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Slides used for November 2013 client briefing by Bovill - UK financial services regulatory consultants. For more info visit: www.bovill.com/CRDIV.aspx
CRD IV is the EU Capital Requirements Directive which implements Basel III. It is designed to strengthen capital requirements for financial institutions, covering both the amount, and quality, of capital held. CRD IV is driven by the European Bank (EBA) and will harmonise reporting across Europe.
Establishing who is affected by CRD IV
Whereas Basel III applies specifically to banks, CRD IV extends to certain types of investment firm. Whether or not you are covered, and become an "IFPRU" firm, depends on the activities you are authorised to carry out under MiFID.
Working out whether your business activities mean you are performing one of these functions is not straightforward. Your permissions may need to be reduced to ensure you are not in scope for CRD IV unnecessarily.
Becoming an IFPRU firm under CRD IV
IFPRU firms – those in scope for CRD IV – will be subject to new capital buffers that increase the amount and quality of capital they have to hold.
All IFPRU firms must also comply with COREP (common reporting) from 31 March 2014. Twenty-five new templates to report "own funds", "credit risk", "operational risk", "market risk" and "large exposures" replace FCA forms and significantly more data is needed at a more granular level. Reports need to be submitted in XBRL (standardised reporting language) which will require an investment in software. Mapping data into the new templates is a time consuming and complicated piece of work.
Preparing for CRD IV
You need to decide now if you are in scope for CRD IV. And if you are you need to start preparing for the new reporting regime.
Bovill can help you understand CRD IV and how it will affect your organisation. We can also review and prepare your data, convert your templates to XBRL, and submit returns on your behalf. For more information contact us via www.bovill.com/CRDIV.aspx.