CP21/7 A new UK prudential regime for MiFID investment firms

Read CP21/7 (PDF)[1]

Why we are consulting

This is the second in a programme of Consultation papers (CPs) and Policy Statements (PSs) that we will issue to introduce the regime and we want your views on the proposed rules.

This CP sets out our proposals for changing prudential standards for these firms and should be read in conjunction with our first CP, CP20/24[2], published in December 2020. Our draft legal rules in this CP also include some non-material additions and amendments to the text from the previous CP, such as updating cross-references and terminology. 

The new regime will streamline and simplify the prudential requirements for MiFID investment firms that are prudentially regulated by the FCA in the UK (FCA Investment Firms). 

It represents a major change for investment firms. It is critical that firms adequately prepare for the regime.

In line with our objectives and Mission, the IFPR will refocus prudential requirements and expectations away from the risks the firm faces, to also consider and manage the potential harm the firm itself can pose to consumers and markets.

To accompany this consultation, we are publishing further proposed templates[3] for the new reporting to support the IFPR and the guidance for completing these templates[4]. We are also publishing proposed forms for [5]applications[3] and notifications[6]. We would welcome any feedback on these in addition to your feedback on this CP. 

Who this applies to

• Any MiFID investment firm authorised and regulated by the FCA that is currently subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR) including:
• investment firms that are currently subject to BIPRU and GENPRU
• ‘full scope,’ ‘limited activity’ and ‘limited licence’ investment firms currently subject to IFPRU and CRR
• ‘local’ investment firms
• matched principal dealers
• specialist commodities derivatives investment firms that benefit from the current exemption on capital requirements and large exposures including:

–oil market participants (OMPS)

–energy market participants (EMPS)

• ‘exempt CAD’-firms
• investment firms that would be exempt from MiFID under Article 3 but have ‘opted-in’ to MiFID
• Collective Portfolio Management Investment Firms (CPMIs)

The draft rules will also apply to any regulated and unregulated holding companies of groups that contain an investment firm authorised and regulated by the FCA and that is currently authorised under MiFID and/or a CPMI.

Next steps

This consultation has now closed. We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.