Specific prudential framework for investment firms


The European Commission is undertaking a fundamental review on the prudential regime for (MiFID) investment firms. This is relevant for all non-bank firms undertaking investment services and activities. The current prudential regime has its origin in 1993, when banks and investment firms became subject to uniform prudential requirements.

Because of this investment firms have been subject to the same EU prudential rules as banks which however do not always do justice to the specific business model of investment firms. Therefore the European Commission has undertaken a fundamental review of the overall prudential framework for investment firms in consultation with the European Banking Authority (EBA).

The proposals are comprised of a Regulation on the prudential requirements of investment firms and a Directive on the prudential supervision of investment firms. It is important to note that although the proposal is meant to ease the burden for investment firms, as the proposals currently stand for some investment firms the capital requirements will increase.