Securities And Banking Update - Capital ideas

Investment firms within the scope of the Capital Requirements Directive ("CRD") have much to do in 2007 in order to prepare for FSA’s new post-transitional rules which come into effect on 1 January 2008. In a nutshell, firms must ensure that they:

• can perform their Pillar 1 capital adequacy calculations, meet the new Pillar 1 capital requirements and satisfy FSA’s new prudential reporting requirements;

• have developed and documented an Internal Capital Adequacy Assessment Process ("ICAAP") as required under Pillar 2; and

• can make the public disclosures required under Pillar 3.

This article highlights some key points concerning what is required for each Pillar.