Divisa Capital, one of the most rapidly developing brokerage service providers in the industry, has received approval from the FCA to upgrade its permissions to full scope, “IFPRU €730k” license. The upgraded authorization allows the subsidiary of Equiti Group to trade with its clients as principal without the matched limitation.
Finance Magnates had a quick chat with Brian Myers, CEO of Divisa UK Limited, about the newly-acquired license.
How long did it take Divisa to obtain the reclassification of the license and how complex is the process?
Upgrading of our license to a full scope IFPRU €730k license has been part of the Equiti Group’s strategy since inception.
The hiring of key personnel across management, compliance, and trading over the course of the year has been in preparation for the license requirements and further expansion and development of Divisa Capital and Equiti Group’s growth strategy.
The requirements for the license are focused on good governance and risk controls, as well as ensuring solid processes and procedures across all functions in the company. It does take time. However, it adds significant value towards the company.
Do you think that the majority of FCA-regulated firms have managed to upgrade to the €730K license on time and do you think that many players have opted to forego the upgrade and will be forced out of the market?
Our sole focus has been on our own setup.
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How relevant do you think is the decision of the FCA to boost capital requirements for firms in light of the upcoming implementation of the new ESMA regulatory framework for retail brokers?
The Equiti Group believes the direction of the industry is moving towards stronger regulation and higher capital requirements. Our focus, including the capital we raised last year and the new Equiti Group structure, has been towards this, and in ensuring we are prepared for the exciting wave of change in the industry.
What does it mean?
An IFPRU 730k firm (where IFPRU refers to the prudential sourcebook for investment firms) holding such a license, however, is not authorized to deal for own account, or underwrite issues of financial instruments on a firm commitment basis.
Full-scope IFPRU €730k firm status is given to firms based in the UK, with own base funds of €730,000 ($850,00), that must adhere to both the European Securities and Markets Authority’s (ESMA) Markets in Financial Instruments Directive and FCA regulations.
As Finance Magnates reported earlier, the FCA was considering forcing straight-through processing (STP) brokers to upgrade their licenses to those of full market makers. This is necessary to ensure that the companies manage to cover negative balances resulting from prospective client losses due to unexpected market moves.
Commenting on the news, Brian Myers, Chief Executive Officer of Divisa Capital, said: “The IFPRU Full Scope €730k license was the next logical step for Divisa. The company has committed huge resource over the past few months in preparing for the license application, building on our robust governance framework and developing our systems and controls.”
Iskandar Najjar, Equiti Group CEO, added: “In early 2017, Divisa Capital received a significant capital injection when the company was acquired by its parent company, Equiti Group, boosting its liquidity levels and allowing the company to recruit heavily and continue its expansion plans. This license is in keeping with the Group strategy.”