The EBA and ESMA Recommend Targeted Revisions to the Investment Firms’ Prudential Framework

Introduction

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have issued their technical advice in response to the European Commission's Call for Advice (CfA) on the Investment Firms Regulation (IFR) and Investment Firms Directive (IFD). They propose limiting significant changes to the framework, which has proven to be fit-for-purpose, as confirmed by stakeholder feedback during the joint consultation.

Key Recommendations

The recommendations aim to enhance the proportionality and functioning of the prudential framework, improve the framework's ability to contribute to a level playing field among investment firms, and between investment firms and financial institutions that perform similar activities. The joint report highlights the areas where higher or lower alignment with the banking framework would be beneficial. It also identifies the need to improve definitions, calculation methodologies, and thresholds monitoring for investment firms, while emphasizing the importance of harmonizing the scope of calculation to ensure consistent application of the framework.

Additional Considerations

In addition, the report addresses a wider range of topics, including the adequacy of own funds requirements, the implications of the Banking Package, the prudential consolidation of investment firm groups, and aspects related to remuneration. It also considers the interactions between the IFR/IFD framework and other regulations, namely the Market in Crypto-Assets Regulation (MiCA), the Undertakings for Collective Investment in Transferable Securities (UCITS), and the Alternative Investment Funds Managers (AIFM) Directives.

Next Steps

The EBA and ESMA will submit the joint report to the European Commission.

Legal Basis and Background

Under Article 16a(4) of their founding regulations, the EBA and ESMA may provide technical advice at the request of the EU Commission, in areas defined in the legislative acts referenced in Article 1(2) of their respective founding regulations. This report was prepared in response to the “Call for advice to the EBA and ESMA for the purposes of the reports on the prudential requirements applicable to investment firms”, published on 1 February 2023. The CfA asked to cover, among others, the areas of categorization of investment firms, the interaction with CRR/CRD, and the future proofing of the IFR/IFD regime.

Quelques pistes pour l'intégration opérationnelle dans votre dispositif :

• Évaluer l'impact des recommandations sur votre cadre prudentiel actuel.
• Mettre à jour les méthodologies de calcul et les seuils de surveillance conformément aux nouvelles directives.
• Assurer une harmonisation avec les autres réglementations pertinentes, telles que MiCA et UCITS.
• Préparer un rapport pour le soumettre à la Commission européenne.