BIPRU TP 15 Commodities firm transitionals: Exemption from capital requirements

1Application

15.1

R

Subject to BIPRU TP 15.2R, BIPRU TP 15 applies to aBIPRU firm:4

4

(1)

whose main business consists exclusively of the provision of investment services or investment activities in relation to the financial instruments set out in points 5, 6, 7, 9 and 10 of Section C of Annex I to the MIFID; and

(2)

to whom the ISD would not have applied if it had remained in force in the form it was in on 31 December 2006.

15.2

R

BIPRU TP 15.13R to BIPRU TP 15.14G apply to any firm to which BIPRU 8 (Group risk - consolidation) applies.

Purpose

15.3

G

BIPRU TP 15 implements Article 48(1) of the Capital Adequacy Directive as applied pursuant to the discretion in the third paragraph of article 95(2) of the EU CRR.4

Duration of exemption

15.4

R

BIPRU TP 15 applies until the entry into force of any amendments to BIPRU TP 15 under any legislative amendments to CRD and EU CRR following from the Commission's report under article 508(3) of the EU CRR on an appropriate prudential regime for the prudential supervision of investment firms and firms referred to in article 4(1)(2)(b) and (c) of the EU CRR.4

4

15.5

G

[deleted]4

4

Exemption

15.6

R

The provisions of GENPRU and BIPRU on capital requirements and GENPRU 1.2 (Adequacy of financial resources) do not apply to a firm to which BIPRU TP 15 applies.

34

15.7

G

[deleted]4

4

15.8

G

An exempt BIPRU commodities firm (which is the name in the Glossary given to a firm with the benefit of the exemption in BIPRU TP 15.6R) may be subject to the requirements of Chapter 3 of IPRU(INV). Details of which exempt BIPRU commodities firm are subject to those requirements can be found in Chapter 3 of IPRU(INV).

15.9

G

The table in BIPRU TP 15.10G provides an indication of which parts of GENPRU and BIPRU generally apply to an exempt BIPRU commodities firm and which parts in general do not apply. If a section is shown as not in general applying the table also identifies any significant aspects of that section that do apply.

15.10

G

Table: Parts of GENPRU and BIPRU that apply to exempt BIPRU commodities firms

This table belongs to BIPRU TP 15.9G

GENPRU and BIPRU provisions

A Y denotes that the provision generally does apply

An N denotes that generally it does not apply

Remarks

GENPRU TP (Transitional provisions)

Y

GENPRU 1.1 (Application and scope)

Y

GENPRU 1.2 (Adequacy of financial resources)

N

GENPRU 1.3 (Valuation)

Y

GENPRU 1.4 (Actions for damages)

Y

GENPRU 1.5 (Application of GENPRU 1 to Lloyd's)

Not applicable as does not apply to BIPRU firms

GENPRU 2.1 (Calculation of capital resources requirements)

N

GENPRU 2.2 (Capital resources)

N4

4
4

GENPRU 2.3 (Application of GENPRU 2 to Lloyd's)

Not applicable as does not apply to BIPRU firms

GENPRU 3.1 (Cross sector groups)

Y

Only applies if the firm is a member of a financial conglomerate

GENPRU 3.2 (Third-country groups)

Y

Provisions about financial conglomerate only apply if the firm is a member of a financial conglomerate

See remarks on BIPRU 8 for provisions about a third-country banking and investment group

BIPRU TP (Transitional provisions)

Y

BIPRU 1.1 (Application and scope)

Y

BIPRU 1.2 (Definition of the trading book)

Y

BIPRU 1.3 (Application for advanced approaches)

N

Provisions about BIPRU 2.1 and BIPRU 8 apply to the extent those parts of BIPRU apply. Otherwise does not apply.

BIPRU 1.4 (Actions for damages)

Y

BIPRU 2.1 (Solo consolidation)

N4

4
4

BIPRU 2.2 (Adequacy of financial resources)

N

BIPRU 2.3 (Interest rate risk in the non-trading book)

N

BIPRU 3 (Standardised approach to credit risk)

N

BIPRU 4 (The IRB approach)

N

BIPRU 5 (Credit risk mitigation)

N

BIPRU 6 (Operational risk)

N

BIPRU 7 (Market risk)

N

BIPRU 7.8.38 R and BIPRU 7.3.39 R (Risk management systems and controls) apply in theory although it is unlikely that a firm will be able to carry out these activities without losing the exemption in BIPRU TP 15.

BIPRU 8 (Group risk - consolidation)

Y

See BIPRU TP 15.13R to BIPRU TP 15.14G

BIPRU 9 (Securitisation)

N

BIPRU 9.1.6R to BIPRU 9.1.8G (Risk systems) apply4

BIPRU 11 (Disclosure)

Y

BIPRU 12

Chapter does not yet exist

BIPRU 13 (Financial derivatives, SFTs and long settlement transactions)

N

BIPRU 14 (Capital requirements for settlement and counterparty risk)

N

15.11

G

SYSC applies to an exempt BIPRU commodities firm.

Definitions

15.12

R

The terms financial instrument, investment services and investment activities have the same meaning as they do in the MIFID.

Consolidation

15.13

R

BIPRU TP 15 does not apply for the purposes of BIPRU 8 with respect to a firm's UK consolidation group or, as the case may be, non-EEA sub-group unless the following conditions are satisfied:

(1)

there is no credit institution in that group;

(2)

each CAD investment firm4 in the group meets the conditions in BIPRU TP 15.1R(1);

4

(3)

each CAD investment firm4 whose head office is in an EEA State satisfies the conditions in BIPRU TP 15.1R(2); and

4

(4)

any CAD investment firm4 whose head office is outside the EEA would have fallen into BIPRU TP 15.1R(2) if:

4

(a)

its head office had been in an EEA State; and

(b)

it had carried on all its business in the EEA and had obtained whatever authorisations for doing so were required under the ISD in the form that Directive was in on 31 December 2006.

15.14

G

If an exempt BIPRU commodities firm is a member of a group that meets the conditions in BIPRU TP 15.13R, BIPRU 8 will not apply to the group. Chapter 14 of IPRU(INV) (Consolidation) applies instead.