Alpari UK ranks among first resolution cases for FCA under RRD

The name of ill-fated retail Forex broker Alpari (UK) has appeared in a presentation made by representatives of the Bank of England and the Financial Conduct Authority at the most recent Prudential Supervision Forum. The presentation by Val Smith – Head of Dual Regulated Department, FCA, and Mark Menary – COO, Resolution Directorate, Bank of England, is dedicated to the implementation of the Recovery and Resolution Directive (RRD).

As you may know, the RRD was adopted centrally by the European Union in May 2014, with its main aim being that all member states have the necessary tools to cut the risk of banks and investment firms failing. When such failures occur, they should have a minimal (if any) impact on the wider market.

In the UK, the RRD applies to prudentially supervised investment firms to which the requirement for base own funds of EUR 730,000 is valid. These are the so called IFPRU 730k investment firms and Alpari (UK) is (or, maybe, was) among those.

As the company was not gauged to have a need of financial stabilization, the resolutions transaction was taken by the FCA. Otherwise, the case would have been transferred to the Resolution Directorate at the Bank of England.


The UK regulators have adapted the EU RRD to be valid for investment firms in the UK. Most of the rules came into force on January 19, 2015, whereas the rules on the contractual recognition of bail-in will come into force on January 1, 2016.

All IFPRU 730k investment firms and group entities in a group that contains a 730k investment firm or credit institution should review the changes to FCA’s Handbook published in January 2015. They should then establish how the new rules will affect their business and take any measures necessary to comply.

Firms covered by the new rules should submit certain information to the FCA, which will then transfer it for analysis to the Bank of England.

To shed some light on the timing of submitting such information (for instance, core business lines and legal entity structure) can be seen below.

Baseline submissions:

• end-Sept 2015 for ‘significant’ firms [c.40 firms]

• end-March 2016 for the others [c.180 firms]

• resubmit / refresh every 2/3 years or if significant change

It is interesting and perhaps somewhat sad for the Forex industry that one of its participants is the leader in these rather dismal statistics of failures and regulatory interventions. A couple of years ago one would hardly apply the expression “too big to fail” or “systemically important” to an FX company. Now, Alpari UK, a retail FX broker, has made it to the top of the list of companies whose failure’s impact UK regulators sought to minimize.

To view the official presentation on the RRD, click here.

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