Response to discussion on a new prudential regime for investment firms
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However, we question the applicability of the regulation for fund managers. Fund managers are already subject to the capital requirements of the UCITS Directive and the AIFMD.
On page 5 f. of the Discussion Paper it says that “the DP will also be relevant for UCITS management companies or AIF managers authorized to conduct certain MiFID investment services or activities”. Considering that CRD IV and CRR are not applicable to neither UCITS nor AIF managers, SIFA seeks clarification on how the DP is relevant for those companies.
Fund managers are subject to appropriate capital requirements of the UCITS Directive or the AIFMD based on assets under management, but at least 25 % of the fixed overhead. Those requirements are easy to apply and cover operational risk. SIFA would urge EBA to consider those requirements as a model for investment firms performing portfolio management, thus creating a level-playing-field between investment firms and fund managers. It should be noted that a fund manager may manage fund assets both under its authorisation as fund manager (UCITS Directive or AIMFD) and under a separate authorisation to perform portfolio management why it makes sense that the capital requirements are the same for both activities.
Question 1: What are your views on the application of the same criteria, as provided for G-SIIs and O-SIIs, for the identification of ‘systemic and bank-like’ investment firms? What are your views on both qualitative and quantitative indicators or thresholds for ‘bank-like’ activities, being underwriting on a firm commitment basis and proprietary trading at a very large scale? What aspects in the identification of ‘systemic and bank-like’ investment firms could be improved?
In our view it might be simpler to describe the applicable capital requirements in relation to the different types of activities that investment firms may have authorization to perform under MiFID instead of class 1-3.Question 2: What are your views on the principles for the proposed prudential regime for investment firms?
SIFA is positive to introducing a more appropriate prudential regime and a new categorisation of investment firms. SIFA would like to encourage the EBA initiative to revise and simplify the regulations regarding capital requirements for investment firms. The proposed regime is definitely a step in the right direction and it is our view that the requirements will be easier to apply.However, we question the applicability of the regulation for fund managers. Fund managers are already subject to the capital requirements of the UCITS Directive and the AIFMD.
On page 5 f. of the Discussion Paper it says that “the DP will also be relevant for UCITS management companies or AIF managers authorized to conduct certain MiFID investment services or activities”. Considering that CRD IV and CRR are not applicable to neither UCITS nor AIF managers, SIFA seeks clarification on how the DP is relevant for those companies.
Fund managers are subject to appropriate capital requirements of the UCITS Directive or the AIFMD based on assets under management, but at least 25 % of the fixed overhead. Those requirements are easy to apply and cover operational risk. SIFA would urge EBA to consider those requirements as a model for investment firms performing portfolio management, thus creating a level-playing-field between investment firms and fund managers. It should be noted that a fund manager may manage fund assets both under its authorisation as fund manager (UCITS Directive or AIMFD) and under a separate authorisation to perform portfolio management why it makes sense that the capital requirements are the same for both activities.