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Investment firms: proposal of a new prudential regime

10/05/2019

On 26 February 2019, the Presidency of the Council of the EU announced that provisional agreement had been reached with the European Parliament on the legislative proposals for a new prudential regime for investment firms.

Investment firms will be subject to the same key measures in the CRD IV, in particular as regards capital holdings, reporting, corporate governance and remuneration, but the set of requirements they would need to apply would be differentiated according to their size, nature and complexity;

the largest firms would be subject to the full banking prudential regime and would be supervised as credit institutions:

  • investment firms that provide “bank-like” services, such as dealing on own account or underwriting financial instruments, and whose consolidated assets exceed EUR 15 billion would automatically be subject to Capital Requirements Regulation and Capital Requirements Directive IV (CRR / CRD IV);
  • investment firms engaged in “bank-like” activities with consolidated assets between EUR 5 and 15 billion could be requested to apply CRR / CRD IV by their supervisory authority, in particular if the firm’s size or activities would involve risks to financial stability;
    while smaller firms that are not considered systemic would be subject to a new bespoke regime with dedicated prudential requirements.
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