Modification by consent: IFPRU 7

Find out more about modification of consent IFPRU7.

Liquidity policy for Capital Requirements Directive IV (CRD IV) investment firms

This applies to all IFPRU investment firms, but in particular IFPRU investment firms that are also an ILAS BIPRU firm.

Modification Direction

Background to CRD IV liquidity standards

The Capital Requirements Regulation (EU) 575/2013 (CRR) and Directive 2013/36/EU (collectively CRD IV) introduced the concept of an EU liquidity regime for credit institutions and investment firms. This included a new Pillar 1 standard - the Liquidity Coverage Requirement (LCR).

The UK already has a domestic liquidity regime for investment firms (BIPRU 12: Liquidity Standards). We stated in our CRD IV Policy Statement (PS13/10) that, as a result of CRD IV, we planned to end our domestic liquidity regime once the LCR became mandatory for investment firms.  The LCR was due to become mandatory once the European Commission’s delegated act was published and in force (1 October 2015).

However, the European Commission subsequently decided that the delegated act could not apply to investment firms without first making changes to the CRR.  This means that investment firms will now not be subject to a binding LCR when the delegated act comes into force on 1 October 2015. As a result we will not be withdrawing our domestic liquidity standards until we have more clarity on how the LCR will apply to investment firms.  In light of this, we are issuing this communication to clarify what our approach to liquidity means for your firm.

What does this mean for my firm?

IFPRU investment firms that are not ILAS BIPRU firms (including exempt IFPRU commodities firms)

Your firm is currently subject to the liquidity requirements and liquidity reporting in BIPRU 12 and SUP 16. These rules will continue to apply as normal.

As a non-ILAS BIPRU firm, your firm is already exempt from the obligations in Part 6 of the CRR.

ILAS BIPRU firms that are not also significant IFPRU firms

Your firm is currently subject to the liquidity requirements and liquidity reporting in BIPRU 12 and SUP 16. These rules will continue to apply as normal.

As a non-significant IFPRU firm, your firm is already exempt from the obligations in Part 6 of the CRR.

ILAS BIPRU firms that are also significant IFPRU firms

Your firm is currently subject to the rules in Part 6 of the CRR as well as the liquidity requirements and liquidity reporting in BIPRU 12 and SUP 16.

We are making a modification of IFPRU 7.1 (Liquidity) available to your firm, which will exempt you from the reporting obligations in Part 6 of the CRR.

The details of the modification are explained in Annex 1 at the end of this document. If your firm wants to take advantage of the modification, the information in this annex explains how you can consent to the modification.

Once we have confirmed that the modification has been granted to your firm we will remove, with immediate effect, the relevant CRR liquidity reporting obligations from your Gabriel reporting schedule.

The modification will only exempt your firm from the obligations in Part 6 of the CRR. All of the liquidity requirements and liquidity reporting in BIPRU 12 and SUP 16 will continue to apply to your firm as normal.

 

Annex 1: Modification of IFPRU 7.1.5R

This annex only applies to a significant IFPRU investment firm that is also an ILAS BIPRU firm.

What is the purpose of the modification?

We are proposing to exempt firms (and, where applicable, consolidation groups) that are both ILAS BIPRU and significant IFPRU firms from compliance with the reporting in Part 6 of the Capital Requirements Regulation (CRR) until we have more clarity on how EU legislation will apply the Liquidity Coverage Requirement (LCR) to investment firms.

What will the modification mean?

The modification will exempt firms from compliance with the obligations in Part 6 of the CRR on an individual basis.  To enable this, the modification will amend the wording in IFPRU 7.1.5R. The modification may also mean that a consolidation group that your firm is a member of also becomes exempt from the obligations in Part 6 of the CRR on a consolidated basis (please refer to IFPRU 7.1.6R and IFPRU 7.1.7R).

After your firm is removed from the obligations in Part 6 of the CRR, you will be exempt from the following Common Reporting (COREP) module obligations:

  • COR003 COREP NSFR
  • COR011 COREP LCR DA (which replaces COR004)
  • COR012 COREP ALMM (which combines COR007 and COR008)

Please note all COR006 items will have been removed in line with EBA requirements, due to Taxonomy changes.

Once your firm has been granted the modification of IFPRU 7.1.5R, and if your firm is a member of a consolidation group that meets the criteria in IFPRU 7.1.6R and IFPRU 7.1.7R, this will also mean that your firm will be exempt from consolidated submissions of the above COREP reporting modules.  No other modification of IFPRU 7.1 is necessary.

These CRR liquidity reporting obligations will be removed from your firm’s Gabriel reporting schedule as soon as we have confirmed that your modification has been granted.

Modification direction

If you want to take advantage of this modification by consent you should email [email protected] or write to us at Central Waivers team, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.

We will then confirm that the modification has been granted, and we will publish each modification direction that we grant on our website.