Waivers form

Waiver application form [doc]

 

Here, we explain Wider Integrated Group waivers and set out how firms should apply for them.

A Wider Integrated Group waiver permits a firm to use diverse blocks when calculating large exposure limits if it meets the conditions in BIPRU 10.9 and/or BIPRU 8.9 rules.

If your firm is relationship managed, we would expect you to have contacted your FSA supervisor about the number and constitution of the diverse blocks contained in the wider integrated group (WIG). You must also tell your supervisor if you intend to set up a UK-integrated group (UKIG) (see BIPRU 10.8.1 R (2)).

How do we define a wider integrated group?

Our rules (BIPRU 10.9.5 R) state that the wider integrated group of a firm consists of each concentration risk group counterparty of the firm that is not a member of its UK integrated group but satisfies all the conditions for membership of it except for BIPRU 10.8.4R (4) (Establishment in the United Kingdom).

What do we need to see when firms apply for a WIG waiver?

Here is the minimum information we would expect to see in a WIG waiver application and you should provide evidence that the conditions are met in this format:

 

BIPRU 10.8.4 R

An undertaking is a member of a firm's UK integrated group if, in relation to the firm, that undertaking satisfies the following conditions:

Insert your evidence in the boxes below

(1) – it is a concentration risk group counterparty  
(2) it is an institution, financial holding company, financial
institution, asset management company or ancillary services
undertaking;		  
(3) it is subject to the same risk evaluation, measurement and control procedures as the firm;  
(4) … [Not relevant for WIG waivers]  
(5) there is no current or foreseen material practical or legal impediment to the prompt transfer of capital resources or repayment of liabilities from the counterparty to the firm.  

Please also provide the following information:

  • Confirmation that you have discussed the formation of a UK Integrated Group (UKIG) with your supervision contact.
  • A list of all firms in the UKIG.
  • Confirmation that each of these firms within the UKIG meets the conditions in BIPRU 10.8.4R with some evidence / explanation.
  • A list of all firms in each diverse block. This is required so that we are clear of the makeup your firm's WIG application.
  • Confirmation that each of these firms meets the conditions in BIPRU 10.8.4R (excluding BIPRU 10.8.4 (4)) with some evidence / explanation.
  • Please explain how your firm has chosen the diverse blocks, bearing in mind the guidance in BIPRU 10.9.14 G, with an explanation of why you believe that there is low correlation between them. Evidence is needed of a low correlation between the underlying exposures, as such geography based arguments, on their own, may not be sufficient.
    We will want to know if your firm has conducted any work to attempt to quantify the likely correlations between diverse blocks. Your firm needs to be able to provide clear evidence that in the event of a specific financial services shock/issue, effecting one of the proposed blocks, the other blocks will not be materially affected. Where appropriate, stress testing analysis should be provided.
  • Whether you utilised a similar WIG arrangement under the IPRU regime.
  • A list of all firms in the residual block.
  • A list of any firms not in the UKIG, WIG or residual block.
  • Details of any joint ventures included in the diverse blocks or residual block, as joint ventures would generally not be considered able to meet the conditions.
  • Confirmation that there are no insurance companies in the diverse blocks or residual block.
  • Details of any ancillary service entities included in the diverse blocks or residual block.

 

A firm cannot have a WIG without having a UKIG. As part of the WIG waiver application, we will want to understand the UKIG and how you have established that your firm is complying with the conditions in BIPRU 10.8.

Publication of WIG waiver direction

Should the firm's application be granted, a full version of the direction will be forwarded to the firm and we will publish an abridged version of the WIG waiver direction. The published version will detail the number of diverse blocks that have been agreed, as well as a brief description of each block, i.e. Europe Block, Australasia Block, Asset Finance Block, Equity Trading Block etc. When making your application, please take this into consideration when naming and describing the diverse blocks.

Transitional Floors calculations

A group that is granted a WIG waiver can apply to use their WIG for the purpose of their transitional floors calculation. If this is the case, please submit an application for a modification of the relevant IPRU rules.

The additional information that a firm who wants to use their WIG for the purpose of their transitional floors calculation needs to provide is:

  • A gap analysis between their capital position with and without a waiver.
  • Details on systems in place to calculate the revised floors.
  • A full explanation of the relevant rules and guidance being used to calculate the revised floors.

How should firms apply for this waiver?

Please apply for waivers for wider integrated groups using the normal FSA waiver application procedures and submit your application to the centralwaiversteam@fsa.gov.uk