Matched Principal exemption - Thistle Initiatives

Written by Thistle Initiatives - Compliance consultancy | Aug 4, 2021 11:00:00 PM

What has happened?

The Matched Principal exemption from the regulated activity of dealing as principal will no longer be available from 1st January 2022.

What do you need to do?

We have learned via the Association of Professional Compliance Consultants, the FCA’s approach to the future application of the Matched Principal Limitation held by a number of firms is that these will remain in place. It is our understanding that;

1. The FCA does not have the power to summarily remove Limitations and that these can only be removed by the firm requesting this.
2. Matched Principal trading can continue unaltered going forward, even under the IFPR regime and the consequences/advantages remain as they do now except that a firm’s prudential status cannot any longer be Limited Licence, it has to be non-SNI.
3. The FCA believes it is helpful for firms to ‘limit’ their regulated activity of Dealing in Investments as Principal, in order to clarify how they trade and to demonstrate they are a lower risk principal dealer and, consequently, are not expected to have the same level of systems and controls that an unfettered principal dealer would be expected to have.
4. The FCA is encouraging firms to clarify that they wish only to undertake Matched Principal trades and it sees a long-term benefit from firms having this limitation.
5. The FCA will continue, therefore, to accept applications for a Matched Principal Limitation (for new applications and from Firms wishing to now deal as Principal and on a Matched Principal basis).
6. The question is whether a Firm can obtain authorisation or via a VoP has obtained the Matched Principal Limitation by the end of this year. If it has, only then will it be entitled to use the Matched Principal Firm PMR Transitional.

How can we help you?

If you’d like to know more about how our compliance consultants can help you with your matched principal trading arrangements or your general IFPR arrangements, such as whether firms are caught by IFPR or can avoid being caught, determining whether firms are SNI or not, capital requirement calculations (FOR / K Factors (if applicable)) and their impact, transitional provisions, assistance with the ICARA or consolidation group considerations, or any other regulatory compliance issues, our expert compliance consultants are here to help.

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