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UPRU 2.1 Financial resources and financial resources requirements

Financial resources

UPRU 2.1.1R

1A firm must ensure that it has at all times financial resources which equal or exceed the applicable financial resources requirement.

Financial resources requirement

UPRU 2.1.2R

The financial resources requirement for a firm is the higher of:

  1. (1)

    subject to a maximum requirement of €10,000,000:

    1. (a)

      initial capital requirement of €125,000; plus

    2. (b)

      if the funds under management exceed €250,000,000, an additional amount of 0.02% of the excess; or

  2. (2)

    13/52 of its annual audited fixed expenditure.

Annual2 fixed expenditure

UPRU 2.1.3R

For the purposes of this sourcebook, a firm's annual fixed expenditure is:

2
  1. (1)

    the sum of the amounts described as total expenditure in the four quarterly financial returns up to (and including) that prepared at the firm's most recent accounting reference date,3 less the following items (if they are included within that expenditure):

    3
    1. (a)

      staff bonuses, except to the extent that they are guaranteed;

    2. (b)

      employees' and directors' shares in profits, except to the extent that they are guaranteed;

    3. (c)

      other appropriations of profits;

    4. (d)

      shared commission and fees payable which are directly related to commission and fees receivable which are included within total revenue;

    5. (e)

      interest charges in respect of borrowings made to finance the acquisition of the firm's readily realisable investments;

    6. (f)

      interest paid to customers on client money;

    7. (g)

      interest paid to counterparties;

    8. (h)

      fees, brokerage and other charges paid to clearing houses, exchanges and intermediate brokers for the purposes of executing, registering or clearing transactions;

    9. (i)

      foreign exchange losses;

    10. (j)

      other variable expenditure; or

  2. (2)

    where the previous accounting period does not include twelve months' trading, an amount calculated in accordance with (1) pro-rated to an equivalent annual amount; or

  3. (3)

    where a firm has not prepared four quarterly financial returns 3since the commencement of its permitted business, an amount based on forecast expenditure included in the budget for the first twelve months' trading, as submitted with its application for authorisation.

    3
UPRU 2.1.4G

A firm's financial resources requirement will be recalculated annually when its fourth quarterly financial return3 is prepared. The firm should maintain financial resources sufficient to meet its new financial resources requirement from the date on which the fourth quarterly financial return3 is prepared (and no later than 80 business days after the accounting reference date).3 The expenditure based requirement 3 applicable at the accounting reference date will be based on the four quarterly financial returns prepared up to and on that date. 3

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