ARKK & Bovill: The New Capital Requirements for Investment Firms

This month, we partnered with Bovill to welcome over 50 professionals to a morning briefing on the EC’s latest regime.

Over the past six months, we’ve dealt with an array of questions from our clients about how the new capital requirements for investment firms might impact them. As we’ve been working closely with industry leading consultants Bovill, there was a natural synergy for us to present an informative breakfast briefing on the topic to our clients.

For a morning rich in updates on the new regime, we’ve summarised our top 4 take away’s to help businesses prepare.

ARKK's CEO and Founder Richard Metcalfe introduces the session

Just a new requirement?

The new capital requirements cover more than just the new prudential regime reporting standards. This is part of the European Commission’s wider exercise to revise how and what firms are reporting to the regulator.

The regime should simplify the reporting requirements, especially for Class 2 CRD IV filers who can find that their reporting scope changes frequently. Aligning the standards across all investment firms and limiting the disclosures for Class 2 and 3 will further standardise reporting, making life simpler for regulators and filers.

Reporting changes

Bovill’s Harpartap Singh and Emma Foley present on the changes

Under the new capital requirements for investment firms, IFPRU firms currently have some of the toughest requirements, including the quarterly filing of COREP.

The EBA document says that there should be a simplified reporting framework for Class 2 and 3 firms. For Class 2 firms, this will mean more detailed reporting than their current process and they will have new items to report on. The technical standards are not currently available (as of 8^th March 2018), however their consultation papers, which stress the need to simplify reporting, suggest that this could follow the XBRL format seen with COREP.

Quality and consistency standards

The FCA are looking closely at the regulatory reporting landscape. Top of their agenda seems to be concerns around the quality of returns and the consistency of data. Following last month’s letter sent to CEO’s of IFPRU and BIPRU firms, the FCA will start sampling returns in October to see if the standards have increased.

Do get in touch if you have any questions around the quality of your existing reporting.

Next steps

1. Working out what class you’ll fall into is top priority:

Understanding this will help you assess the impact of the changes, and if applicable, to review the impact on your group.

2. The next step is to understand how you will report this information. This is a good time to check that your current requirements are being calculated correctly, especially in light of the FCA’s plans to review data quality in Q4 2018.

Any more, burning new capital requirement questions?

If you missed our briefing and want to find out more about the New Capital Requirements for investment firms, please drop us a line here. We’ll answer your queries and let you know the dates for our next briefing.