Which aspect is the FCA LEAST likely to assess when evaluating the risk of a London Market broker under the three-pillar framework?

In the context of the FCA's three-pillar framework, the assessment of a London Market broker primarily focuses on the risks posed by the firm's operations, governance, and risk management processes. While capital adequacy is an important aspect of overall financial health, it is less likely to be a direct focus of the FCA when evaluating risks in the operational context of a broker.

The three-pillar framework is designed to ensure that firms manage their capital, risk, and governance effectively. Operational efficiency, risk management processes, and governance structure relate directly to how a firm operates in practice, focusing on the robustness of their internal systems and the effectiveness of their risk controls. These aspects provide deeper insights into how well the firm can withstand operational and market challenges.

In contrast, while capital adequacy indicates whether a firm has sufficient capital to meet its obligations, it is treated more as a financial requirement rather than a direct risk assessment area within the operational context that the FCA evaluates in this framework. Therefore, capital adequacy is less likely to be the primary focus during such an assessment of a broker’s risks compared to the other factors related to how they manage and run their operations.