Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.


Status: This chapter was amended on 31 December 2020 as a result of Brexit. However, it is subject to the FCA Prudential Transitional Direction, which means that firms should not comply with these provisions yet. Instead, firms must follow this link and continue to comply with pre-IP completion day requirements https://www.handbook.fca.org.uk/handbook?date=31-12-2020&timeline=True (unless specified otherwise in the Direction). To see a full list of Handbook modules affected, please see Section B of the Annex to the Direction.

IFPRU 3.1 Base own funds requirement

Application

IFPRU 3.1.1 R RP

This section applies to an IFPRU investment firm, unless it is an exempt IFPRU commodities firm.

IFPRU 3.1.2 R RP

This section applies to a firm in relation to the whole of its business, except where a particular provision provides for a narrower scope.

IFPRU 3.1.3 G RP

The adequacy of a firm'sown funds needs to be assessed in relation to all the activities of the firm and risks to which they give rise.

Purpose

IFPRU 3.1.4 G RP

This section implements EC standards for the base own funds requirement to be held by an IFPRU investment firm. In particular, it implements articles 28 and 29 of CRD.

IFPRU 3.1.5 G RP

Principle 4 requires a firm to maintain adequate financial resources. IFPRU 3 sets out provisions that deal specifically with the adequacy of that part of a firm's financial resources that consists of own funds in addition to Parts Two (Own Funds) and Three (Capital requirements) of the UK CRR1.

Main requirement

IFPRU 3.1.6 R RP
  1. (1)

    Subject to (2), an IFPRU investment firm must maintain, at all times, common equity tier 1 capital equal to, or in excess of, the base own funds requirement.

  2. (2)

    For the purpose of (1), the common equity tier 1 capital of an IFPRU investment firm must comprise only of one or more of the items referred to in article 26(1)(a) to (e) of the UK CRR1 (Common equity tier 1 items).

[Note: article 28(1) of CRD]

IFPRU 3.1.7 R RP

At the time that it first becomes an IFPRU investment firm, a firm must hold initial capital of not less than the base own funds requirement applicable to that firm.

Calculation of the base own funds requirement

IFPRU 3.1.8 R RP

The amount of an IFPRU investment firm'sbase own funds requirement is set out in the table in IFPRU 3.1.9 R.

Table: Base own funds requirement

IFPRU 3.1.9 R RP

This table belongs to IFPRU 3.1.8 R.

Firm Category

Amount: Currency equivalent of

IFPRU 730K firm

€730,000

IFPRU 125K firm

€125,000

IFPRU 50K firm

€50,000

[Note: articles 28(2), 29(1) and 29(3) of CRD]

IFPRU 3.1.10 G RP

A collective portfolio management investment firm is required to maintain base own funds requirement of €125,000 (in line with IPRU(INV) 11.3.1R(1)).