFID Delegated Directive]6
For the purpose of CASS 7.13.20 R an entity is a relevant group entity if it is:(1) (a) a CRD credit institution; or 6(b) a bank authorised in a third country; or6(c) a qualifying money market fund; or6(d) the entity operating or managing the qualifying money market fund; and6(2) a member of the same group as that firm. [Note: article 4(3) first sub-paragraph of the MiFID Delegated Directive]6
In complying with the requirement in CASS 7.13.22 R to periodically review6 whether diversification (or further diversification) is appropriate, a firm should have regard to:(1) whether it would be appropriate to deposit client money in client bank accounts opened at a number of different third parties; (2) whether it would be appropriate to limit the amount of client money the firm holds with third parties that are in the same group as each other;(3) whether risks arising from
12Details of the notification to be provided by a BIPRU firm in relation to capital instruments issued by another undertaking in its group for inclusion in its capital resources or the consolidated capital resources of its UK consolidation group or non-UK sub-group23 are set out in BIPRU 8.6.1A R to BIPRU 8.6.1F R. 17
The SPV referred to in GENPRU 2.2.124R (2)(a) must satisfy the following conditions:(1) it is controlled by the firm and may not operate independently of the firm;(2) the rights of investors in the SPV who do not belong to the group of the BIPRU firm in question are not such as to affect the ability of the firm to control the SPV;8(3) all or virtually all of its exposures (calculated by reference to the amount) consist of exposures to the firm or to that firm'sgroup; and8(4) 8it
An SPV could take the form of a limited partnership. In such an arrangement, holders of a capital instrument issued by the SPV which do not belong to the group of the BIPRU firm in question should have no right to participate in the management of the partnership, whether under the partnership's constitutional documents or the transaction documents. In general, this means that they should be treated as limited partners. It is expected that the general partner, having control of
The SPV referred to in GENPRU 2.2.124R (2)(a) must fund its subscription for the capital issued by the firm by the issue of capital that satisfies the following conditions:(1) it must comply with the conditions for qualification as tier one capital, as amended by GENPRU 2.2.130 R, as if the SPV was itself a firm seeking to include that capital in its tier one capital resources;(2) 48(a) its terms must include an obligation on the firm that, in the event of a collapse of the SPV
A reciprocal cross-holding means a holding of the BIPRU firm of shares, any other interest in the capital, and subordinated debt, whether in the trading or non-trading book, in:(1) a credit institution; or(2) a financial institution;that satisfies the following conditions:(3) the holding is the subject of an agreement or arrangement between the BIPRU firm and either the issuer of the instrument in question or a member of a group to which the issuer belongs;(4) under the terms
(1) A firm must apply the requirements of this section at group, parent undertaking and subsidiary undertaking levels, including those subsidiaries established in a country or territory which is outside the United Kingdom7.(2) Paragraph (1) does not limit SYSC 12.1.13 R (2)(dA) (which relates to the application of the Remuneration Code within UK consolidation groups and non-UK sub-groups7).[Note:3article 92(1) of CRD]3
SYSC 12.1.13 R (2)(dA) requires the firm to ensure that the risk management processes and internal control mechanisms at the level of any UK consolidation group or non-UK sub-group7 of which a firm is a member comply with the obligations set out in this section on a consolidated (or sub-consolidated) basis. In the FCA’s6 view, the application of6 this section at group, parent undertaking and subsidiary undertaking levels in SYSC 19A.3.1R(1) is in line with67the application of
(1) Deferred remuneration paid in:6(a) 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; and6(b) cash should also be subject to performance criteria.6(2) The FCA6 would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with
(1) Subject to (1A) to (3), the rules1 in SYSC 19A Annex 1.1R to 1.4R1 apply in relation to the prohibitions on Remuneration Code staff being remunerated in the ways specified in:11(a) SYSC 19A.3.40 R (guaranteed variable remuneration);(b) SYSC 19A.3.49 R (6deferred variable remuneration); and(c) (replacing payments recovered or property transferred).(1A) Paragraph (1) applies only to those prohibitions as they apply in relation to a firm that satisfies at least one of the conditions
(1) Sections 137H and 137I of the Act enables the FCA6 to make rules that render void any provision of an agreement that contravenes specified prohibitions in the Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision. SYSC 19A.3.53A R and1SYSC 19A.3.54 R (together with SYSC 19A Annex 1) are such rules1 and render1 void provisions of an agreement that contravene the specified prohibitions on guaranteed
The circumstances which should be treated as giving rise to a conflict of interest cover cases where there is a conflict between the interests of the firm or certain persons connected to the firm or the firm'sgroup and the duty the firm owes to a client; or between the differing interests of two or more of its clients, to whom the firm owes in each case a duty. It is not enough that the firm may gain a benefit if there is not also a possible disadvantage to a client, or that one
