Own Funds Requirements under IFR/IFD: A Practical Guide for Investment Firms (H1072)
A calculation-focused, regulation-grounded programme that helps compliance, finance and risk professionals at Forex, CFD and investment firms master Own Funds composition, Fixed Overheads Requirement, K-Factors and the Overall Funds Requirement — and apply them with confidence under IFR/IFD.
Table of Contents
- About the Course
- Who Should Attend
- Key Learning Objectives
- Course Curriculum
- FAQs – Frequently Asked Questions
- Testimonials From Past Participants
- Other Upcoming Courses
- Fees & Registration Details
- Registration Form
About the Course
The IFR/IFD framework fundamentally redesigned how investment firms — including Forex and CFD brokers — calculate and maintain regulatory capital. Unlike the CRR/CRD regime it replaced, IFR/IFD introduces a proportionate, activity-based model built around firm classification, Fixed Overheads and a suite of K-Factors that directly reflect the risks a firm poses to clients, markets and itself.
This six-hour programme provides a comprehensive and calculation-focused walkthrough of Own Funds requirements under IFR/IFD. Starting from the regulatory context and firm classification, participants work through each layer of the framework: Own Funds composition, the Fixed Overheads Requirement, all relevant K-Factors, the Permanent Minimum Capital and the final OFR determination. The programme places particular emphasis on practical application — including common calculation errors, CySEC reporting expectations and worked numerical examples drawn from real investment firm profiles.
By the end of the day, participants will have both the conceptual clarity and the hands-on calculation skills to assess, document and defend their firm’s Own Funds position under IFR/IFD.
Who Should Attend
Finance, compliance and risk professionals at CySEC-regulated investment firms (CIFs), including Forex and CFD brokers.
CFOs, Financial Controllers and Finance Managers responsible for regulatory capital reporting.
Internal auditors reviewing the adequacy of the firm’s capital calculation processes.
Compliance Officers and Risk Managers involved in ICARA preparation and capital adequacy monitoring.
Newly appointed staff in finance or compliance roles who need a structured introduction to IFR/IFD capital requirements.
Key Learning Objectives
After completing the programme, participants will be able to:
- Explain why the IFR/IFD framework replaced CRR/CRD for investment firms and describe
its key structural principles. - Classify investment firms into Class 1, Class 2 and Class 3 and identify the capital
obligations applicable to each class. - Describe the composition of Own Funds under IFR — CET1, AT1, Tier 2 and applicable
deductions — and explain how each component qualifies or is excluded. - Define and calculate the Fixed Overheads Requirement (FOR), including the treatment of
non-recurring and variable costs. - Identify and calculate all relevant K-Factor requirements across Risk-to-Client, Risk-to-
Market and Risk-to-Firm categories. - Explain the Permanent Minimum Capital Requirement (PMR) and how the Overall Own
Funds Requirement (OFR) is determined using the MAX formula.
- Apply the IFR/IFD classification criteria to their own firm and determine which capital requirements apply.
- Calculate the FOR based on audited financial statements, correctly identifying eligible exclusions and common misclassification errors.
- Compute K-Factor requirements — including K-AUM, K-CMH, K-ASA, K-COH, K-NPR, K-DTF, K-CON and K-TCD — using realistic firm data.
- Determine the OFR using the OFR=MAX(PMR, FOR, KFR)\text{OFR} = \text{MAX(PMR, FOR, KFR)}OFR=MAX(PMR, FOR, KFR) formula and assess whether the firm holds adequate capital.
- Identify Own Funds calculation errors and reporting weaknesses in worked examples and case scenarios.
- Approach capital requirement calculations with precision and regulatory rigour, recognising the supervisory and prudential consequences of errors.
- Develop a proactive stance toward maintaining and documenting adequate Own Funds at all times, not merely at reporting dates.
- Value the IFR/IFD framework as a proportionate, risk-sensitive tool rather than a compliance burden, and engage with it accordingly in their professional role
Course Curriculum
- Why IFR/IFD replaced CRR/CRD for investment firms
- Scope of the IFR/IFD framework — which firms and activities are covered
- Overview of CySEC’s implementation and supervisory expectations
- How the programme is structured and what participants will achieve
Classification of Firms
- Class 1 — systemic investment firms
- Class 2 — most CFD/Forex brokers
- Class 3 — small and non-interconnected firms
Classification thresholds and practical classification exercise
Conceptual Framework
- Risk-to-Client (RtC)
- Risk-to-Market (RtM)
- Risk-to-Firm (RtF)
- How the three risk dimensions map to K-Factor categories
Components of Own Funds
- Common Equity Tier 1 (CET1) — share capital and retained earnings
- Additional Tier 1 (AT1) — subordinated instruments
- Tier 2 Capital — subordinated loans
Deductions
- Intangible assets
- Deferred tax assets
- Own shares and other deductions
- Worked example: mapping a CIF balance sheet to qualifying Own Funds
- Definition and rationale — minimum capital based on fixed expenses
- Formula and calculation methodology based on prior-year audited accounts
- Eligible adjustments — non-recurring costs and variable expenses
- Common calculation errors — misclassification and incorrect exclusions
- Practical exercise: calculating FOR from a sample P&L
Risk to Client (RtC)
- K-AUM — Assets Under Management
- K-CMH — Client Money Held
- K-ASA — Assets Safeguarded and Administered
- K-COH — Client Orders Handled
Risk to Market (RtM)
- K-NPR — Net Position Risk (applies to B-book exposure)
Risk to Firm (RtF)
- K-DTF — Daily Trading Flow
- K-CON — Concentration Risk
- K-TCD — Trading Counterparty Default
- K-Factor calculation exercise using sample firm data
- Definition and applicable thresholds by firm class
- Relationship between PMR, FOR and KFR in capital planning
- Definition and formula: OFR=MAX(PMR, FOR, KFR)\text{OFR} = \text{MAX(PMR, FOR, KFR)}OFR=MAX(PMR, FOR, KFR)
- Interpreting the result — when each component drives the requirement
- Capital buffers, ongoing monitoring and breach scenarios
- Full end-to-end OFR calculation for a Class 2 CFD broker
- Full end-to-end OFR calculation for a Class 3 small investment firm
- Identifying and correcting errors in a pre-populated calculation
- Group discussion: CySEC reporting and documentation expectations
- Key takeaways from each section
- Individual action points — what participants will apply in their role
- Open Q&A
Programme Evaluation
Fees & Registration Details
Testimonials From Past Participants
FAQs – Frequently Asked Questions
This course is designed for portfolio managers, compliance officers, risk managers, and professionals involved in investment decision-making, oversight, and regulatory compliance within investment firms.
Participants will learn how to:
- Apply suitability requirements in portfolio management
- Align portfolios with client mandates and target markets
- Implement and monitor best execution policies
- Structure and evidence compliant decision-making processes
The course is fully aligned with:
- MiFID II Directive 2014/65/EU
- MiFIR Regulation (EU) No 600/2014
- Law 87(I)/2017 Cyprus Investment Services Law
It also reflects supervisory expectations from CySEC and ESMA.
The course is highly practical, using real-life case studies, regulatory scenarios, and examples of common findings during inspections to help participants apply the framework effectively.
