CP21/7 A new UK prudential regime for MiFID investment firms

Open consultation: CP21/7
19/04/2021
19/04/2021
Consultation closes
28/05/2021

We are consulting on our second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR). IFPR is a new prudential regime for UK firms authorised under the Markets in Financial Instruments Directive (MiFID).

Read CP21/7 (PDF)

Why we are consulting

This is the second in a programme of Consultation papers (CPs) and Policy Statements (PSs) that we will issue to introduce the regime and we want your views on the proposed rules.

This CP sets out our proposals for changing prudential standards for these firms and should be read in conjunction with our first CP, CP20/24, published in December 2020. Our draft legal rules in this CP also include some non-material additions and amendments to the text from the previous CP, such as updating cross-references and terminology. 

The new regime will streamline and simplify the prudential requirements for MiFID investment firms that are prudentially regulated by the FCA in the UK (FCA Investment Firms). 

It represents a major change for investment firms. It is critical that firms adequately prepare for the regime.

In line with our objectives and Mission, the IFPR will refocus prudential requirements and expectations away from the risks the firm faces, to also consider and manage the potential harm the firm itself can pose to consumers and markets.

To accompany this consultation, we are publishing further proposed templates for the new reporting to support the IFPR and the guidance for completing these templates. We are also publishing proposed forms for applications and notifications. We would welcome any feedback on these in addition to your feedback on this CP. 

Who this applies to

  • Any MiFID investment firm authorised and regulated by the FCA that is currently subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR) including:
  • investment firms that are currently subject to BIPRU and GENPRU
  • ‘full scope,’ ‘limited activity’ and ‘limited licence’ investment firms currently subject to IFPRU and CRR
  • ‘local’ investment firms
  • matched principal dealers
  • specialist commodities derivatives investment firms that benefit from the current exemption on capital requirements and large exposures including:

–oil market participants (OMPS)

–energy market participants (EMPS)

  • ‘exempt CAD’-firms
  • investment firms that would be exempt from MiFID under Article 3 but have ‘opted-in’ to MiFID
  • Collective Portfolio Management Investment Firms (CPMIs)

The draft rules will also apply to any regulated and unregulated holding companies of groups that contain an investment firm authorised and regulated by the FCA and that is currently authorised under MiFID and/or a CPMI.

Respond to this consultation 

We want your comments on this CP by 28 May 2021.

Online response form

You can send them to us using the response form above or email [email protected]

Or, write to: Paul Rich or Hillary Neale, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.

Next steps

We plan to publish a further CP in Q3 2021, as set out in Table 1 in Chapter 2 of this CP. Following each consultation, we will consider your feedback, and publish a PS and near final rules. We will publish the final rules once the Financial Services Bill (the FS Bill) has passed through Parliament and all the consultations are complete.

Page updates

22/04/2021: Link changed Reporting forms for CP2