Firms3 should aim to identify and manage the conflicts of interest arising in relation to their various business lines and their group's activities under a comprehensive conflicts of interest policy. In particular, the disclosure of conflicts of interest by a firm should not exempt it from the obligation to maintain and operate the effective organisational and administrative arrangements under SYSC 10.1.7 R. While disclosure of specific conflicts of interest is required by SYSC
(1) A 9management company5and an insurance intermediary12 must establish, implement and maintain an effective conflicts of interest policy89 that is set out in writing and is appropriate to the size and organisation of the firm and the nature, scale and complexity of its business.(2) Where the 9management company5or insurance intermediary12 is a member of a group, the policy must also take into account any circumstances, of which the firm is or should be aware, which may give
(1) The conflicts of interest policy must include the following content:(a) it must identify in accordance with SYSC 10.1.3 R, SYSC 10.1.4 R, SYSC 10.1.4BR and SYSC 10.1.4CR (as applicable),12 by reference to the specific services and activities carried out by or on behalf of the management company or insurance intermediary12 the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more clients;
5A UK UCITS management company13, when identifying the types of conflict of interests for the purposes of SYSC 10.1.4 R, must take into account:(1) the interests of the firm, including those deriving from its belonging to a group or from the performance of services and activities, the interests of the clients and the duty of the firm towards the UCITS scheme13it manages; and(2) where it manages two or more UCITS schemes13, the interests of all of them.[Note: article 17(2) of the
112(1) LR 11.1.7 R to LR 11.1.11 R do not apply to an arrangement between a closed-ended investment fund and its investment manager or any member of that investment manager's group4 where the arrangement is such that each invests in or provides finance to an entity or asset and the investment or provision of finance is either:2(a) made at the same time and on substantially the same economic and financial terms; or2(b) referred to in the closed-ended investment fund's published
1An applicant must satisfy the FCA that: (1) the discretion of its board to make strategic decisions on behalf of the applicant has not been limited or transferred to a person outside the applicant’s group; and(2) its board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the applicant’s group.
1In considering whether an applicant has satisfied LR 6.13.1R, the FCA will consider, among other things, whether the board of the applicant consists solely of non-executive directors and whether significant elements of the strategic decision-making of or planning for the applicant take place outside the applicant’s group, for example with an external management company.
Firms are reminded that a change in control may give rise to a change in the groupcompanies to which the appropriate regulator's7 consolidated financial supervision requirements apply. Also, the firm may for the first time become subject to the appropriate regulator's7 requirements on consolidated financial supervision.6 This may apply, for example, if the controller is itself an authorised undertaking. The appropriate regulator7 may therefore request such a firm, controller or
If a person is proposing a change in control over more than one firm within a group, then the controller or proposed controller may submit a single section 178 notice5 to the PRA7 in respect of all those firms which are PRA-authorised persons and a single section 178 notice to the FCA in respect of all those firms which are not PRA-authorised persons.7 The section 178 notice5should contain all the required information as if separate notifications had been made, but information
When an event occurs (for example, a group restructuring or a merger) as a result of which: (1) more than one firm in a group would undergo a change in control; or(2) a single firm would experience more than one change in control;then, to avoid duplication of documentation, all the firms and their controllers or proposed controllers may discharge their respective obligations to notify the appropriate regulator7 by submitting a single section 178 notice5 to the PRA7 containing
- (1)
[deleted] 3
3 - (2)
[deleted] Editor’s note: The text of this provision has been moved to SYSC 25.1.5R]3
3
(1) 6A must be capable of being effectively supervised by the FCA having regard to all the circumstances including-(a) the nature (including the complexity) of the regulated activities that A carries on or seeks to carry on;(b) the complexity of any products that A provides or will provide in carrying on those activities;(c) the way in which A’s business is organised;(d) if A is a member of a group, whether membership of the group is likely to prevent the FCA’s effective supervision
(1) 6B must be capable of being effectively supervised by the FCA having regard to all the circumstances including-(a) the nature (including the complexity) of the regulated activities that B carries on or seeks to carry on;(b) the complexity of any products that B provides or will provide in carrying on those activities;(c) the way in which B’s business is organised;(d) if B is a member of a group, whether membership of the group is likely to prevent the FCA’s effective supervision
In assessing the threshold conditions set out in paragraphs 2C and 3B of Schedule 6 to the Act6, factors which the FCA6 will take into consideration include, among other things, whether: 6(1) it is likely that the FCA6 will receive adequate information from the firm, and those persons with whom the firm has close links, to enable it to determine whether the firm is complying with the requirements and standards under the regulatory system for which the FCA is responsible6 and to