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.

PRIN 1 Annex 1 Non-designated investment business - clients that a firm may treat as an eligible counterparty for the purposes of PRIN

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11.1

A firm may categorise the following types of client as an eligible counterparty for the purposes of PRIN:

(1)

a properly constituted government (including a quasi-governmental body or a government agency) of any country or territory;

(2)

a central bank or other national monetary authority of any country or territory;

(3)

a supranational whose members are either countries or central banks or national monetary authorities;

(4)

a State investment body, or a body charged with, or intervening in, the management of the public debt at national level3;

(5)

another firm, or an overseas financial services institution;

(6)

any associate of a firm (except an OPS firm), or of an overseas financial services institution, if the firm or institution consents;

(7)

a client when he is classified as an eligible counterparty in accordance with 1.2; or

(8)

a recognised investment exchange, EU regulated market5 or clearing house.

2

1.2

A firm may classify a client (other than another firm, regulated collective investment scheme, or an overseas financial services institution) as an eligible counterparty for the purposes of PRIN under 1.1(7) if:

(1)

the client at the time he is classified is one of the following:

(a)

a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time);

(b)

a body corporate that meets (or any of whose holding companies or subsidiaries meets) two of the following tests:

(i)

a balance sheet total of 12.5 million euros (or its equivalent in any other currency at the relevant time);

(ii)

a net turnover of 25 million euros (or its equivalent in any other currency at the relevant time);

(iii)

an average number of employees during the year of 250;

(c)

[deleted]4

(d)

a partnership or unincorporated association which has net assets of at least £10 million (or its equivalent in any other currency at the relevant time) (and calculated, in the case of a limited partnership, without deducting loans owing to any of the partners);

(e)

a trustee of a trust (other than an occupational pension scheme, SSAS, personal pension scheme or stakeholder pension scheme) with assets of at least £10 million (or its equivalent in any other currency), calculated by aggregating the value of the cash and designated investments forming part of the trust's assets, but before deducting its liabilities;

(f)

a trustee of an occupational pension scheme or SSAS, or a trustee or operator of a personal pension scheme or stakeholder pension scheme where the scheme has (or has had at any time during the previous two years):

(i)

at least 50 members; and

(ii)

assets under management of not less than £10 million (or its equivalent in any other currency at the relevant time); and

(2)

the firm has, before commencing business with the client on an eligible counterparty basis:

(a)

advised the client in writing that he is being categorised as an eligible counterparty for the purposes of PRIN;

(b)

given a written warning to the client that he will lose protections under the regulatory system;

(c)

for a client falling under (1)(a) or (b):

(i)

taken reasonable steps to ensure that the written notices required by (a) and (b) have been delivered to a person authorised to take such a decision for the client; and

(ii)

not been notified by the client that the client objects to being classified as an eligible counterparty;

(d)

for a client falling under (1)(c), (d), (e) or (f):

(i)

taken reasonable steps to ensure that the written notices required by (a) and (b) have been delivered to a person authorised to take such a decision for the client; and

(ii)

obtained the client's written consent or is otherwise able to demonstrate that consent has been given.