Related provisions for REC 2.3.18
1 - 6 of 6 items.
4For the purposes of calculating the risk-based approach, the FSA would normally expect the UK RIE to provide the FSA with an annual financial risk assessment that identifies the risks to its business. As a financial risk assessment is likely to form an integral part of the UK RIE's management process and decision-making culture, the FSA would normally expect it to be approved by the UK RIE'sgoverning body.
4The FSA would normally expect to use the financial risk assessment prepared by the UK RIE in the course of preparing individual guidance on the amount of financial resources that it considers is sufficient for a UK RIE to hold in order to satisfy the recognition requirements. The financial risk assessment would provide the basis for calculating the amount of eligible financial resources that should be held by the UK RIE under the risk-based approach.
4The financial risk assessment should be based on a methodology which provides a reasonable estimate of the potential business losses which a UK RIE might incur in stressed but plausible market conditions. The FSA would expect a UK RIE to carry out a financial risk assessment at least once in every twelve-month period, or more frequently if there are material changes in the nature, scale or complexity of the UK RIE's operations or its business plans that suggest such financial
4Where a UK RIE is a member of a group, the FSA would normally expect the annual risk assessment to be accompanied by a consolidated balance sheet: (1) of any group in which the UK RIE is a subsidiary undertaking; or(2) (if the UK RIE is not a subsidiary undertaking in any group) of any group of which the UK RIE is a parent undertaking.
4The FSA would expect to consider the financial risk assessment, any proposal with respect to an operational risk buffer and, if applicable, the consolidated balance sheet, in formulating its guidance on the amount of eligible financial resources it considers to be sufficient for the UK RIE to hold in order to meet the recognition requirements. In formulating its guidance, the FSA would, where relevant, consider whether or not the financial risk assessment makes adequate provision
(1) 4The FSA would normally expect a UK RCH to hold, in addition to the minimum amount determined under REC 2.3.8G, an operational risk buffer equal to 50% of the amount calculated under REC 2.3.8 G (1).(2) The FSA would normally expect a UK RIE to hold, in addition to the minimum amount determined under REC 2.3.9G (1)(a)(i), an operational risk buffer consistent with a risk-based approach.(a) Where the amount of eligible financial resources calculated by a UK RIE under REC 2.3.17G
Schedule to the Recognition Requirements Regulations, paragraph 3
2(1) |
The [UK RIE] must ensure that the systems and controls used in the performance of its [relevant functions] are adequate, and appropriate for the scale and nature of its business. |
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(2) |
Sub-paragraph (1) applies in particular to systems and controls concerning - |
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(a) |
the transmission of information; |
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(b) |
the assessment, mitigation and management of risks to the performance of the [UK RIE'srelevant functions]; |
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(c) |
the effecting and monitoring of transactions on the [UK RIE]; |
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(ca) |
the technical operation of the [UK RIE], including contingency arrangements for disruption to its facilities; |
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(d) |
the operation of the arrangements mentioned in paragraph 4(2)(d); and |
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(e) |
(where relevant) the safeguarding and administration of assets belonging to users of the [UK RIE's] facilities. |
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For each UK recognised body, the FSA will conduct a periodic risk assessment. This assessment will take into account relevant considerations including the special position of recognised bodies under the Act, the nature of the UK recognised body's members, the position of other users of its facilities and the business environment more generally.
The risk assessment will guide the FSA's supervisory focus. It is important, therefore, that there is good dialogue between the FSA and the recognised body. The FSA expects to review its risk assessment with the staff of the UK recognised body to ensure factual accuracy and a shared understanding of the key issues, and may discuss the results of the risk assessment with key individuals of the UK recognised body. If appropriate, the FSA may send a detailed letter to the body's