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

CP13/6
CRD IV for Investment Firms
6.18 The CRR now prevents ‘exempt CAD firms’ from also being authorised to provide the ancillary
service (1) referred to in Section B of Annex I to MIFID, which is safekeeping and administration
of financial instruments for the account of clients, including custodianship and related services
such as cash/collateral management. To the extent that there are any such firms that would
otherwise be ‘exempt CAD firms’ but for this additional permission, they would now be
included back within the definition of ‘investment firm’ under CRD IV. As a result, such firms
would not be eligible for the limited treatment under Article 31 of the Directive – as reflected
in the Interim Prudential Sourcebook for Investment Businesses (IPRU (INV)) – but would be
subject to the CRR and the Directive, as an IFPRU limited licence firm.
In summary, firms that are authorised to carry out:
• MIFID investment services and activities (1) (reception and transmission of orders)
and/or (5) (investment advice); and
• MIFID ancillary service (1) safekeeping and administration of financial instruments
for the account of clients, including custodianship and related services such as
cash/collateral management ;
will no longer be exempt from the definition of ‘investment firm’ and will instead
become subject to the CRD IV. Firms in this position should refer to chapter 2 for
details on the application of CRD IV to investment firms.
Whereas firms that are authorised only for the purposes of MIFID investment services
and activities (1) and (5), but not ancillary service (1), may continue to be treated as
‘exempt CAD firms’.
Q25: Do you agree to our proposal to exercise the discretion
in article 95(2) of the CRR to retain current CRD rules
in force on own funds requirements (Pillar 1) for BIPRU
firms keeping the ‘status quo’ pending the EU-wide
review of what is an appropriate prudential regime as
a whole for firms in the investment sector in 2015? If
not, please explain why not and propose alternative
approaches and the rationale for those approaches.
Q26: Do you agree to our proposal to retain current CRD
rules in force on Pillar 2, Pillar 3 and systems and control
requirements in SYSC (including the Remuneration Code)
for BIPRU firms keeping the ‘status quo’ pending the EUwide
review of what is an appropriate prudential regime
as a whole for firms in the investment sector in 2015?
If not, please explain why not and propose alternative
approaches and the rationale for those approaches.
52 July 2013
Financial Conduct Authority