Discussion on a new prudential regime for investment firms

  • Discussion
  • 2 FEBRUARY 2017
The European Banking Authority (EBA) launched today a consultation in response to the European Commission's call for technical advice on the design of a new prudential regime for investment firms, which is specifically tailored to the needs of investment firms’ different business models and inherent risks. The aim of this work is to develop a single, harmonised set of requirements that are reasonably simple, proportionate, and more relevant to the nature of investment business. The consultation runs until 2 February 2017.
The Commission's call for advice of 13 June 2016 follows up on the first two recommendations included in the EBA's Report on investment firms published on 15 December 2015 and is addressed to all investment firms that are not systemic and bank-like. In particular, the EBA recommends a framework focused on the risks that investment firms pose to customers and to market integrity and liquidity.
Therefore, the EBA is proposing that the ongoing capital requirements shall be calculated based on capital factors (K-factors) that are attributed to one of these two broad types of risks. As a result, firms that pose more risk to customers and markets should get higher capital requirements than those who pose less risk, and firms that pose similar risk to customers and markets but with more own risk should hold more capital than those with less own risk.
The Discussion Paper covers the most important aspects related to the new prudential requirements for investment firms, including three possible alternatives to set minimum liquidity requirements. All three alternatives aim at addressing the liquidity profile of investment firms in a more appropriate way than the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR).

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 2 February 2017.
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will then take place at the EBA premises on 1 December 2016 from 11 to 13 UK time.


Today's response focuses on the second recommendation included in the EBA's Report on investment firms. The response to the first recommendation on the criteria to identify the class of investment firms for which the prudential regime laid down in the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) is applicable was sent to the Commission and published on the EBA website on 20 October 2016.
Based on the evidence received, the EBA plans to finalise its report in response to the Commission’s call for advice by mid-2017. 


The form is now closed.

Received responses to the EBA


Charles Stanley

(571.11 KB - PDF) Last update 3 February 2017

Baillie Gifford

(1.3 MB - PDF) Last update 3 February 2017


(378.63 KB - PDF) Last update 3 February 2017

Discussion Paper on a new prudential regime for Investment Firms (EBA-DP-2016-02)

(854.63 KB - PDF) Last update 4 November 2016