Financial Market Supervisory Authority (FIMSA) performs the supervisory activity on the activities of investment companies according to the “Law of Azerbaijan Republic on Securities Market” and other normative acts deriving from the Law.
FIMSA performs the prudential control on each investment company that holds the license. The aim of the control is to provide the protection of consumer rights, performance of investment companies according to the regulation, provision of stability of financial market and fulfillment of prudential requirements of investment companies. Therefore, capital requirements for investment companies ensure the capital adequacy of investment companies and assessment of financial risks management.
Capital requirements of investment companies are regulated by the “Law of Azerbaijan Republic on Securities Market”, “Rules on ongoing capital requirements of investment companies”, “Rules on minimum amount of nominal capital of licensed entities in capital markets and their formation” and “Rules on preparation and submission of reports by investment companies”.
The indicator of capital adequacy of investment companies is calculated according to the regulations and equals the difference between the core capital and total capital demand. Core capital is consisted of first and second level capital according to the Rules. The total capital requirement of investment company is the sum of credit, market, operation, settlement, counteragent and concentration risks.
Capital adequacy indicator of the investment company means the sufficient level of liquid assets to respond to the requirements by operations implemented by the investment company. In case of breach of capital requirements supervisory authority adopts the intervention decisions and performs intervention activities.