EUROPEAN UNION: EBA Issues Opinion on the Design of a New Prudential Framework for Investment Firms

Monday October 9 2017

The European Banking Authority (EBA) has published its Opinion on the design and calibration of a new prudential framework for investment firms, which is specifically tailored to the needs of investment firms’ different business models and inherent risks. The Opinion includes a series of recommendations aiming to develop a single and harmonised set of requirements that are reasonably simple, proportionate and relevant to the nature of investment firms authorised to provide MiFID services and activities. 

The EBA has developed this Opinion in response to the European Commission’s call for advice of 13 June 2016 on the design of a new prudential framework for those MiFID investment firms for which the current prudential regime of the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) is not appropriate.

The Opinion covers the design and calibration of capital and liquidity requirements, consolidated supervision, reporting requirements, the suitability of the proposed framework for commodity derivatives firms and the need of macroprudential tools. Further recommendations are provided on the applicability of the remuneration requirements and corporate governance rules to investment firms laid down in the CRD and CRR.

In addition, this Opinion includes recommendations for the introduction of very simple prudential requirements for small investment firms that provide limited services or activities.

The EBA Opinion is accompanied by a Report, which includes background information and the underlying rationale for each of the recommendations, as well as a detailed impact assessment based on the quantitative impact studies carried out by the EBA.

Click on the link above for further information.