Skip to content
Investment Funds Update

UK Investment Firm Prudential Regime – FCA’s Second Consultation – Implications for Investment Managers

Share

On 19 April 2021, the UK Financial Conduct Authority (FCA) published its second consultation paper (CP21/7) on the new prudential regime for FCA investment firms (IFPR), which includes UK Markets in Financial Instruments Directive (MiFID) firms and UK collective portfolio management investment firms (CPMIs — that is, alternative investment fund managers (AIFMs) with MiFID “top-up” permissions). This follows the FCA’s first consultation paper on the IFPR that was published in December 2020 (CP20/24). A third consultation paper will be published later in 2021.

The IFPR is based largely on the new prudential regime for EU investment firms as contained in the EU Investment Firm Regulation and Directive (IFR/IFD — see our previous Update), but the IFPR proposals deviate from the IFR/IFD in a number of ways.

CP21/7 and CP20/24 contain proposals that would be of particular significance to in-scope UK investment managers. In particular, while CP20/24 dealt with matters such as the categorisation of firms and what constitutes own funds for capital purposes, CP21/7 is likely to be more interesting to investment managers, as it covers, among other things, the methods of calculating a firm’s likely capital requirement as well as rules on remuneration.

Once finalised, the IFPR is expected to come into effect on 1 January 2022.

References in this Update to “investment firms” means UK FCA-authorised investment firms.

Attorney Advertising—Sidley Austin LLP is a global law firm. Our addresses and contact information can be found at www.sidley.com/en/locations/offices.

Sidley provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships as explained at www.sidley.com/disclaimer.

© Sidley Austin LLP

Contacts

Offices