CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

CRD IV for Investment Firms
CP13/6
6.
Prudential requirements for BIPRU firms
Purpose
6.1 This chapter sets out our proposals to:
• exercise the discretion in the CRR article 95(2) to retain current CRD rules on own funds
requirements (Pillar 1);
• retain current CRD rules on Pillar 2, disclosure (Pillar 3) and systems and control requirements
in SYSC (including the Remuneration Code); and
• for the new prudential category of ‘BIPRU firms’ (using the revised, proposed term included
in the Glossary in Appendix 1).
Background
6.2 Certain investment firms subject to current CRD are not subject to the full CRD IV, pending the
Commission’s review by end 2015.
6.3 These firms are a subset of the category excluded from the definition of ‘investment firm’
in article 4.1(2)(c) of the Regulation. This exclusion has been amended in relation to the
corresponding one in article 3(1)(b)(iii) of the CAD – also referred to as ‘exempt CAD firms’
in our current Handbook. However, the Regulation changes the scope of this exclusion in the
following ways:
• a firm in this category must not be authorised to provide ancillary service (1) referred
to in Section B of Annex 1 MIFID (which is safekeeping and administration of financial
instruments for the account of clients, including custodianship and related services such as
cash/collateral management); and
• the addition of MIFID activities (2) (execution of orders on behalf of clients) and (4) (portfolio
management) have been added.
6.4 Article 95(2) of the Regulation sets out the own funds requirements and the alternative
treatment – as part of the discretion for competent authority explained below – in relation to
those firms in the exclusion in article 4.1(2)(c) of the CRR where they carry out MIFID activities
(2) and/or (4).
Financial Conduct Authority July 2013
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