Agenda

1. Introduction (15 min)

• Background
• Dates and scope of application
• Initial capital

2. Capital Adequacy Ratio & Own Funds (30 min)

• Minimum thresholds for CAD Ratio (Capital Adequacy Ratio)
• Own funds calculation

3. Minimum Capital requirements (15 min)

• Fixed overheads requirement
• Permanent minimum capital requirement
• K‐Factor Requirement

4. Breaking down the K‐Factor requirement (3 hrs)

• Risk‐to‐Client (RtC) K‐factors
• Risk‐to‐Market (RtM) K‐factors
• Risk‐to‐Firm (RtF) K‐factors

During this session we will analytically explain the methodologies that the IFR establishes for measuring the minimum capital requirements of investment firms across a number of risk metrics, which are called k-factors and are intended to reflect the various risks arising from the business of an investment firm, according to the activities it carries out. There are various k-factors under each of the three broad risk categories of Risk-to-Client, -Market and -Firm, and for each such k-factor a different methodology applies.

5. Concentration Risk (15 min)

• Limits
• Exposure value excess and K-CON (Concentration risk)
• Exclusions

6. Liquidity requirement (15 min)

• Liquid assets threshold
• Liquid assets definition

7. Important Exemptions (30 min)

• Transitional provisions
• Group Capital test

During this session we will explain the provisions of the IFR which allow for gradual implementation of specified IFR methodologies during a transitional period of 5 years after initial IFR application, i.e. until 26 June 2026, with an aim to support the investment firm sector in adjusting to the new requirements without becoming insolvent.

We will also discuss the cases in which, an investment firm that belongs to a group which, based on the IFR/IFD provisions, is subject to prudential consolidation, can be permitted to follow simpler prudential consolidation requirements where certain conditions apply.

8. Disclosure, reporting and risk management arrangements (1 hr)

• Reporting obligations
• Disclosure requirements
• Risk management arrangements.

CPD

This seminar may contribute to Continuing Professional Development requirements. At the end of the seminar participants will be given a certificate of attendance confirming the total number of training hours (6 CPD).

Services

Our services include:

• Handouts, including the hard copy presentation, examples, case studies, exercises, and additional notes, if applicable.
• Stationery, such as pads, pens, and files.
• Drinks (coffee, tea, etc.) and a buffet lunch.
• A fully equipped training room with WiFi access.
• Certificate of completion.

Trainer

Artemis Hadjivarnava
Principal, Capital Adequacy Lead, Risk Consulting, KPMG in Cyprus

Artemis is a Principal in the Risk Consulting department of KPMG in Cyprus, with more than 15 years of experience in the financial services advisory field. She heads the Capital Adequacy consulting team and has extensive experience in the implementation of various assurance and advisory engagements in relation to Capital Adequacy (IFR/IFD, Basel III & IV, CRR/CRD) Calculations and Impact Studies, Capital Adequacy seminars, Consolidated Supervision, ICAAPs, Pillar 3 Disclosures, Operational Risk Management Frameworks, Client Assets, Internal Controls and overall Regulatory Compliance in banks and investment firms.

Artemis has extensive experience in the design and implementation of ICAAPs and has been actively involved in capital planning, stress testing and Pillar 2 capital allocation exercises, as well as in the identification and assessment of risks in the financial services industry. Since the implementation of the IFR & IFD prudential framework, she has also been extensively involved in the design and implementation of the ICARA process for investment firms, and in the drafting of their ICARA Reports.

Furthermore, Artemis has supported the Cyprus Securities and Exchange Commission (“CySEC”) with the adjustment of the IFR CoRep templates, while she has also had an active role in the development of guidelines for CySEC on consolidated supervision, in the transposition of the European Council’s CRD 2 and CRD 3 provisions into CySEC’s Directives DI144-2007-05 and DI144-2007-06 for the Capital Requirements of Investment Firms and for the Large Exposures of Cyprus Investment Firms, respectively, and in developing guidelines for the proper handling and protection of client funds and financial instruments.

In 2015, she was certified by the HRDA as a “Trainer of Vocational Training”.