EBA publish final draft technical standards on the prudential treatment of investment firms

  • Press Release
  • 16 December 2020

The European Banking Authority (EBA) published today a package of seven final draft Regulatory Technical Standards (RTS) on the prudential treatment of investment firms. These final draft RTS, which are part of the phase 1 mandates of the EBA roadmap on investment firms, will ensure a proportionate implementation of the new prudential framework for investment firms taking into account the different activities, sizes and complexity of investments firms.

With the entry into force of the Investment Firms Regulation (IFR) and Directive (IFD), most of the investment firms authorised under the Markets in Financial Instruments Directive (MiFID) will be subject to a new prudential regime, different and independent from the Capital Requirements Regulation (CRR) applicable today. With today’s submission, the EBA is preparing for a smooth introduction of the IFR/IFD, which is due to be applicable by mid-2021.

The technical standards included in this package set out the main aspects of the new prudential regime in relation to the calculation of the regulatory capital requirements. They provide further technical clarifications on the methodologies to be applied by all types of investment firms, including investment advisors, portfolio managers, execution brokers, firms trading on own account and commodity dealers.

In addition, certain specific investment firms may be required to apply the banking rules also after the entry into force of the IFR. Therefore, one of the mandates delivered today includes the criteria for the identification of these investment firms on the basis of their systemic importance.

Finally, under the new framework, large investment firms trading on their own account or underwriting on a firm committed basis may be required to apply for a credit institution authorisation. To support this requirement, the package includes a specification of the information required for such authorisation, consisting of simplified and reduced requirements as to what is expected from a bank holding deposits or providing loans.

Legal basis and background

The EBA has developed these draft RTS and ITS according to Article 8a(6)(a) of the Capital Requirements Directive (CRD) and Article 13(4), Article 15(5)(a), Article 15(5)(b), Article 15(5)(c), Article 23(3), of  the IFR - (EU) 2019/2033 -  and Article 5(6), of the IFD - (EU) 2019/2034, which mandate the Authority to further specify, develop, determine a prudential framework for investment firms to ensure supervisory convergence and a level playing field among investment firms across the EU. The technical standards will be applicable from 26 June 2021.

The Investment Firms Prudential Package consists of the Directive (EU) 2019/2034 and the Regulation (EU) 2019/2033, which were published in the Official Journal on 5 December 2019 and establish a new prudential framework for investment firms authorised under MIFID.


Final draft RTS on prudential requirements for Investment Firms

(1.1 MB - PDF) Last update 12 April 2022

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