Financial Services (Investment and Fiduciary Services)
Repealed Subsidiary 2007/002
FINANCIAL SERVICES (CAPITAL ADEQUACY OF INVESTMENT FIRMS) REGULATIONS 2007
27. The Authority may authorise an investment firm to exceed the limits laid down in regulations 64 to 70 of the FSCACI Regulations if the following conditions are met–
the exposure on the non-trading book to the client or group of clients shall not exceed the limit in regulation 64(1) of those Regulations, calculated with reference to own funds in accordance with those Regulations, so that the excess arises entirely on the trading book;
the applicant meets an additional capital requirement on the excess in respect of the limit in regulation 64(1) of those Regulations, calculated in accordance with Schedule 6;
where 10 days or less has elapsed since the excess occurred, the trading-book exposure to the client or group of connected clients shall not exceed 500% of the applicant’s own funds;
any excesses which have persisted for more than 10 days shall not, in aggregate, exceed 600% of the applicant’s own funds; and
the applicant shall report to the Authority every three months all cases where the limit laid down in regulation 64(1) of those Regulations has been exceeded during the preceding three months and the names of the clients concerned.
Control over exposures.
28.(1) The Authority shall establish procedures to prevent investment firms from deliberately avoiding the additional capital requirements on exposures, exceeding the limits laid down in regulation 64(1) of the FSCACI Regulations, once those exposures have been maintained for more than 10 days–
by means of temporarily transferring those exposures to another company, whether within the same group or not; or
by undertaking artificial transactions to close out the exposure during the 10 day period and create a new exposure;
(1A) The Authority shall notify the European Commission, the European Council and EBA of the procedures established under subregulation (1).