Related provisions for BIPRU 2.2.39
1 - 2 of 2 items.
(1) A firm may take into account factors other than those identified in the overall Pillar 2 rule when it assesses the level of capital it wishes to hold. These factors might include external rating goals, market reputation and its strategic goals. However, a firm should be able to distinguish, for the purpose of its dialogue with the FSA, between capital it holds in order to comply with the overall financial adequacy rule and to meet the risks set out in the overall Pillar 2
(1) A securities firm should also consider the impact of external factors on the levels of capital it needs to hold. Scenarios covering such external factors should relate to its strategy and business plan. A securities firm might wish to consider the questions in (2) to (7).(2) Whether it plans to participate in a one-off transaction that might strain temporarily or permanently its capital.(3) Whether the unevenness of its revenue suggests that it should hold a capital buffer.
A firm should not expect the FSA to accept as adequate any particular model that it develops or automatically to reflect the results from the model in any individual capital guidance. However, the FSA will take into account the results of a sound and prudent model when giving individual capital guidance (see GENPRU 1.2.19 G (Outline of provisions related to GENPRU 2.1 (Adequacy of financial resources))).
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.