The Capital Requirements Directive (CRD) comes into force on 1 January 2007 and changes the way regulated firms calculate their minimum capital requirements, with an aim of ensuring a firm has sufficient financial resources to meet the risks it faces.
CRD is based around a three-stage process known as ‘pillars’:
Pillar 1: Firms covered by CRD are required to revise their minimum capital requirements for credit, market and operational risks.
Pillar 2: Firms covered by CRD are required to implement an Individual Capital Adequacy Assessment (ICAAP). Adequacy of capital against risks not covered in Pillar 1 is measured and assessed to determine whether additional capital is required.
Pillar 3: Robust disclosure requirements to give the market a role in ensuring the firm holds the appropriate level of capital.
Factsheets
A detailed overview of CRD can be found in our CRD factsheet.
Our Organisational Systems & Controls factsheet details the new SYSC requirements.
If you require any assistance in reviewing the assessment which the FSA has given you, completing the on-line questionnaire, or with any other CRD issues, then please give us a call or e-mail.
Lorraine Bay
Moore Stephen LLP
St Pauls House
Warwick Lane
EC4M 7BP
020 7334 9191