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    EBA and ESMA Issue List of Instruments and Funds Under IFR

    May 31, 2021

    EBA and ESMA jointly published a provisional list of additional instruments and funds that competent authorities may allow to be used as own funds for some of the smallest investment firms. These firms include only non-legal persons or joint‐stock companies, or those that meet the conditions for qualifying as small and non‐interconnected investment firms, as defined in the Investment Firms Regulation (also IFR or Regulation 2019/2033). The list is provisional and intended to provide guidance to investment firms and competent authorities ahead of the application of the requirements of the Investment Firms Regulation, as of June 26, 2021.

    The provisional list is based on the information received from national competent authorities across EU and includes instruments and funds that national competent authorities may permit to be used as own funds, in addition to the instruments included in the Common Equity Tier 1 (CET1) list published by EBA in accordance with the Capital Requirements Regulation (CRR). Therefore, instruments and funds of investment firms will be allocated either to this new list or to the existing CET1 list, depending on their nature. EBA and ESMA will assess the terms and conditions of all instruments and funds included in this provisional list against regulatory provisions at a later stage and, subsequently, update, maintain, and publish the list on a regular basis.

    The first publication of the list relating to further instruments and funds existing before May 31, 2021 has a provisional character because EBA has not yet performed any assessment of the form of instruments and funds included in the list. If this assessment concludes that an instrument or fund does not qualify for treatment under Article 22 of Council Directive 86/635/EEC, such instrument or fund will be removed from the list. Starting with the first update of the list, the inclusion of an instrument or fund in the list implies that EBA has been consulted by competent authorities before they permit further instruments and funds and EBA has assessed the form of instruments and funds included in this list. This list will be updated regularly—for example, each time a new type of further instrument or fund that qualifies as own funds is issued or where a type of further instrument or fund needs to be removed from the list because it no longer qualifies for treatment under Article 22 of Council Directive 86/635/EEC or because it no longer exists.

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    Keywords: Europe, EU, Banking, Securities, IFR, CRR, CET 1, Regulatory Capital, Class 3 Firms, Investment Firms, ESMA, EBA

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