The European Commission (EC) published the Delegated Regulation 2022/1455 with regard to regulatory technical standards for own funds requirement for investment firms based on fixed overheads. Regulation 2022/1455 shall enter into effect on September 25, 2022.
Regulation 2022/1455, which supplements the Investment Firms Regulation or IFR (2019/2033), sets out provisions for the calculation of the fixed overheads requirement, in general (Article 1) and for commodity and emission allowance dealers (Article 2), as well as the notion of material change (Article 3). Article 1 states, where third parties, including tied agents, incurred fixed expenses, on behalf of the investment firms, that are not already included within the total expenses in the annual financial statements referred to in paragraph 1, those fixed expenses shall be added to the total expenses of the investment firm. Where a breakdown of the third party’s expenses is available, an investment firm shall add to the figure representing the total expenses only the share of those fixed expenses applicable to the investment firm. Where such a breakdown is not available, an investment firm shall add to the figure representing the total expenses only its share of the third party’s expenses as it results from the business plan of the investment firm. Meanwhile, Article 3, which sets out provisions on the notion of material change, states that a material change referred to in the IFR shall be considered to have occurred where either of the following conditions are met:
- a change, either in the form of an increase or in the form of a decrease, in the business activity of the firm results in a change of 30% or greater in the firm’s projected fixed overheads of the current year
- a change, either in the form of an increase or in the form of a decrease, in the business activity of the firm results in changes in the firm’s own funds requirements based on projected fixed overheads of the current year equal to or greater than EUR 2 million
Related Link: Regulation 2022/1455
Keywords: Europe, EU, Banking, Investment Firms, Investment Firms Regulation, IFR, Fixed Overheads, Own Funds Requirement, Reporting, EC
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