Final draft adopted by the EBA and submitted to the European Commission
These draft Regulatory Technical Standards (RTS) on prudential requirements include a draft RTS on the reclassification of certain investment firms to credit institutions, five draft RTS on capital requirements for investment firms at solo level, and one draft RTS on the scope and methods of prudential consolidation for investment firms at group level.
The European Banking Authority (EBA) published today phase 1 of its 3.2 reporting framework. The technical package supports the implementation of the reporting framework by providing standard specifications and includes the validation rules, the Data Point Model (DPM) and the XBRL taxonomies for version 3.2. The phase 2 and 3 of the same framework will be published in Q2 and Q3 of this year. The EBA also published today a revised list of validation rules for the reporting frameworks currently in use.
Phase 1 of the technical package covers the new reporting requirements that include the amendments to the following supervisory reporting frameworks: common reporting (COREP) on own funds, additional liquidity monitoring metrics (ALMM), net stable funding ratio (NSFR), asset encumbrance, global systemically important institutions (G-SII) reporting and Investment Firms). The new reporting requirements are expected apply from December 2022. The technical package for Supervisory Benchmarking and Remunerations will be published respectively in phase 2 and 3.
The technical package is available on the reporting framework release 3.2 page. The DPM Query Tool has also been updated to reflect the current release.
The EBA also published today an updated package of validation rules that reflects the changes to the reporting framework currently in use. This package highlights the validation rules that have been deactivated or the updated severity status.
The European Banking Authority (EBA) published today an Opinion on the amendments proposed by the European Commission as regards the EBA final draft Regulatory Technical Standards (RTS) specifying the methodology for calculating the fixed overheads requirements for investment firms in the context of the implementation of the Investment Firms Regulation (IFR). Despite having identified a substantive change in the Commission’s version of the RTS, the EBA considers the amendments continue to strike a good balance between the flexibility and risk sensitivity required for the calculation of the fixed overheads requirement and the need for a harmonised regulatory framework.
On 16 December 2020 the EBA submitted its final draft RTS specifying the methodology for calculating the fixed overheads requirements. On 29 November 2021, the European Commission sent a letter to the EBA about its intention to endorse the RTS with amendments and submitted a modified version of the RTS.
The Commission’s version of the RTS, compared to the final draft RTS submitted by the EBA in December 2020, includes a substantive change, which represents an additional point for deduction from total expenses on the list detailed in the draft RTS, and is specifically aimed at market makers. Indeed, the Commission’s proposal enables the investment firms acting as market makers to benefit from the principle of deduction of trading fees also when these are not passed directly to the clients. The EBA agrees with the proposed amendment, while also proposing an editorial change meant to preserve the consistency with the reading of the IFR.
Finally, the EBA agrees with the rest of the Commission’s amendments, which are considered as non-substantive, and, therefore, hopes that a swift adoption can be ensured.
This Opinion is based on Article 10(1) of Regulation (EU) No 1093/2010, which requires the Authority to submit its response in the form of an opinion to amendments proposed by the European Commission.
The European Banking Authority (EBA) launched today a second consultation on its draft regulatory technical standards (RTS) on the calculation of the threshold for investment firms. With this consultation, the EBA is seeking to address the level playing field concerns raised by the industry in relation to geographical constraints of some undertakings a well as to ensure a more proportionate and consistent methodology for the calculation of the thresholds. These RTS are part of the EBA’s roadmap for delivering on mandates related to the implementation of a new prudential regime for investment firms. The consultation runs until 17 July 2021.
The identification of large investment firms, which will be subject to the application of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD), depends on the size of the investment firms and of the groups they belong to. Based on the feedback received in the first consultation, which the EBA launched on 4 June 2020, concerns were raised on the level playing field between undertakings, which are part of groups domiciled in the EU and undertakings operating in the EU, which are part of groups domiciled outside of the EU. The amended proposals included in this consultation aim at ensuring that the framework is neutral with regards to geographical limitations.
These draft RTS set out a proportionate and technically consistent methodology for the calculation of the level of total assets to be compared to the EUR 30 bn threshold and further clarify the notion of relevant entity. Finally, they clarify elements related to the application of accounting standards, the treatment of branches, and the treatment of intragroup exposures.
