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HMRC internal manual

Corporate Finance Manual

Understanding corporate finance: the legal and regulatory framework: Financial Services and Markets Act 2000: the FSA Handbook

The FSA Handbook

The standards that firms regulated by the Financial Services Authority must adhere to are set out in the FSA Handbook, which is divided into a number of ‘sourcebooks’. The Handbook can be found on the FSA website, . Certain of these set out ‘high-level’ standards (key principles, the responsibilities of directors and senior managers, threshold conditions, etc) that apply to all firms. The General Prudential Sourcebook (GENPRU) sets out the basic ‘prudential requirements’ that regulated firms must meet, that is, the requirement to maintain adequate capital resources, to address liquidity risk. The Collective Investment Schemes Sourcebook (COLL) provides a regime of product regulation for authorised funds (see CFM14090 and CTM48110).

Other sourcebooks address the specific risks that particular types of business face. The Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU) deals with credit risk, operational risk and market risk in banking businesses.

Terms commonly used in corporate finance are defined in the FSA Handbook, and may have a specific meaning for regulatory purposes. See for example, the FSA Handbook definitions of terms such as ‘deposit’, ‘debt security’ ‘debenture’, and ‘derivative’. These definitions are particularly important to the understanding of derivative products such as futures, options and swaps (see CFM13000).