Related provisions for BIPRU 4.3.86

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

A firm must at all times maintain liquidity resources which are adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due.
A firm must have in place robust strategies, policies, processes and systems that enable it to identify, measure, manage and monitor liquidity risk over the appropriate set of time horizons for its business activities, to ensure that it maintains adequate levels of liquidity resources. These strategies, policies, processes, and systems must be appropriate to the firm's business lines, currencies in which it operates, and its group companies and must include adequate allocation
(1) Economic substance: the risk management and capital treatment of a securitisation must be determined on the basis of its economic substance and not its legal form.(2) Eligible structures: only standalone traditional securitisations are eligible.(3) Eligible underlying assets: term assets (e.g. residential mortgages) originated by the firm are eligible. (4) Effective credit-risk transfer: the securitisation mechanism (e.g. true sale) must effectively transfer the risks of the
Exposure quality: a firm must consider the impact that securitisation has on the quality of the remaining exposures it holds and the capital planning implications.
If a firm repurchases securitised exposures or securitisation positions, it must:(1) be able to demonstrate that it has adequately considered the following:(a) the price of the repurchase;(b) the firm's capital and liquidity position before and after repurchase;(c) the performance of the securitised exposures; and(d) the performance of the securitisation positions;(2) have concluded, taking into account the factors in (1) and any other relevant information, that the repurchase
If an originator or sponsor fails to comply with BIPRU 9.6.1 R or BIPRU 9.6.1A R1 in respect of a securitisation, it must:(1) hold capital against all of the securitised exposures associated with the securitisation transaction as if they had not been securitised; and(2) disclose publicly:(a) that it has provided non-contractual support;1 and(b) the regulatory capital impact of doing so.[Note: BCD Article 101(2)]
(1) The support described in BIPRU 9.6.5 G (1) is permitted by BIPRU 9.6.1 R.(2) The support described in BIPRU 9.6.5 G (3) is not permitted by BIPRU 9.6.1 R.(3) The support described in BIPRU 9.6.5 G (2) may be permitted by BIPRU 9.6.1 R under the following conditions:(a) the fact that the firm may give it is expressly set out in the contractual and marketing documents for the securitisation;(b) the nature of the support that the firm may give is precisely described in the documentation;(c)
To assess its expected capital requirements over the economic and business cycles, a firm may wish to project forward its financial position taking account of its business strategy and expected growth according to a range of assumptions as to the state of the economic or business environment which it faces. For example, an ICAAP should include an analysis of the impact that the actions of a firm's competitors might have on its performance, in order to see what changes in its environment
If a firm's current available capital resources are less than the capital resources requirement indicated by the stress test that need not be a breach of BIPRU 2.2.41 R. The firm may wish to set out any countervailing effects and off-setting actions that can be demonstrated to the satisfaction of the appropriate regulator as being likely to reduce the difference referred to in the first sentence. The appropriate regulator is only likely to consider a demonstration of such actions
A firm may decide to hold additional capital to mitigate any weaknesses in its overall control environment. These weaknesses might be indicated by the following:(1) a failure by a firm to complete an assessment of its systems and controls to establish whether they comply with SYSC; or(2) a failure by a firm's senior management to approve its financial results; or(3) a failure by a firm to consider an analysis of relevant internal and external information on its business and control
SYSC 19C.3.12RRP
(1) A firm that is significant in terms of its size, internal organisation and the nature, scope and complexity of its activities must establish a remuneration committee. (2) The remuneration committee must be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital and liquidity. (3) The chairman and the members of the remuneration committee must be members
SYSC 19C.3.18RRP
A firm must ensure that total variable remuneration does not limit the firm's ability to strengthen its capital base.
SYSC 19C.3.19GRP
This Remuneration Principle underlines the link between a firm's variable remuneration costs and the need to manage its capital base, including forward-looking capital planning measures. Where a firm needs to strengthen its capital base, its variable remuneration arrangements should be sufficiently flexible to allow it to direct the necessary resources towards capital building.
BIPRU 5 sets out the principles for the recognition of credit risk mitigation in the calculation of risk weighted exposure amounts for the purposes of the calculation of the credit risk capital component.
If a defined term does not appear in the IPRU(INV) glossary below, the definition appearing in the main HandbookGlossary applies. financial resources a firm’s financial resources as calculated in accordance with IPRU(INV) 12.3 (Calculation of financial resources). financial resources requirementan amount of financial resources that a firm must hold as set out in IPRU(INV) 12.2 (Financial resources requirements).
SUP 16.2.1GRP
(1) In order to discharge its functions under the Act, the appropriate regulator5 needs timely and accurate information about firms. The provision of this information on a regular basis enables the appropriate regulator5 to build up over time a picture of firms' circumstances and behaviour.5(2) Principle 11 requires a firm to deal with its regulators in an open and cooperative way, and to disclose to the appropriate regulator5 appropriately anything relating to the firm of which
When a firm does not meet the combined buffer, it must prepare a capital conservation plan and submit it to FCA no later than five business days after the firm identified that it did not meet the combined buffer. [Note: article 142(1) of CRD]
The Principles1 IntegrityA firm must conduct its business with integrity.2 Skill, care and diligenceA firm must conduct its business with due skill, care and diligence.3 Management and controlA firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.4 Financial prudenceA firm must maintain adequate financial resources.5 Market conductA firm must observe proper standards of market conduct.6 Customers'
For the purposes of GENPRU, BIPRU or INSPRU, except where a rule in GENPRU, BIPRU or INSPRU provides for a different method of recognition or valuation:(1) when a firm, upon initial recognition, designates its liabilities as at fair value through profit or loss, it must always adjust any value calculated in accordance with GENPRU 1.3.4 R by subtracting any unrealised gains or adding back in any unrealised losses which are not attributable to changes in a benchmark interest rate;(2)
A firm must establish formal change control procedures, hold a secure copy of the model, and periodically use that model to check valuations.
