Featured Product

    EC on Proportionate and Risk-Sensitive Rules for Investment Firms

    December 20, 2017

    EC proposed a two-track overhaul to make life simpler for smaller investment firms, while bringing the largest, systemic ones under the same regime as European banks. The proposal includes new and simpler prudential rules for the large majority of investment firms which are not systemic, without compromising financial stability. It also covers amended rules to ensure that it large, systemic investment firms that are involved in bank-like activities and pose similar risks as banks are regulated and supervised like banks. Consequently, ECB, in its supervisory capacity (under the Single Supervisory Mechanism) would supervise such systemic investment firms in the Banking Union. This will ensure level playing field between the large and systemic financial institutions.

    The proposals amend the Capital Requirements Regulation (CRR), the Capital Requirements Directive (CRD IV), the revised Markets in Financial Instruments Directive (MiFID II), and the Markets in Financial Instruments Regulation (MiFIR). Under these proposals, the vast majority of investment firms in the EU would no longer be subject to rules that were originally designed for banks. This will reduce administrative burden, boost competition, and increase investment flows, all of which are priorities of the Capital Markets Union, without compromising financial stability. Meanwhile, the largest and most systemic investment firms would be subject to the same rules and supervision as banks.

    The new rules split non-systemic investment firms into two groups. The capital requirements for the smallest and least risky investment firms will be set in a simpler way. The rules will be comprehensive and robust enough to capture the risks of investment firms, yet flexible enough to cater to various business models and ensure that these firms can remain commercially viable. These firms would not be subject to any additional requirements on corporate governance or remuneration. For larger firms, the rules introduce a new way of measuring their risks based on their business models. For firms which trade financial instruments, these will be combined with a simplified version of existing rules. As part of its work to strengthen capital markets, EC had announced, in its Mid-Term Review of the Capital Markets Union Action Plan, that it would propose a more effective prudential and supervisory framework for investment firms. This proposal is part of the the EC Regulatory Fitness and Performance (REFITprogram. 

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, CRR/CRD, MiFID/MiFIR, Proportionality, Capital Markets Union, EC

    Related Articles
    News

    FED Adopts Proposal to Implement Reporting Form for SCCL

    FED adopted a proposal to implement the Single-Counterparty Credit Limits (SCCL) reporting form (FR 2590; OMB No. 7100-NEW).

    November 20, 2019 WebPage Regulatory News
    News

    FED Proposes to Extend Initial Compliance Dates Under SCCL Rule

    FED published a proposal to extend, by 18 months, the initial compliance dates for foreign banks subject to the single-counterparty credit limit (SCCL) rule.

    November 20, 2019 WebPage Regulatory News
    News

    CBIRC to Strengthen Supervisory and Policy Support for SME Services

    CBIRC released a notification on strengthening supervision and guidance to enhance the quality and efficiency of financial services for "small and micro-enterprises" (SMEs).

    November 20, 2019 WebPage Regulatory News
    News

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Update Rule on Derivative Contracts Exposure Calculation

    US Agencies (FDIC, FED, and OCC) announced a final rule updating the way certain banking organizations are required to measure counterparty credit risk for derivative contracts under their regulatory capital rules.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Amend Treatment of HVCRE Exposures

    US Agencies (FDIC, FED, and OCC) finalized a rule to modify the treatment of high volatility commercial real estate (HVCRE) exposures, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Changes to Rule on Supplementary Leverage Ratio

    US Agencies (FDIC, FED, and OCC) finalized changes to the capital requirement for banking organizations predominantly engaged in custodial activities, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Consults on Guidance on Liquidity Risk Management for Insurers

    IAIS is seeking feedback on the draft application paper on liquidity risk management for insurers.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Publishes Application Paper on Recovery Planning

    IAIS published the final application paper on recovery planning, along with the resolution of comments on the draft application paper.

    November 18, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of November Meeting of RCG for MENA Region

    FSB published a summary of the November meeting of the Regional Consultative Group (RCG) for Middle East and North Africa (MENA).

    November 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4174