Content Options

View Options

Status: You are viewing the version of the handbook as on 2009-03-31.

ELM 2.5 Continuing capital requirement

Obligation to meet own funds requirement

ELM 2.5.1R

A firm must, at all times, maintain own funds equal to or in excess of its own funds requirement.

Calculation of own funds requirement

ELM 2.5.2R

A firm's own funds requirement is, at any time, 2% of the higher of the following amounts:

  1. (1)

    its e-money outstandings at that time; and

  2. (2)

    the average of its daily e-money outstandings amount for the six month period ending at that time.

Newly authorised ELMI without a six month average

ELM 2.5.3R

If a firm has not been an ELMI for the whole of the period referred to in ELM 2.5.2 R (2), the firm must calculate the amount in ELM 2.5.2 R (2) from the projected amounts of its daily e-money outstandings amount for the six month period beginning on the day it is granted an e-money permission. Those projections must be the ones contained in the business plan supplied by the firm to the FSA as part of its application for the granting an e-money permission or (if the plan is amended and resubmitted to the FSA before the granting an e-money permission) the plan as so amended and resubmitted.

ELM 2.5.4R

If, in relation to a firm:

  1. (1)

    the projections referred to in ELM 2.5.3 R (or any further projections prepared under this rule) have proved to be significantly incorrect; or

  2. (2)

    it is reasonably likely that those projections will prove to be significantly incorrect;

and more than one month of the six month period beginning on the date the firm is granted an e-money permission remains at the time that the circumstances in ELM 2.5.4 R (1) or ELM 2.5.4 R (2) first arise, the firm must prepare revised projections of its daily e-money outstandings amount for the rest of that period.

ELM 2.5.5R

The revised projections in ELM 2.5.4 R must:

  1. (1)

    be prepared to a high standard and be fair and reasonable;

  2. (2)

    be based on reasonable and appropriate assumptions and research and (where appropriate) fact; and

  3. (3)

    be completed and sent to the FSA within ten business days of the circumstances in ELM 2.5.4 R (1) or ELM 2.5.4 R (2) first arising.

ELM 2.5.6R

If a firm produces new projections under ELM 2.5.4 R, the amount referred to in ELM 2.5.2 R (2) must be calculated from the average of its daily e-money outstandings amount for the six month period beginning on the day it is granted an e-money permission, as follows:

  1. (1)

    (for the period prior to the day as of which the calculation is being made) from the firm's actual e-money outstandings; and

  2. (2)

    (for the remainder of the six month period) from those new projections.

ELM 2.5.7G

The effect of the rules in SYSC 3 is that a firm should take reasonable care to establish and maintain systems and controls that ensure that the firm will know as soon as reasonably possible if the projections referred to in ELM 2.5.4 R (1) have proved to be significantly incorrect or if it is reasonably likely that those projections will prove to be significantly incorrect.