PS25/14: Definition of capital for FCA investment firms

Read PS25/14 (PDF)[2]

Why we are changing

Following consultation[3], we’re removing all cross-references to the UK Capital Requirements Regulation (UK CRR) from MIFIDPRU 3 and establishing a standalone framework for regulatory capital tailored specifically to investment firms.

The new rules do not change the overall levels of regulatory capital firms must hold or require firms to alter their capital structures. Instead, they: 

• Clarify what qualifies as own funds.
• Reduce unnecessary complexity.
• Remove provisions designed for banks that are not relevant to investment firms.

Who this applies to

These changes affect all entities subject to MIFIDPRU, including: 

• MIFIDPRU investment firms.
• UK parent entities that are required to comply with MIFIDPRU 3 based on their consolidated position.
• Parent undertakings subject to the Group Capital Test.

Next steps

The new rules will come into effect on 1 April 2026.

We do not expect firms to change their capital arrangements because these reforms maintain existing capital standards and eligibility criteria. However, firms may need to consider the clarifications provided and update internal documents with new rule references.

Background

The rules in this PS are part of our wider programme to simplify and modernise our prudential framework for investment firms. They deliver on commitments made in PS21/6: Implementation of Investment Firms Prudential Regime[4] to keep the Investment Firms Prudential Regime (IFPR) under review and identify simplification opportunities.