Guidance
1. Section 6.11 of these Rules provides that an Authorised Person in Categories 1, 2, 3A and 5 must use the Basic Indicator Approach to calculate its Operational Risk Capital Requirement, unless the firm has approval from the Regulator to use the Standardised Approach or Alternative Standardised Approach. In this App7:
a. the Basic Indicator Approach is prescribed in Section A7.1;
b. the Standardised Approach is prescribed in Section A7.2; and
c. the Alternative Standardised Approach is prescribed in Section A7.3.
2. The application of various components of the rules on Operational Risk to Authorised Persons with a Financial Services Permission to carry out various Regulated Activities is detailed in the table below:
Regulated Activities | Prudential Category | Capital requirement | Systems and controls requirement | PII cover |
Accepting Deposits | 1 | YES | YES | NO |
Providing Credit | 2 | YES | YES | NO |
Dealing in Investments as Principal (not as a Matched Principal) | 2 | YES | YES | NO |
Dealing in Investments as Principal (only as a Matched Principal) | 3A | YES | YES | NO |
Dealing in Investments as Agent | 3A | YES | YES | NO |
Acting as the Trustee of an Investment Trust | 3B | NO | YES | YES |
Providing Custody | 3B or 3C | NO | YES | YES |
Providing Trust Services | 3B | NO | YES | YES |
Managing Assets | 3C | NO | YES | YES |
Managing a Collective Investment Fund | 3C | NO | YES | YES |
Managing a Profit Sharing Investment Account which is a PSIAr | 3C | NO | YES | YES |
Providing Money Services | 3C | NO | YES | YES |
Arranging Credit | 4 | NO | YES | YES |
Arranging Deals in Investments | 4 | NO | YES | YES |
Advising on Investments or Credit | 4 | NO | YES | YES |
Arranging Custody | 4 | NO | YES | NO |
Insurance Intermediation | 4 | NO | YES | YES |
Insurance Management | 4 | NO | YES | YES |
Acting as the Administrator of a Collective Investment Fund | 4 | NO | YES | YES |
Administering a Specified Benchmark |
4 | NO | YES | YES |
Operating a Credit Rating Agency | 4 | NO | YES | YES |
Operating a Multilateral Trading Facility or Organised Trading Facility | 4 | NO | YES | YES |
Operating a Representative Office |
4 | NO | YES | YES |
Providing Information in Relation to a Specified Benchmark | 4 | NO | YES | YES |
Islamic Financial Business | 5 | YES | YES | NO |
Shari'a- compliant Regulated Activities | 5 | YES | YES | NO |
Managing a Profit Sharing Investment Account which is a PSIAu | 5 or 1 | YES | YES | NO |