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    EBA Offers Clarification on Implementation of Investment Firms Regime

    July 01, 2021

    EBA published an Opinion that provides guidance on the actions to be taken in case of uncertainty on whether investment firms should apply for an authorization as a credit institution in the absence of the delegated act establishing the methodology for the calculation of the highest threshold (the EUR 30 billion threshold), on which the EBA has currently opened a second public consultation. The Opinion is meant to ease implementation of the Investment Firms Regulation (IFR) and Directive (IFD), which entered into force on June 26, 2021. The opinion provides clarity to both investment firms and their supervisors in the cases in which uncertainty about the relevant classification and the subsequent need for application for an authorization as a credit institution arises in the absence of the technical standards.

    The IFR and IFD classify investment firms according to their business model and size, with the size being benchmarked on various thresholds. For a vast majority of investment firms, sufficient clarity already exists with regard to the prudential regime, which applies to them. However, in a few cases, especially for investment firms of third-country groups, the Opinion provides guidance on the actions to be taken in case of uncertainty on whether these investment firms should apply for an authorization as a credit institution in the absence of the delegated act establishing the methodology for the calculation of the highest threshold. EBA advises competent authorities to apply a pragmatic approach for investment firms in cases where the relevant EUR 30 billion threshold for the identification of the prudential regime to be applied to the investment firm cannot be determined without the guidance provided in the EBA technical standards that are being consulted on. EBA advises supervisors not to prioritize any supervisory or enforcement action in relation to the identification of investments firms, until six months after the final methodology is in place. While EBA cannot provide a proposal for a delegated act with the Opinion, it intends to do so as soon as possible following the ongoing consultation period. EBA requests that EC adopt the technical standards by means of a delegated regulation as quickly as possible after their submission by EBA to provide the necessary legal certainty and resolve the issues highlighted in the Opinion.

     

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    Keywords: Europe, EU, Banking, Securities, Investment Firms, Regulatory Technical Standards, IFD, IFR, Opinion, CRD, Basel, Credit Institutions, Third Country Groups, EBA

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