EBA published a package that includes the final draft implementing technical standards on supervisory reporting and disclosures of investment firms. The disclosure requirements will be applicable from June 26, 2021 while the first reporting reference date is September 2021 for quarterly reports and December 2021 for annual reports. These reporting requirements are a part of the EBA reporting framework 3.1, which is expected to apply from September 2021. EBA will also develop the data point model, XBRL taxonomy, and validation rules based on the final draft implementing technical standards.
The standards included in this package set out the main aspects of the new reporting framework in relation to the calculation of own funds, levels of minimum capital, concentration risk, liquidity requirements, and the level of activity in respect of small and non-interconnected investment firms. The implementing technical standards propose a different set of templates to cover small and non-interconnected investment firms and to include information that is proportionate to their size and complexity. The accompanying annexes contain reporting templates and instructions for Class 2 and Class 3 investment firms, information about data point model and validation rules, templates and instructions for disclosure of own funds, and reporting templates and instructions for group capital test. Additionally, one template has been included to define the size and level of activity thresholds that will trigger a shift to the reporting requirements into one or the other classification of investment firms (class 2 and class 3). EBA issued a single set of standards with integrated Pillar 3 disclosures and supervisory reporting requirements and standardized formats and definitions with a view to improving consistency between reporting and disclosures requirements, which will facilitate compliance with both requirements.
The draft implementing technical standards will be submitted to EC for endorsement before being published in the Official Journal of the European Union. The final draft implementing technical standards, which are part of the phase 1 mandates of the EBA roadmap on investment firms, will ensure a proportionate implementation of the new prudential framework for investment firms taking into account the different activities, sizes, and complexity of investments firms. The Investment Firms Prudential Package consists of the Investment Firms Directive (2019/2034 or IFD) and the Regulation (2019/2033 or IFR), which were published in the Official Journal of the European Union on December 05, 2019, entered into force on December 26, 2019, and establish a new prudential framework for investment firms authorized under Markets in Financial Instruments Directive (MiFID). The IFR and IFD package covers small and non-interconnected investment firms (class 3 firms) and other investment firms other than small and non-interconnected investment firms (class 2 firms). IFR requires the development of several pieces of level 2 legislation in to reflect and implement the new requirements for investment firms.
Keywords: Europe, EU, Banking, Securities, IFR, IFD, Implementing Technical Standards, Reporting, Disclosures, Investment Firms, EBA
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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