IFPR

IFPR Prudential Regime

The UK Investment Firm Prudential Regime (IFPR) applies to all investment firms authorised by the FCA under the Markets in Financial Instruments Directive (MiFID) as well as those firms undertaking additional MiFID activities such as Collective Portfolio Management Investment firms (CPMIs).

This applies to firms that were previously out of scope of being categorised in other prudential categories such as BIRPU, IFPRU and exempt CAD firms. Under the IFPR, those categories ceased to exist, and all firms under IFPR are categorised as either SNI (small non-interconnected) firms or non-SNI, depending on the regulatory activities they carry out and the financial thresholds they meet.

The IFPR implementation changed the funds requirements firms should hold at all times based on the MiFID investment services and activities they have permission to undertake. The capital requirements of SNI firms are the higher of the Fixed Overhead Requirements (FOR) and the Permanent Minimum Capital (PMR). Additionally, non-SNI firms have to calculate ‘K-factors’; an entirely new concept which aims to capture the risk of harm posed by a firm to the market, to customers, and the firm itself.

Design/Review of the Risk Management Framework
Assessment of the impact on the firm’s risk profile
Preparation/Review of the Policies and Procedures for risk identification, risk mitigation and risk monitoring techniques
Analysis of various risks during the year under review
Identification of challenging areas with recommendations for remedy measures
Assistance with enquiries