General principle
- Comply with all prudential requirements in Parts Two to Seven on an individual basis
Retained EU Law
2019
United Kingdom
Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (Text with EEA relevance)
At a glance
What's here
28 compliance obligations
What this Act requires
Sections that create concrete duties on businesses or carry penalties. Procedural and definitional sections are folded into the “Browse other sections” expander at the bottom of each group. Click any section title to read the source text on legislation.gov.uk.
Prudential consolidation
- Set up group consolidation structure for prudential reporting
Own funds composition
- Maintain qualifying own funds at all times
Qualifying holdings outside the financial sector
- Deduct excess qualifying holdings in non‑financial sector entities from regulatory capital
Own funds requirements
- Maintain own funds at the highest of three minimum capital requirements
K‐factor requirement and applicable coefficients
- Monitor K-factors and notify regulator of material changes
Measuring CMH for the purpose of calculating K‐CMH
- Calculate K-CMH using rolling average of client money held
Measuring ASA for the purpose of calculating K‐ASA
- Measure total daily safeguarded assets (ASA) for K-ASA calculation
RtM K‐factor requirement
- Manage trading book and calculate RtM K-factor requirement
Calculation of exposure value
- Treat each transaction separately if netting conditions are not met
Monitoring obligation
- Monitor and control concentration risk
Calculation of the exposure value
- Calculate exposure value for investment firms using prescribed methods
Limits with regard to concentration risk and exposure value excess
- Keep client exposure within concentration risk limits and manage any excess
Obligation to notify
- Notify the regulator when concentration risk limits are exceeded
Procedures to prevent investment firms from avoiding the K‐CON own funds requirement
- Do not temporarily transfer exposures or enter artificial transactions to avoid K-CON requirements
Liquidity requirement
- Hold enough liquid assets to cover one third of fixed overheads
Client guarantees
- Hold additional liquid assets equal to 1.6% of client guarantees
Scope
- Publish annual financial disclosures on time
Risk management objectives and policies
- Disclose risk management objectives and policies for each risk category
Governance
- Disclose governance details about your management body and risk committee
Own funds
- Disclose own funds information to regulators
Own funds requirements
- Disclose capital adequacy, K-factor and fixed overheads information
Remuneration policy and practices
- Disclose remuneration policy details for risk‑taking staff
Investment policy
- Disclose voting rights and voting behaviour for significant shareholdings in listed companies
Environmental, social and governance risks
- Disclose environmental, social and governance (ESG) risks
Reporting requirements
- Report prudential information to the regulator quarterly (or annually if small)
Reporting requirements for certain investment firms, including for the purposes of the thresholds referred to in Article 1(2) of this Regulation and in point (1)(b) of Article 4(1) of Regulation (EU) No 575/2013
- Report total assets monthly and quarterly if above EUR 5 billion
Transitional provisions
- Commodity and emission allowance dealers: apply new rules from 26 June 2026
Browse 38 other sections — procedural / definitional / commencement
Subject matter and scope
Supervisory powers
Application of stricter requirements by investment firms
Definitions
Exemptions
The group capital test
Small and non‐interconnected investment firms
Fixed overheads requirement
Permanent minimum capital requirement
RtC K‐factor requirement
Measuring AUM for the purpose of calculating K‐AUM
Measuring COH for the purpose of calculating K‐COH
Calculating K‐NPR
Calculating K‐CMG
RtF K‐factor requirement
Scope
Calculating K‐TCD
Replacement cost (RC)
Potential future exposure
Collateral
Netting
Credit valuation adjustment
Measuring DTF for the purpose of calculating K‐DTF
Prudential treatment of assets exposed to activities associated with environmental or social objectives
Calculating K‐CON
Exclusions
Exemption for commodity and emission allowance dealers
Temporary reduction of the liquidity requirement
Exercise of the delegation
Derogation for undertakings referred to in point (1)(b) of Article 4(1) of Regulation (EU) No 575/2013
Derogation for investment firms referred to in Article 1(2)
Review clause
Amendment to Regulation (EU) No 1093/2010
Amendments to Regulation (EU) No 575/2013
Amendments to Regulation (EU) No 600/2014
Amendment to Regulation (EU) No 806/2014
References to Regulation (EU) No 575/2013 in other Union legal acts
Entry into force and date of application
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