Investment Firms Prudential Regime (IFPR) - What does it mean?

Investment Firms Prudential Regime (IFPR) – What does it mean for UK Investment Firms?

Investment Firms Prudential Regime (IFPR) – What does it mean for UK Investment Firms?

Investment Firms Prudential Regime (IFPR) – What does it mean for UK Investment Firms?

What is IFPR?

The IFPR (Investment Firms Prudential Regime) is an initiative by the UK regulator to tailor capital requirements, consolidation, liquidity requirements among other areas, together with the associated regulatory reporting currently served by COREP, to a model that more appropriately reflects the activities of investment firms.

 

Who is affected?

IFPR will impact all MiFID firms deemed to be non-systemic. In practice this means all UK firms apart from eight larger institutions who will continue to be supervised under CRR and adopt CRD V.

Those firms who are affected will be impacted differently according to whether they are classified as a small and non-interconnected FCA investment firm (SNIs) or a Non-SNI.

The FCA have made the distinction between these two classifications according to the ‘Potential to cause particular harm to traded markets’ which will be determined by a number of criteria and  associated thresholds including:

  • Assets Under Management
  • Client Orders Handled
  • On- and Off-Balance Sheet
  • Total Annual Gross Revenue Threshold

 

Why are the changes being made?

The broad aim of IFPR is to do away with the ‘one size fits all types of financial institutions’ regulatory approach that currently applies, with specific intentions including:

Enhancing consumer protection by reducing the likelihood of failure and, in the unfortunate event that a failure does happen, a reduction of wider consequent cost particularly with regard to investor compensation.

Increasing systemic capital quality and giving scope to some firms to reduce overall capital cost

 

What’s changing?

New Calculations

A number of significant changes to reporting metrics such as

  • Own Funds
  • Liquidity
  • Concentration Risk
  • Prudential Consolidation/Group Capital

For example, Capital requirements will now involve the calculation of

initial capital – Permanent Minimum Requirement (PMR)

Fixed Overhead Requirement (FOR)

Activity based “K-factor” requirement (KFR) for some firms

 

The new Own Funds requirement will be whichever is the highest of these three figures for a Non-SNI and of the PMR and FOR for an SNI

 

New Templates

Around 50 new and amended templates that will apply dependent on a firms classification together with associated validations and cross validations.

 

How VERMEG can help

VERMEG is offering an comprehensive IFPR reporting solution on its AgileREPORTER platform tailored to a firm’s individual needs. The FCA have already published its first Consultation Paper (CP20/24) to gather feedback from the industry and will issue two more before the intended implementation date in 2022. VERMEG’s experts are monitoring all Regulator issuances to ensure that our solution evolves in alignment with the FCA’s intentions.

 

Flexible Deployment:

Cloud

Hosted by VERMEG – This involves a Fully Managed Service that includes all O/s, Database etc licencing, Regulatory and Platform updates, Security Patching, backups and business continuity among other benefits

Alternatively, if a firm requires deployment on its own private cloud this option is also fully supported.

 

On-Premise 

For firms that have a preference for deployment on their own servers, a more traditional On-Premise offering is available.

 

Solutions that we offer

Full Automation – a full end to end solution is available incorporating data acquisition, regulatory calculation, return templates, all published validations and cross validations together with the required regulator submission.

 

On the other hand if a firm has a more simplified requirement, for example a fully or partially manual solution, AgileREPORTER is fully flexible in this regard.

 

Whichever solution is the right fit for your organisation, all added value functionality such as

Configurable Approval Workflow

Request for Information Capability

Commentary and Supporting Documentation

as well as the AgileREPORTER Analysis Module available.

 

Please contact us at communications@vermeg.com for more details as to how we can help you or watch our most recent webinar explaining IFPR and its implications for firms here.

 

 

ANDREW KESBEY  – GLOBAL HEAD OF REGULATORY PRODUCT