Firms can apply for permissions to vary the capital requirements set out in CRD IV.
Firms can apply for permissions to vary their capital requirements. The Capital Requirements Regulation (CRR) sets out minimum expectations of firms. It is one of the two principal parts in the Capital Requirements Directive (CRD) IV. This version of the directive came into effect in January 2014.
CRR is directly binding on firms, while the CRD was transposed into our Handbook.
The firms we regulate under CRD IV need to comply with the CRR. This compliance is supplemented by technical standards and guidelines from the European Banking Authority.
Capital requirements set how much capital your firm must hold.
We oversee CRR permissions with the Prudential Regulation Authority (PRA). Together, we try to make sure firms are operated and managed prudently. This protects firms, customers and the broader economy.
Permission to vary the capital requirements is individually assessed, as these regulations attempt to make sure firms do not take on excess risk and become insolvent. The strengthened prudential requirements for banks across the EU were a response to the 2008 global financial crisis. The requirements aim to make banks stronger in crises and periods of stress.
Read a summary of the act and its principal aspects.
Our Prudential sourcebook for Investment Firms (IFPRU) provides the full outline of these requirements for UK firms. They include capital requirements, liquidity measures and transparent leverage ratios.
CRD IV introduced new prudential requirements. We are responsible for prudentially regulating nearly all the UK investment firms under these requirements.
See our pages on CRD IV.