Comments to these consultations 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 17 July 2021. All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 23 June 2021 from 10:00 to 12:00 CET. The EBA invites interested stakeholders to register using this link.
The dial-in details will be communicated in due course.
The EBA has developed these draft RTS according to Article 8a(6)(b) of the CRD which mandates the Authority to further specify, develop and determine a prudential framework for investment firms to ensure a level playing field among investment firms across the EU and supervisory convergence.
To assess the impact of the provisions proposed in this regulatory product, the EBA, together with the relevant competent authorities, will carry out a data collection exercise in parallel with the public consultation.
The European Banking Authority (EBA) outlined today its roadmap for the implementation of the new regulatory framework for investment firms and launched a public consultation on its first set of regulatory deliverables on prudential, reporting, disclosures and remuneration requirements. The roadmap outlines the EBA’s work plan for each of the mandates laid down in the IFR/IFD and clarifies the sequencing and rationale behind their prioritisation. Through these mandates, the EBA will contribute to the implementation of a regulatory framework that is calibrated to the size and nature of investment firms. This will strengthen supervision, which will rely more directly on the risks faced by the clients and the investment firms themselves. The consultations launched today run until 4 September 2020.
The first consultation paper on prudential requirements includes three draft Regulatory Technical Standards (RTS) on the reclassification of certain investment firms to credit institutions, five draft RTS on capital requirements for investment firms at solo level, and one draft RTS on the scope and methods of prudential consolidation for investment firms at group level.
The second consultation paper on reporting requirements and disclosures, includes draft Implementing Technical Standards (ITS) on the levels of capital, concentration risk, liquidity, the level of activities as well as disclosure of own funds; and draft RTS specifying the information that investment firms have to provide in order to enable the monitoring of the thresholds that determine whether an investment firm has to apply for authorisation as credit institution.
The third and fourth consultation papers on remuneration requirements include one draft RTS on the criteria to identify all categories of staff whose professional activities have a material impact on the firm’s risk profile or assets it manages (‘risk takers’); and one draft RTS specifying the classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration of risk takers.
When developing these RTS and ITS, the EBA has considered the proportionality principle so as to take into account the specificities of the different classes of investment firms.
Finally, to assess the impact of the provisions proposed in the regulatory deliverables, the EBA also launched a data collection exercise on a voluntary basis.
Comments to these consultations 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 4 September 2020.
All contributions received will be published following the closure of the consultation, unless specifically requested otherwise.
The EBA will hold a public hearing, which will take place via conference call on the following dates:
The dial in details will be communicated in due course.
The EBA has developed these draft RTS and ITS according to Article 8a(6)(a), Article 8a(6)(b) of the CRD and in Article 7(5), Article 13(4), Article 15(5)(a), Article 15(5)(b), Article 15(5)(c), Article 23(3), Article 49, Article 54, Article 55(5) of the Regulation (EU) 2019/2033 and Article 5(6), Article 30(4), Article 32(1)(j) of the Directive (EU) 2019/2034, which mandate the Authority to further specify, develop, determine a prudential framework for investment firms to ensure a level playing field among investment firms across the EU and supervisory convergence.
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 represents a new prudential framework for investment firms authorised under MIFID.
The mandates allocated to the EBA includes 18 draft RTS, 3 draft ITS, 6 sets of guidelines, 2 reports, the requirement for the EBA to maintain a list of capital instruments and a database of administrative sanctions, and a number of notifications in various areas.
The European Banking Authority (EBA) today published its draft Regulatory Technical Standards (RTS) on the scope and methods of consolidation of an investment firm group under the Investment Firms Regulation (IFR). These RTS detail the scope and methods for the prudential consolidation, as well as the methodology for the consolidation of capital requirements and the rules applicable for minority interest and additional Tier 1 and Tier 2 instruments issued by subsidiaries in the context of prudential consolidation. The aim of these RTS is to ensure prudential consolidation is carried out in a harmonised and consistent way. These RTS are the last regulatory products of the EBA Roadmap on investment firms, released in June 2020.
