Water Ripple

Investment Firm Prudential Regime (IFPR)

The UK investment firm prudential regime ‘IFPR’ is a complete overhaul
of the CRD/CRR rules that currently apply to investment firms. All MiFID investment firms will need to adopt to the new rules. The new regime is set to go live in the UK on the 1 January 2022. Pillar 4 welcomes the new rules as more attuned to investment firms whilst recognising several nuances they might cause to some investment firms. We have undertaken extensive research and documented several insights in this area.

In particular, matched principal brokers and local firms that currently make use of limitations awarded through CRDIV to entertain lower prudential requirements will see a significant increase in their minimum capital requirements due to an elimination of these limitations and treatment of both types of trading as 'principal dealing' or 'dealing on own account' whereby the new minimum requirement is £750K.

Trading venues (MTF and OTF) are set to benefit from a significantly lower minimum capital requirement of £150K from the current €730K requirement although wind down costs and other pillar 2 operational capital elements generally tend to be high for trading venues. 

Our Consultants have helped several buy side, sell side, and trading venues, including IFPRU730K active risk-takers meet their prudential and liquidity requirements including reporting requirements. We recommend that firms take early action to assess the impact to their capital adequacy and risk models and plan well ahead of implementation of the new rules.

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How Pillar 4 Can Help

         Pro bono initial assessment over phone

         Tailored IFPR board briefing

         Preparing Impact Assessment specific to your business

         Preparation or update of ICARA and liquidity adequacy assessment including stress tests

         Preparation or update of pillar 2 framework

         Update risk management framework including risk appetite review and updates to risk policies

         Help developing practical and workable capital monitoring and reporting tools

         Regulatory strategy

         Regulatory change management

         Impact assessment and implementation

Streets of London

Summary of new prudential requirements for investment firms...

Business Presentation

FR-IFD Key highlights for local firms...

London Town

FR-IFD Key highlights for matched principle dealers...

Image by Charles Postiaux

Key takeaways for class 2 firms ( non-systemically relevant)...


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Company registration number: 12547364
Registered address; 56 Katie Court, London, England, United Kingdom E16 1XS
Business address:  1 Royal Exchange Avenue, London, England, United Kingdom  EC3V 3LT