On 28 June 2021, HM Treasury published a draft of the Financial Services and Markets Act 2000 (PRA-regulated Activities) (Amendment) Order 2021.

The Statutory Instrument will enact consequential amendments to the Financial Services and Markets Act 2000 (PRA-regulated Activities) (Amendment) Order (the PRA RAO) as a result of the introduction of the Investment Firm Prudential Regime (IFPR), as well as other minor technical amendments.

Currently, the PRA RAO allows the PRA to choose to designate any investment firm that fulfils two criteria: (1) dealing in investments as principal, and (2) being subject to the initial capital requirement of EUR 730,000. The IFPR will make the initial capital requirement of EUR 730,000 obsolete, as it will create new initial capital requirements for investment firms. Therefore, the reference to the initial capital requirement of EUR 730,000 is removed by the Statutory Instrument.

The Statutory Instrument also makes changes to the PRA RAO which will allow the PRA to continue to designate systemic investment firms after the IFPR is introduced. Article 2(3) of the Statutory Instrument makes changes which allow for all investment firms that deal in investments as principal to be eligible for designation by the PRA. This does not mean the PRA will necessarily designate all of these investment firms. When designating investment firms, the PRA will continue to have regard to its statutory objectives, the assets of the person or group, and its Statement of Policy on designation. The other changes made by the Statutory Instrument are minor technical changes. For example, Article 2(2) clarifies the meaning of ‘FCA controlled function’ and ‘PRA controlled function’.