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August 22, 2018

ECB published its opinion (CON/2018/36) on the review of prudential treatment of investment firms. In January 2018, ECB had received requests from the European Parliament and the Council of the EU, respectively, for an opinion on a proposal for a Regulation on the prudential requirements of investment firms and amending Capital Requirements Regulation or CRR (No 575/2013), Markets in Financial Instruments Regulation or MiFIR (No 600/2014), and EU Regulation No 1093/2010 (regulation establishing EBA), along with a proposal for a Directive on the prudential supervision of investment firms and amending the fourth Capital Requirements Directive or CRD IV (Directive 2013/36/EU) and Markets in Financial Instruments Directive or MiFID (Directive 2014/65/EU). Overall, ECB supports the objective of the proposed acts in setting out a prudential framework that is better adapted to the risks and business models of different types of investment firms.

The opinion states that ECB generally supports the purpose of subjecting systemically important investment firms to the same prudential rules as credit institutions; however, the proposed acts should be carefully assessed in order to avoid unintended consequences for other Union legal acts due to the change in the definition of credit institutions. This opinion highlights in particular certain implications for the statistics regime. However, such effects are not limited to the statistics framework. Currently, only credit institutions can be eligible counterparties for Eurosystem monetary policy operations. The possible consequences of an inclusion of Class 1 investment firms in the definition of "credit institution" will need to be carefully assessed by ECB.

 

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Keywords: Europe, EU, Banking, Securities, MiFID/MiFIR, CRR/CRD, Opinion, CON/2018/36, ECB

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