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MIFIDPRU TP 3 Group capital test: transitional arrangements

1Application

13.1

R

MIFIDPRU TP 3 applies to:

(1)

a MIFIDPRU investment firm;

(2)

a UK parent entity; and

(3)

a GCT parent undertaking in an investment firm group.

Purpose

13.2

G

MIFIDPRU TP 3 contains transitional provisions which allow an investment firm group to apply the group capital test on a temporary basis before the FCA has determined an application under MIFIDPRU 2.4.17R, provided that certain conditions are met.

Temporary application of the group capital test

13.3

R

(1)

This rule applies to an investment firm group where:

(a)

the UK parent entity or a MIFIDPRU investment within that investment firm group has submitted an application to the FCA under MIFIDPRU 2.4.17R by no later than 1 February 2022; and

(b)

the management body of the UK parent entity or MIFIDPRU investment firm has determined that there is a reasonable basis to conclude that the investment firm group satisfies the requirements in MIFIDPRU 2.4.17R(2)(a) and (b).

(2)

This rule applies from 1 January 2022 until the earlier of the following:

(a)

1 January 2024; or

(b)

the date specified in the notification to the UK parent entity or MIFIDPRU investment firm of the FCA’s decision in relation to the application in (1)(a).

(3)

Where this rule applies, the undertakings in MIFIDPRU TP 3.1 may apply the group capital test in accordance with MIFIDPRU 2.6, even though the FCA has not granted permission to use the group capital test under MIFIDPRU 2.4.17R.

13.4

G

Under MIFIDPRU 2.4.18R(2)(g), an application submitted under MIFIDPRU 2.4.17R must demonstrate how the investment firm group would comply with the consolidated requirements under MIFIDPRU 2.5 if the FCA did not grant permission to apply the group capital test. The application must also explain the timeframe in which the investment firm group would expect to comply with the consolidated requirements. If the FCA does not grant the application, it will use this information to determine an appropriate date under MIFIDPRU TP 3.3R(2)(b) on which the transitional arrangements will end.