New prudential framework for investment firms published in the EU’s Official Journal

News

New prudential framework for investment firms published in the EU’s Official Journal

10 December 2019

Regulatory News Alert

Context and objectives

On 9 January 2019, we reported on the endorsement by EU ambassadors of a legislative package introducing a new regulatory framework for investment firms, requiring among other elements minimum capital provision for investment firms aligned on the current banking model.

The package was finally published in the Official Journal of the EU on 5 December 2019 (following their adoption by the Council of the EU in October). It is composed of:

  • Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU — investment firms’ directive (IFD) 
  • Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 — investment firms’ regulation (IFR).
PDF - 168kb

Timeline

The two texts will enter into force 20 days after their publication in the Official Journal, i.e. on 25 December 2019. While the IFD requires national transposition of its provisions, IFR is binding and directly applicable in all Member States.

Most of the provisions of both IFD and IFR shall apply from 27 June 2021. For this purpose, Member States of the EU shall adopt, publish, and begin applying the measures necessary to comply with IFD by 26 June 2021.

However, certain provisions will already apply from an earlier date:

  • As from 25 December 2019, the scope of application of the specific reporting requirements for market risk (i.e. the reporting of trading book positions and all non-trading book positions subject to foreign exchange or commodity risks) will be reduced to credit institutions only
  • As from 26 March 2020, regulated markets will be required to adopt tick-size regimes in shares, depositary receipts, exchange‐traded funds, certificates, and other similar financial instruments while systematic internalizers will be required to use quotes, price improvements on those quotes and execution prices in compliance with those tick-sizes.

 

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Contacts

Subject matter specialists

Jean-Philippe Peters
Partner – Risk Advisory and Regulatory Watch Co-Leader
Tel: +352 45145 2119
jppeters@deloitte.lu

Xavier Zaegel
Partner – Capital Markets Services
Tel: +352 45145 2748
xzaegel@deloitte.lu

Arnaud Duchesne
Director – Risk Advisory
Tel: +352 45145 4852
aduchesne@deloitte.lu

 


Regulatory Watch Kaleidoscope service

Simon Ramos
Partner – IM Advisory & Consulting
Leader and Regulatory Watch Co-Leader
Tel : +352 45145 2702
siramos@deloitte.lu

Benoit Sauvage
Director – Regulatory Watch Coordinator
Tel : +352 45145 4220
bsauvage@deloitte.lu

Marijana Vuksic
Manager – Strategy, Regulatory & Corporate Finance
Tel : +352 45145 2311
mvuksic@deloitte.lu

 

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