The IFR requires investment firm groups to identify a parent undertaking and those of its subsidiaries that are subject to the IFR to carry out the consolidation of the group. Particular attention is given to the setting up of a proper organisational structure and appropriate internal control mechanisms to ensure that the data required for consolidation are duly processed and reported.
These RTS address in detail the main elements that come into play when carrying out prudential consolidation for investment firm groups. In particular, the RTS detail four key aspects:
In developing these draft RTS the EBA has leveraged, where possible, the existing work on the prudential consolidation of credit institutions, although differences exist based on the legal texts (i.e. IFR vs CRR). Therefore, the scope of consolidation for investment firm groups is more limited than that of banking groups and calls for a closer alignment with Article 22 of the Accounting Directive in terms of entities in the scope of consolidation, as well as on the methods for consolidation available to investment firm groups.
These RTS are the final regulatory product of the EBA Roadmap on Investment Firms. However, the EBA is continuing its work on the implementation of the IFR/IFD package, including in the context of the IFR/IFD review, which has been requested by the European Commission.
The EBA has developed these RTS in accordance with Article 7(5) Regulation (EU) 2019/2033 (IFR) that mandates the EBA to develop draft RTS to specify the details of the scope and methods for prudential consolidation of an investment firm group, in particular for the purpose of calculating the fixed overheads requirement, the permanent minimum capital requirement, the K-factor requirement on the basis of the consolidated situation of the investment firm group, and the method and necessary details for minority interest and additional Tier 1 and Tier 2 instruments issued by subsidiaries in the context of prudential consolidation.
The EBA sets out guidance on the application of thresholds to determine which investment firms are to be re-classified as credit institutions.
The methodological framework is provided through two draft regulatory technical standards (RTS) The first RTS provide details regarding the calculation of the EUR 30 bn threshold for the classification purposes; the second RTS provide the necessary information to supervisors to enable the monitoring of the thresholds.
The European Banking Authority (EBA) published today a package of two final draft regulatory technical standards (RTS) regarding the reclassification of investment firms as credit institutions. These final draft RTS, which are part of the EBA’s roadmap for the implementation of a new prudential regime for investment firms, will provide clarity in the calculation of the EUR 30 bn threshold for investment firms looking to understand whether they should be applying for authorisation as a credit institution, as well as assist competent authorities in the monitoring of firms’ position triggering a reclassification.
The identification of large investment firms, which will be reclassified as credit institutions and, therefore, subject to the application of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD), depends on the size of the investment firms and of the groups they belong to. With today’s publication, the EBA is providing a methodological framework for determining the need for reclassification of an investment firm as a credit institution, which is neutral to geographical limitations, thus ensuring a proportionate and consistent calculation of the level of total assets to be compared to the EUR 30 bn threshold.
The final draft RTS on the calculation methodology also cover other technical aspects, including the accounting standards for the determination of asset values, the methodology for implementing the solo and the group test, as well as the procedure to calculate the total assets on a monthly basis and the treatment of assets belonging to European branches of third-country groups.
Finally, under the Investment Firms Regulation (IFR), investment firms are required to provide information to enable the monitoring of the threshold for reclassification. The second set of draft RTS submitted today to the Commission specify harmonised reporting requirements to provide competent authorities with the tools for carrying out the ongoing monitoring of the EUR 30 bn threshold. These harmonised requirements are an integral part of the investment firms’ reporting framework.
The EBA has developed these draft RTS according to Article 8a(6)(b) of the CRD and Article 55(5) of the IFR which mandates the Authority to further specify, develop and determine a prudential framework for investment firms to ensure a level playing field among investment firms across the EU and supervisory convergence.
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.
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.
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.
The European Banking Authority (EBA) launched today a second consultation on its draft regulatory technical standards (RTS) on the calculation of the threshold for investment firms. With this consultation, the EBA is seeking to address the level playing field concerns raised by the industry in relation to geographical constraints of some undertakings a well as to ensure a more proportionate and consistent methodology for the calculation of the thresholds. These RTS are part of the EBA’s roadmap for delivering on mandates related to the implementation of a new prudential regime for investment firms. The consultation runs until 17 July 2021.
