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UPRU 2.1 Financial resources and financial resources requirements

Financial resources

UPRU 2.1.1 R

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 2.1.2 R

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)

    the amount specified in article 97 of the EU CRR (Own funds based on fixed overheads) (as replicated in UPRU 2.1.2A EU).5

    5
UPRU 2.1.2A EU

5 Own Funds based on Fixed Overheads

1

In accordance with Articles 95 and 96, an investment firm and firms referred to in point (2)(c) of Article 4(1) that provide the investment services and activities listed in points (2) and (4) of Section A of Annex I to Directive 2004/39/EC shall hold eligible capital of at least one quarter of the fixed overheads of the preceding year.

2

Where there is a change in the business of an investment firm since the preceding year that the competent authority considers to be material, the competent authority may adjust the requirement laid down in paragraph 1.

3

Where an investment firm has not completed business for one year, starting from the day it starts up, an investment firm shall hold eligible capital of at least one quarter of the fixed overheads projected in its business plan, except where the competent authority requires the business plan to be adjusted.

[Note Article 97(1) to (3) of the EU CRR]
UPRU 2.1.3 R

[deleted]

5
UPRU 2.1.4 G

A firm'sfinancial 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

2 3 3 2 2 2 3 3 3 3

UPRU 2.2 Method of calculation of financial resources

UPRU 2.2.1 R

PART I

A firm must calculate its financial resources as shown below, subject to the detailed requirements set out in Part II.

Financial resources

Category

Part II

Para

(1)

[deleted]2

2

(2)

[deleted]2

2

(3)

[deleted]2

2

(4)

[deleted]2

2

(5)

[deleted]2

2

(6)

[deleted]2

2

(7)

[deleted]2

2

(8)

[deleted]2

2

1(8A)

[deleted]2

2

(9)

[deleted]2

2

(10)

[deleted]2

2

(11)

[deleted]2

2

(12)

[deleted]2

2

(13)

[deleted]2

2

(14)

[deleted]2

2

Own funds 2

2

E

(15)

Illiquid assets

F

11

Financial resources = (E - F) =

G

PART II

DETAILED REQUIREMENTS

1

[deleted]2

2

2

[deleted]2

2

3

[deleted]2

2

4

[deleted]2

2

5

[deleted]2

2

6

[deleted]2

2

7

[deleted]2

2

8

[deleted]2

2

9

[deleted]2

2

10

[deleted]2

2

11

Illiquid assets (Item 15)

Illiquid assets comprise:

(a)

tangible fixed assets;

Note

In respect of tangible fixed assets purchased under finance leases the amount to be deducted as an illiquid asset shall be limited to the excess of the asset over the amount of the related liability shown on the balance sheet.

(b)

holdings in, including subordinated loans to, credit or financial institutions which may be included in the own funds of such institutions unless they have been deducted under item 9;

(c)

any investment in undertakings other than credit institutions and other financial institutions where such investments are not readily realisable;

(d)

any deficiency in net assets of a subsidiary;

(e)

deposits not available for repayment within 90 days or less (except for payments in connection with margined futures or options contracts);

Note

Where cash is placed on deposit with a maturity of more than 90 days but is repayable on demand subject to the payment of a penalty, then this is not required to be deducted as an illiquid asset but a deduction is required for the amount of the penalty.

(f)

loans, other debtors and accruals not falling due to be repaid within 90 days or which are more than one month overdue by reference to the contractual payment date;

(g)

physical stocks;

(h)

prepayments to the extent that the period of prepayment exceeds thirteen weeks; and

(i)

if not otherwise covered, any holding in eligible capital instruments of an insurance undertaking, insurance holding company, or reinsurance undertaking that is a subsidiary or participation. Eligible capital instruments include ordinary share capital, cumulative preference shares, perpetual securities and long-term subordinated loans, that are eligible for insurance undertakings under GENPRU 2 or, as the case may be, INSPRU 7.