Capital Adequacy Advisory

Forex Brokerage Capital Adequacy & Practical Compliance Advice

 

Forex brokerages and investment firms are subject to capital adequacy requirements and solvency requirements (for EU companies only), meaning they are obligated to monitor and assess the level of regulatory capital which must be maintained on a continuing basis to achieve practical compliance.

The amount of capital which forex brokerages or investment firms must have at their disposal is estimated depending on the type of risk: whether this is credit risk, market risk or operational risk. Forex brokerages and investment firms must have a minimum capital prescribed by the laws and regulations of the jurisdiction where they operate, if they:

  • Hold clients’ money and/or securities.

  • Receive, transmit and/or execute investors’ orders.

  • Manage portfolios of investments or financial instruments.

 

While the EU had harmonized capital adequacy regulations by introducing The Capital Adequacy Directive 2006/49/EC (as amended),  which sets out the rules relating to the market risks faced by investment firms and credit institutions, most of non-EU jurisdictions have their own regulations and requirements as regards to capital adequacy applicable to investment firms.

 

Our dedicated team of specialists holds extensive knowledge and insight into industry practices relating to capital adequacy requirements / solvency requirements, and we can provide professional advice on the interpretation of capital regulatory requirements and practical compliance assistance to forex brokerage and investment firms in all major offshore and onshore jurisdictions.

 

Please Contact us to learn more about our capital adequacy advisory services which we can offer to your forex brokerage or investment firm.

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