The identification of large investment firms, which will be subject to the application of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD), depends on the size of the investment firms and of the groups they belong to. Based on the feedback received in the first consultation, which the EBA launched on 4 June 2020, concerns were raised on the level playing field between undertakings, which are part of groups domiciled in the EU and undertakings operating in the EU, which are part of groups domiciled outside of the EU. The amended proposals included in this consultation aim at ensuring that the framework is neutral with regards to geographical limitations.
These draft RTS set out a proportionate and technically consistent methodology for the calculation of the level of total assets to be compared to the EUR 30 bn threshold and further clarify the notion of relevant entity. Finally, they clarify elements related to the application of accounting standards, the treatment of branches, and the treatment of intragroup exposures.
Comments to these consultations 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 17 July 2021. All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 23 June 2021 from 10:00 to 12:00 CET. The EBA invites interested stakeholders to register using this link.
The dial-in details will be communicated in due course.
The EBA has developed these draft RTS according to Article 8a(6)(b) of the CRD which mandates the Authority to further specify, develop and determine a prudential framework for investment firms to ensure a level playing field among investment firms across the EU and supervisory convergence.
To assess the impact of the provisions proposed in this regulatory product, the EBA, together with the relevant competent authorities, will carry out a data collection exercise in parallel with the public consultation.
The European Banking Authority (EBA) outlined today its roadmap for the implementation of the new regulatory framework for investment firms and launched a public consultation on its first set of regulatory deliverables on prudential, reporting, disclosures and remuneration requirements. The roadmap outlines the EBA’s work plan for each of the mandates laid down in the IFR/IFD and clarifies the sequencing and rationale behind their prioritisation. Through these mandates, the EBA will contribute to the implementation of a regulatory framework that is calibrated to the size and nature of investment firms. This will strengthen supervision, which will rely more directly on the risks faced by the clients and the investment firms themselves. The consultations launched today run until 4 September 2020.
The first consultation paper on prudential requirements includes three draft Regulatory Technical Standards (RTS) on the reclassification of certain investment firms to credit institutions, five draft RTS on capital requirements for investment firms at solo level, and one draft RTS on the scope and methods of prudential consolidation for investment firms at group level.
The second consultation paper on reporting requirements and disclosures, includes draft Implementing Technical Standards (ITS) on the levels of capital, concentration risk, liquidity, the level of activities as well as disclosure of own funds; and draft RTS specifying the information that investment firms have to provide in order to enable the monitoring of the thresholds that determine whether an investment firm has to apply for authorisation as credit institution.
The third and fourth consultation papers on remuneration requirements include one draft RTS on the criteria to identify all categories of staff whose professional activities have a material impact on the firm’s risk profile or assets it manages (‘risk takers’); and one draft RTS specifying the classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration of risk takers.
When developing these RTS and ITS, the EBA has considered the proportionality principle so as to take into account the specificities of the different classes of investment firms.
Finally, to assess the impact of the provisions proposed in the regulatory deliverables, the EBA also launched a data collection exercise on a voluntary basis.
Comments to these consultations 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 4 September 2020.
All contributions received will be published following the closure of the consultation, unless specifically requested otherwise.
The EBA will hold a public hearing, which will take place via conference call on the following dates:
The dial in details will be communicated in due course.
The EBA has developed these draft RTS and ITS according to Article 8a(6)(a), Article 8a(6)(b) of the CRD and in Article 7(5), Article 13(4), Article 15(5)(a), Article 15(5)(b), Article 15(5)(c), Article 23(3), Article 49, Article 54, Article 55(5) of the Regulation (EU) 2019/2033 and Article 5(6), Article 30(4), Article 32(1)(j) of the Directive (EU) 2019/2034, which mandate the Authority to further specify, develop, determine a prudential framework for investment firms to ensure a level playing field among investment firms across the EU and supervisory convergence.
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 represents a new prudential framework for investment firms authorised under MIFID.
The mandates allocated to the EBA includes 18 draft RTS, 3 draft ITS, 6 sets of guidelines, 2 reports, the requirement for the EBA to maintain a list of capital instruments and a database of administrative sanctions, and a number of notifications in various areas.