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FCA Policy Statement PS21/9 – Investment Firm Prudential Regime

FCA Policy Statement PS21/9 – Investment Firm Prudential Regime

Background

  • On 19 April 2021, the Financial Conduct Authority (FCA) issued its second consultation for UK investment firms about its new Investment Firm Prudential Regime (IFPR) that will start in early 2022
  • On 26 July 2021, the FCA published its Policy Statement PS21/9 to summarise the feedback it received and to set out the FCA’s rules; it is titled “Implementation of Investment Firms Prudential Regime”
  • This new Policy Statement is available on the FCA’s website and is 804 pages long; the webpage link is https://www.fca.org.uk/publication/policy/ps21-9.pdf
  • The IFPR introduces a new prudential regime for MiFID investment firms that will create a single, proportionate regime that reflects firms’ size and business
  • The proposed “near final” rules will apply to any MiFID investment firm authorised and regulated by the FCA including all firms subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR)
  • The FCA does not expect to make any changes to these rules before they are made final, unless this is essential due to ongoing policy work, and feedback received, for the other CPs on the IFPR.
  • The FCA intends to publish its third CP around the beginning of August 2021 and a further PS summarising the feedback received and bringing together all of the FCA’s final rules in Q4 2021.
  • The FCA expects its full IFPR regime to take effect in January 2022 subject to the Treasury making the necessary secondary legislation under the FS Act.

Impacts

What the FCA is changing:

  • Introducing the IFPR means that there will be a single prudential regime for all FCA investment firms, simplifying the current approach for globally active systemically important banks.
  • It should reduce barriers to entry and allow for better competition between investment firms.
  • Some firms will have meaningful capital and liquidity requirements for the first time, adequate with the potential harm they can cause.

Timeline with relevant dates to be logged on regulatory calendar

  • The IFPR regime will be effective from 1 January 2022

Next steps

All firms need to review detailed FCA proposed rules and guidance in order to prepare immediately for the new IFPR regime in the UK starting in January 2022.

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