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Capital Requirements Directive (CRD), sets out the... Lernen beginnen
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... the prudential (capital) rules for financial firms. It applies to banks, building societies and most investment firms. The aim is to ensure that firms hold adequate financial resources and have adequate controls to prudently manage the business
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Principle 4 of the FCA's Principles for Businesses establishes that: Lernen beginnen
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‘a firm must maintain adequate financial resources’ Financial resources include both capital resources and liquidity resources, so that the firm can meet its liabilities as they fall due.
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Capital Adequacy Requirements. The standards for investment firms are set out in three modules (Sourcebooks) of the FCA Handbook: 3 Lernen beginnen
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GENERAL Prudential Sourcebook. | Prudential Sourcebook for UK MiFID INVESTMENT Firms. | INTERM Prudential Sourcebook for Investment Businesses. GII GENPRU - high-level standards for firms which are subject to Capital Requirements Directive. | MIFIDPRU - prudential requirements for UK-regulated firms. | Capital adequacy rules for investment firms.
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The Capital Requirements Directive (CRD) and the Capital Requirements Regulations (CRR) apply to __? Lernen beginnen
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(banks/deposit taking institutions)
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CRD framework three pillars: Pillar 1 | Pillar 2 | Pillar 3 Lernen beginnen
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MINIMUM REQUIREMENTS for credit and risk. | Firms decide if ADDITIONAL CAPITAL should be held to cover risks not covered in Pillar 1. | DISCLOSURE of information about risks. MAD Minimum capital requirements for credit and risk. | Firms decide if additional capital should be held to cover risks not covered in Pillar 1. | Disclosure of information about risks.
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Firms subject to CRD requirements must also comply with provisions relating to the quality of capital held. Capital is split into three tiers for this purpose: 3 Capital Requirements Directive Lernen beginnen
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Core Tier One capital. | Tier Two capital. | Tier Three capital For example: Permanent share capital, reserves, externally verified interim profits.| Long-term subordinated debt.| Short-term subordinated debt.
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With the exception of MiFID investment firms, firms that are not subject to the CRD requirements must adhere to the rules in the ‘IPRU-INV’ Sourcebook. Such firms include: LASS-J Lernen beginnen
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Lloyd’s agents,| Authorised professional firms,| Securities-futures firms,| Service companies, | Junior ISA credit union providers. LASS-J
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Lernen beginnen
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Parties commit to buy or sell an asset on a specified date in the future, but at a price agreed today. As the price is agreed at the outset, the seller is protected from a fall in the price of the underlying asset.
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Passporting is the method by which...? 2 Lernen beginnen
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... firms authorised in one EU member state are under MiFID II, | are permitted to carry on regulated financial services in another state without the local authorization. 'MiFID II' / 'without the local authorization'.
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IPRU-INV. All firms must comply with two overarching requirements: Investment Firms Prudential Regime 2 | overarching - nadrzędny Lernen beginnen
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Firms must at all timesFirms must have available the amount of financial resources.| Firms must notify the FCA if they become aware of a breach. rms must notify the relevant regulator immediately if the firm becomes aware that it is in breach of.
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The aim of the prudential regime (Investment Firms Prudential Regime (IFPR)) is to...? Lernen beginnen
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... is to simplify the requirements for FCA solo regulated MiFID investment firms. By refocusing prudential requirements away from the risks that firms face.
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Investment firms are subject to...? 2 IFPR outcomes identified by FCA Lernen beginnen
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to consistent prudential requirements. | To spend less time on complex capital requirement calculations
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A prudential regime that is aligned to the way that investment firms run their business by taking into account the...?...? IFPR outcomes identified by FCA Lernen beginnen
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... the different business models of FCA investment firms. Prudential rules that are understandable (rules brought into a new single prudential sourcebook, MIFIDPRU).
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Capital Requirements Directive (CRD) applies to...? 3 Lernen beginnen
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banks, | building societies | and most investment firms. The aim is to ensure that firms hold adequate financial resources and have adequate controls to prudently manage the business
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The aim of Capital Requirements DirectivThe aim is to ensure that firms hold adequate financial resources and have adequate controls to prue (CRD) is to ensure that...? 2 Lernen beginnen
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... that firms hold adequate financial resources, | and have ADEQUATE CONTROLS to prudently manage the business.
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