New Prudential Regime

Investment Firm Regulation:
Solutions for the New Prudential Framework

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The Investment Firm Regulation (IFR), a new prudential framework developed by the European Commission (EC), will apply to all MiFID investment firms from 26 June 2021. The IFR is intended to be simpler and more proportionate to a firm’s operations than existing requirements. This will require the vast majority of investment firms to adapt to a new set of capital, liquidity, and reporting requirements.

For some firms, the IFR introduces a new obligation to conduct an ongoing Internal Capital Adequacy Assessment Process (ICAAP), to document the ICAAP in a formal report at least annually, and to make certain public disclosures.

When the IFR comes into force, some firms may be hit hard with requirements to maintain significantly greater levels of capital.

At ACA, we have a wide range of solutions designed to help you with your IFR obligations.  Our prudential team can help you navigate and understand the myriad sources of information and provide guidance on the requirements contained within the European Directives and Regulations, FCA Handbooks and regulatory technical standards from European authorities. This offers relief from the time and effort spent on regulatory reporting.

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How We Help

 

Prudential Framework Impact Assessment

We conduct a gap analysis to help you understand how the new prudential framework impacts your firm. This gap analysis covers categorisation, capital requirements and resources, liquidity requirement and resources, group rules, regulatory reporting, compliance with the on-going ICAAP requirements, and the associated documentation and public disclosures. This will allow your firm to identify and plan for any capital injection required and to formulate plans to modify operational arrangements in advance of the new requirements coming into effect.

Capital Monitoring

Based on your management accounts and budgets, we monitor your current and future capital adequacy to help you identify trends in advance of solvency issues arising. This is a key operating process forming part of the ICAAP and will be especially important for firms utilising transitional provisions.

Regulatory Reporting

We can carry out your on-going prudential regulatory reporting to the FCA, freeing up your team from this burden and allowing them to focus on value-add activities for the business.

ICAAP Report Preparation

We work with internal stakeholders to understand the processes implemented by firms to control risk and manage capital and to assess the level of capital that adequately addresses future and current risks, with all findings documented in your ICAAP report.

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