What is My Own Funds Minimum Requirement?

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What is the Minimum Own Funds Requirement?

A regulated firm should hold a minimum of Own Funds to satisfy the following Capital Ratios at all times:

• A Common Equity Tier 1 (CET1) Capital Ratio of 4.5%
• A Tier 1 (T1) Capital Ratio of 6%, and
• A  Total Capital Ratio of 8%

These Capital Ratios are calculated as a percentage of Total Risk Exposure.

What are Own Funds required to cover?

Firms are required to hold Own Funds (i.e. capital), to ensure that they can cover risks that they may face during the course of business, such as:

• Operational risk
• Market risk
• FX risk
• Commodities Risk
• Credit Valuation Adjustment Risk

This is also known as a firm’s Capital Adequacy Requirement and is often referred to as the required regulatory capital of a firm.