Some important compliance issues include:(1) insurance against fraud and dishonesty;(2) arrangements for the prevention, detection and reporting of money laundering;(3) establishing and maintaining a satisfactory system of control;(4) keeping proper books of account;(5) computation and application of profits;(6) investment of surplus funds;(7) capital requirements; (8) liquidity requirements;(9) limits on shares and loans;(10) maintenance of membership records;(11) submission
5The governing body must be satisfied that: (1) the information available is sufficiently comprehensive for the proper assessment of the potential risks for the credit union, and in order to determine its need for capital and liquidity; (2) the information available is sufficiently comprehensive to provide a clear statement of the performance and financial position of the credit union; (3) management information reports are prepared with sufficient frequency;(4) sufficient attention
1Even where a firm recognises credit risk mitigation when calculating risk weighted exposure amounts, it must: (1) continue to undertake full credit-risk assessment of the underlying exposure; and(2) demonstrate to the FCA the fulfilment of the requirement in (1).
1For unfunded credit protection:(1) to be eligible for recognition:(a) the party giving the undertaking must be sufficiently reliable; and(b) the protection agreement must be legally effective and enforceable in the relevant jurisdictions, to provide appropriate certainty as to the credit protection achieved, having regard to the approach used to calculate risk weighted exposure amounts and to the degree of recognition allowed; and(2) protection must be provided by central governments
(1) This paragraph provides guidance on BIPRU 4.2.2 R and in particular BIPRU 4.2.2 R (1).(2) The information that a firm produces or uses for the purpose of the IRB approach should be reliable and take proper account of the different users of the information produced (customers, shareholders, regulators and other market participants).(3) A firm should establish quantified and documented targets and standards, against which it should test the accuracy of data used in its rating
(1) This rule sets out what must be treated as being non-significant business or immaterial for the purposes of BIPRU 4.2.26 R (4), for exposures that do not fall within the equity exposureIRB exposure class.(2) A firm may elect permanently to exclude exposures from the IRB approach and apply the standardised approach. However a firm may only make use of this exemption to the extent that:(a) the consolidated credit risk requirement (adjusted under (6)) so far as it is attributable
This section also has rules requiring a firm to carry out appropriate stress tests and scenario analyses for the risks it has previously identified and to establish the amount of financial resources needed in each of the circumstances and events considered in carrying out the stress tests and scenario analyses. In the case of a BIPRU firm, the appropriate regulator will consider as part of its SREP whether the BIPRU firm should hold a capital planning buffer and, in such a case,
(1) 6In identifying an appropriate range of adverse circumstances and events in accordance with GENPRU 1.2.42R (2):(a) a firm will need to consider the cycles it is most exposed to and whether these are general economic cycles or specific to particular markets, sectors or industries;(b) for the purposes of GENPRU 1.2.42R (2)(a), the amplitude and duration of the relevant cycle should include a severe downturn scenario based on forward looking hypothetical events, calibrated against
SYSC 19D.3.12RRP
(1) A firm that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities must establish a remuneration committee. (2) A firm in (1) must ensure that:(a) the remuneration committee is constituted in a way that enables it to exercise competent and independent judgement on remuneration policies and practices and the incentives created for managing risk, capital and liquidity;(b) the chairman and the members of the remuneration
SYSC 19D.3.50RRP
A firm must ensure that any approval by its shareholders or owners or members, for the purposes of SYSC 19D.3.49R, is carried out in accordance with the following procedure: (1) the firm must give reasonable notice to all its shareholders or owners or members of its intention to seek approval of the proposed higher ratio;(2) the firm must make a detailed recommendation to all its shareholders or owners or members that includes:(a) the reasons for, and the scope of, the approval
SUP App 3.9.5GRP
3Table 2: MiFIDinvestment services and activitiesPart II RAO InvestmentsPart III RAO InvestmentsA MiFIDinvestment services and activities1.Reception and transmission of orders in relation to one or more financial instrumentsArticle 252Article 76-81, 83-85, 892.Execution of orders on behalf of clientsArticle 14, 21A Article 76-81, 83-85, 893.Dealing on own accountArticle 14Article 76-81, 83-85, 894.Portfolio managementArticle 37 (14, 21, 25 - see Note 1) 2Article 76-81, 83-85,
(1) [deleted]88(2) In this context, the FCA will interpret the term 'appropriate88' as meaning sufficient in terms of quantity, quality and availability, and 'resources' as including all financial resources (though only in the case of firms not carrying on, or seeking to carry on, a PRA-regulated activity)8, non-financial resources and means of managing its resources; for example, capital, provisions against liabilities, holdings of or access to cash and other liquid assets, human
A sole trader or a partner may use any personal assets, including property, to meet the capital requirements of this chapter, but only to the extent necessary to make up a shortfall.
The FCA expects the IRC model to capitalise pre-default basis risk. In this respect, the model should reflect that in periods of stress the basis could widen substantially. The firm should disclose to the FCA its material basis risks that are incremental to those already captured in existing market risk capital measures (VaR-based and others). This must take actual close-out periods during periods of illiquidity into account.