7.1 | G | (1) | The table in this annex identifies the rules in MIFIDPRU 7 that impose obligations relating to the ICARA process and the guidance provisions corresponding to those rules. |
(2) | MIFIDPRU investment firms may find this annex helpful when designing and reviewing their ICARA processes to ensure that all mandatory requirements have been met. | ||
(3) | Firms should not use this table as a substitute for reading and applying the detailed rules and guidance in MIFIDPRU 7. |
MIFIDPRU rule | Basic obligation | Associated guidance | Content of guidance |
MIFIDPRU 7.4: baseline ICARA obligations | |||
Explanation of the link between the overall financial adequacy rule and the ICARA process | |||
The requirement to operate an ICARA process to identify, monitor and, if proportionate, reduce all material potential harms relevant to the firm | Guidance on how firms should seek to mitigate the risk of potential harms | ||
The requirement for the ICARA process to be proportionate to the nature, scale and complexity of the firm’s business | |||
The requirement for the ICARA process to be internally consistent | Explanation of the FCA’s expectations in relation to consistency and coherency of the ICARA process | ||
The requirement to identify all material harms that may result from the firm’s business | Explanation of the basic factors that will be relevant when identifying potential harms | ||
Cross-reference to additional guidance in MIFIDPRU 7 Annex 1R and MIFIDPRU 7 Annex 2R | |||
Guidance on assessing potential harms that is potentially relevant to all firms | |||
Additional guidance on assessing potential harms that is relevant for a firm that is dealing on own account or that has significant investments on its balance sheet | |||
MIFIDPRU 7.5: Capital and liquidity planning, stress testing, wind-down planning and recovery planning | |||
Business model assessment and capital and liquidity planning requirements, including stress testing | Guidance referring to Finalised Guidance FG20/1 | ||
Guidance on stress testing obligations and reverse stress testing for firms with more complex businesses or operating models | |||
Additional guidance on more in-depth stress testing and reverse stress testing | |||
Recovery planning requirements | Guidance on issues that may be relevant when assessing potential recovery actions | ||
Wind-down planning requirements | Guidance referring to the Wind-Down Planning Guide and Finalised Guidance FG20/1 | ||
Requirement to use wind-down analysis to assess levels of own funds and liquid assets required under overall financial adequacy rule | Explanation of the interaction between the overall financial adequacy rule and the wind-down triggers | ||
MIFIDPRU 7.6: Assessing and monitoring the adequacy of own funds | |||
Requirement to produce a reasonable estimate of impact of potential harms on own funds | Guidance on how the assessment of potential harms interacts with the own funds threshold requirement and the overall financial adequacy rule and how the firm should conduct its assessment | ||
Requirement to use assessment under MIFIDPRU 7.6.2R to assess if additional own funds required to meet overall financial adequacy rule | |||
Guidance explaining the circumstances in which the guidance in MIFIDPRU 7.6.7G to MIFIDPRU 7.6.10G is relevant | |||
Guidance on how a non-SNI MIFIDPRU investment firm should assess whether harms may be covered by its own funds requirement | |||
Guidance on circumstances in which harms may not be covered by a non-SNI MIFIDPRU investment firm’s own funds requirement | |||
Guidance on how an SNI MIFIDPRU investment should assess whether harms may be covered by its own funds requirement | |||
Guidance on how a firm’s assessment of potential harms contributes to determining its own funds threshold requirement | |||
Requirement to meet own funds threshold requirement with specified types of own funds | |||
Notification requirements when a firm’s own funds reach certain levels | Guidance on the FCA’s ability to set an alternative early warning indicator | ||
Guidance explaining how notifications under MIFIDPRU 7.6.11R interact with general notification obligations under Principle 11 or SUP 15.3 | |||
Explanation of FCA’s approach to intervention when firm’s own funds reach certain levels | |||
MIFIDPRU 7.7: Assessing and monitoring the adequacy of liquid assets | |||
Requirement to produce reasonable estimate of liquid assets required by the firm | Guidance on the interaction between the overall financial adequacy rule and the liquid assets that a firm must hold | ||
Guidance on how a firm should assess the liquid assets required for the ongoing operation of its business | |||
Guidance on the basic liquid assets requirement and how to determine the firm’s liquid assets threshold requirement | |||
Requirement to meet liquid assets threshold requirement with core liquid assets and non-core liquid assets | General principles applicable to non-core liquid assets | ||
Basic definition of non-core liquid assets | Guidance on exclusions for non-core liquid assets | ||
Requirement to apply appropriate haircut to non-core liquid assets | Guidance on minimum haircuts for non-core liquid assets | ||
Guidance on approach to applying haircuts to shares or units in collective investment undertakings | |||
Notification requirements when a firm’s liquid assets reach certain levels | Guidance explaining how notifications under MIFIDPRU 7.6.14R interact with general notification obligations under Principle 11 or SUP 15.3 | ||
Explanation of FCA’s approach to intervention when firm’s liquid assets reach certain levels | |||
MIFIDPRU 7.8: Reviewing and documenting the ICARA process | |||
Requirement to review the ICARA process at least annually | Guidance on reviewing the ICARA process following a material change in the firm’s business | ||
Requirement for firm to notify the FCA of the submission date of the firm’s MIF007 (ICARA assessment questionnaire) return | Guidance on interaction between the firm’s ICARA review and its submission date for its MIF007 return | ||
Requirement to submit MIF007 return following review of ICARA process due to a material change in the firm’s business | |||
Requirement to document review of the ICARA process and minimum contents of review document | |||
Requirement for firm’s governing body to review and approve the ICARA document | Guidance on the interaction between the obligations in COCON and the ICARA process | ||
Record keeping requirements in relation to the ICARA process | |||
MIFIDPRU 7.9: Firms forming part of a group | |||
Requirement for any firm that forms part of a group to assess risks arising from that group or its other members | Guidance on the entities included within a firm’s assessment of group risk | ||
Ability of investment firm group to operate the ICARA process on a group-level basis | Guidance that an investment firm group is not required to operate an ICARA process on a consolidated basis | ||
Disapplication of individual ICARA process requirement in relation to MIFIDPRU investment firm included in a group ICARA process | |||
Circumstances in which a group ICARA process cannot be used | Guidance on when the FCA may prohibit the use of a group-level ICARA process in relation to one or more firms | ||
Application of requirements in MIFIDPRU 7.4 to MIFIDPRU 7.8 to an investment firm group operating a group ICARA process | |||
Ability to include multiple firms within one ICARA document | Guidance on when a single ICARA document can be used | ||