September 29, 2017

EBA published its opinion on the design and calibration of a new prudential framework for investment firms. The EBA opinion is accompanied by a report, which provides the underlying rationale for each recommendation, and a detailed impact assessment based on the quantitative impact studies conducted by EBA.

The opinion includes a series of recommendations for developing a single and harmonized set of requirements that are reasonably simple, proportionate, and relevant to the nature of investment firms authorized to provide MiFID services and activities. It covers the design and calibration of capital and liquidity requirements, consolidated supervision, reporting requirements, the suitability of the proposed framework for commodity derivatives firms, and the need of macro-prudential tools. In the context of proportionality, this opinion includes recommendations for the introduction of very simple prudential requirements for small investment firms that provide limited services or activities. Further recommendations are provided on the applicability of the remuneration requirements and corporate governance rules to investment firms laid down in the CRD and CRR.

This opinion is in response to the EC's call for advice on June 13, 2016 on the design of a new prudential framework for those MiFID investment firms for which the current prudential regime of the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) is not appropriate. The new framework is specifically tailored to the needs of investment firms' different business models and inherent risks. 

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Keywords: Europe, EU, Securities, New Prudential Framework, CRR, CRD, Proportionality, EBA