FCA License (STP)
An FCA STP (Straight-Through Processing) license, also known as an IFPRU 125K license, permits firms to operate as intermediaries in the UK financial market by executing client orders directly with liquidity providers without acting as market makers.
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FCA STP (Straight-Through Processing)
An FCA STP (Straight-Through Processing) license, also known as an IFPRU 125K license, permits firms to operate as intermediaries in the UK financial market by executing client orders directly with liquidity providers without acting as market makers. This model ensures that client trades are processed without dealer intervention, promoting transparency and aligning broker interests with those of their clients.
Key Features of the FCA STP License:
- Capital Requirements: Firms must maintain a minimum capital of €125,000. This capital serves as a financial buffer to support the firm’s operations and safeguard against potential risks.
- Operational Scope: Holders of this license can:
- Receive and transmit orders.
- Execute orders on behalf of clients.
- Provide portfolio management services.
- Offer investment advice.
- Market Making Restrictions: Firms with an STP license are prohibited from acting as market makers. They cannot take proprietary positions or deal on their own account, ensuring that all client orders are routed directly to external liquidity providers.
- Client Fund Handling: These firms are authorized to hold client funds, necessitating robust systems and controls to protect client assets and comply with the FCA’s client money rules.
Regulatory Compliance Requirements:
- Local Presence: Firms must establish a physical presence in the UK, including a registered office and operational facilities. This presence facilitates effective supervision and demonstrates a commitment to the UK market.
- Qualified Personnel: At least two directors with relevant experience and qualifications are required. These individuals must pass the FCA’s “fit and proper” assessment, ensuring they possess the integrity and competence to manage the firm’s activities.
- Compliance Framework: Firms must implement comprehensive compliance policies, including anti-money laundering (AML) procedures, risk management strategies, and internal controls to ensure adherence to regulatory standards.
