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    EBA Proposes Rules on Calculation of Threshold for Investment Firms

    June 07, 2021

    EBA launched a second consultation on the draft regulatory technical standards on calculation of the threshold for investment firms. With this consultation, EBA is seeking to address the level playing field concerns raised by industry in relation to the geographical constraints of some undertakings as well as ensure a more proportionate and consistent methodology for the calculation of the thresholds. The regulatory technical standards are part of the EBA roadmap for delivering on mandates related to the implementation of a new prudential regime for investment firms. The comment period on the consultation ends on July 17, 2021. EBA also launched a data collection to assess the impact of the provisions proposed in the proposed regulatory standards.

    The proposed regulatory standards have been developed for the mandate related to the reclassification of certain investment firms to credit institutions in line with Article 8a(6)(b) of the Capital Requirements Directive (CRD). Article 8a(6)(b) of CRD requires EBA to draft technical standards on the calculation methodology related to the EUR 30 billion threshold for an investment firm to be required to apply for a credit institution authorization. The draft regulatory standards cover a number of areas relevant for the implementation of this threshold, including the

    • Clarification of the notion of consolidated assets
    • Accounting standards for the determination of asset values
    • Procedure to calculate the total assets on a monthly basis
    • Treatment of assets of branches of third-country groups

    Based on the feedback received in the first consultation, which EBA had launched on June 04, 2020, concerns were raised on the level playing field between undertakings that are part of the groups domiciled in EU and EU-operating undertakings that are part of groups domiciled outside EU. The amended proposals included in this consultation aim to ensure that the framework is neutral with regard to geographical limitations. The draft technical standards set out a proportionate and technically consistent methodology for calculation of the level of total assets to be compared to the EUR 30 billion threshold and further clarify the notion of relevant entity. The draft regulatory technical standards are likely to be submitted to EC for endorsement in the early fourth quarter of 2021, following which they will be subject to scrutiny by the European Parliament and the Council, before being published in the Official Journal of the European Union. The regulatory technical standards will apply 20 days after their publication in the Official Journal. The analysis of the responses of the consultation will be communicated in due time in the form of a final report.


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    Comment Due Date: July 17, 2021

    Keywords: Europe, EU, Banking, Investment Firms, IFD, IFR, CRR, CRD, Basel, Regulatory Capital, Proportionality, Reporting, Data Collection, EBA

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