Significant changes in DFSA Prudential requirements - CP 161

DFSA proposes capital requirements more aligned to business models and risk profiles

The Riffle

Revisions to EBCM, Introduction of an Activity Based Capital Requirement, removal of Professional Indemnity Insurance cover in many cases, enhanced cover in others…a lot to cover!

The CP undertakes a comprehensive review of the prudential regime for firms in Category 3, primarily focused on capital and liquidity requirements applicable to firms carrying out the following Financial Services:

• Dealing in Investments as Agent;
• Managing Assets;
• Managing a Collective Investment Fund;
• Managing a (Restricted) Profit Sharing Investment Account (PSIA);
• Providing Custody; and
• Acting as the Trustee of a Fund.

Relevant firms will find that the scope of proposed regulatory changes includes:

• certain reductions to the Base Capital Requirement and the EBCM;
• applicable liquidity requirements are to be adjusted and made more flexible;
• the introduction of a new activity based capital requirement to support the availability of loss-absorbing capital; and
• the removal of the requirement to have professional indemnity insurance (PII) for the majority of Domestic Firms and Branches.

We will revert with a detailed analysis in the days to come. In the meantime, do have a read by clicking here.

Subscribe to the Riffle - it's free!