Featured Product

    EBA Issues Standards on Prudential Treatment of Investment Firms

    December 16, 2020

    EBA published a package of seven final draft regulatory technical standards on the prudential treatment of investment firms. The Investment Firms Directive and Regulation (IFD/IFR) set out a significant number of mandates for EBA covering a broad range of areas related to the prudential treatment of investment firms. The implementation of the mandates is divided into four phases, according to the legal deadline set out in the IFD/IFR for the draft regulatory technical standards. The current package covers mandates developed under the first phase. These include draft technical standards that focus on the reclassification of investment firms to credit institutions, the capital requirements for investment firms at solo level, and the requirements on a consolidated basis.

    A comprehensive work plan for delivering all mandates had been established in the Roadmap on Investment Firms Prudential Package, which the EBA published on May 02, 2020. The following seven draft technical standards that EBA has published now have been developed in accordance with the principles of proportionality, non-disruptive transition, a level playing field, and harmonization (as laid down in the investment firms roadmap):

    • Draft technical standards on the information to be provided for the authorization of credit institutions as defined in point (1)(b) of Article 4(1) of the Capital Requirements Regulation (CRR)
    • Draft technical standards to specify the calculation of the fixed overheads requirement and define the notion of a material change
    • Draft technical standards to specify the methods for measuring the K-factors; the standards provide clarification on the measurement of most of the Risk-to-Client (RtC) K-factors and some of Risk-to-Firm (RtF) K-factors, whereas the Risk-to-Market (RtM) K-factors are either defined as references to the CRR or as detailed in the IFR and, therefore, require no further specification
    • Draft technical standards to specify the notion of segregated accounts by setting the conditions for their identification for the purpose of calculating the capital requirement related to the K-factor "client money held" (K-CMH).
    • Draft technical standards to specify adjustments to the K-factor "daily trading flow" (K-DTF) coefficients in the event that, in stressed market conditions, K‐DTF requirements seem overly restrictive and detrimental to financial stability; the draft standards also specify that stressed market conditions shall cover only those stressed market conditions that are referred in point (a) of Article 3 of the Regulation (EU) 2017/578 when they lead to increased trading volumes
    • Draft technical standards to specify the amount of total margin for the calculation of "clearing margin given" (K-CMG) and the criteria for avoiding regulatory arbitrage in the event that K-CMG approach is used
    • Draft technical standards on the criteria for subjecting certain investment firms to CRR (threshold of EUR 5 billion); these standards set the quantitative thresholds above which an investment firm’s activities should be considered to be of a significant scale that could lead to a systemic risk

    Other mandates that are part of the first phase but are not included in this report are those concerning variable remuneration and those related to reporting requirements, disclosure requirements, and monitoring of the threshold referred to in Article 8a(6) of the Capital Requirements Directive. 


    Related Links

    Keywords: Europe, EU, Banking, Securities, IFD, IFR, MIFID, Regulatory Reporting, Roadmap, CRR, CRD, Investment Firms, Proportionality, K-Factor Regime, Systemic Risk, EBA

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582