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 App6:
a. the Basic Indicator Approach is prescribed in Section A6.1;
b. the Standardised Approach is prescribed in Section A6.2; and
c. the Alternative Standardised Approach is prescribed in Section A6.3.
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