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Proposed reform of the prudential framework for investment firms

18/05/2018

On 20 December 2017, the European Commission proposed a reform aiming both at simplifying the life of small investment firms and systematically submitting larger firms to the same regulation and surveillance as European banks.

On 20 December 2017, the European Commission proposed a reform aiming both at simplifying the life of small investment firms and systematically submitting larger firms to the same regulation and surveillance as European banks.

Non-systemic investment firms will be divided into two groups. For the smaller and less risky firms, the body of rules applicable to them remains sufficiently flexible to allow these firms to stay commercially viable. Thus these firms will not be subject to any additional requirements on corporate governance or remuneration policy. The proposal also brings systemic investment firms that perform certain types of banking activities (e.g. underwriting and proprietary trading) and whose assets exceed €30 billion under the definition of credit institutions. These systemic firms will be subject to the same treatment as banks and, in particular, direct surveillance by the ECB.

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