EU Prudential Framework For Investment Firms

Current position

At the moment, investment firms that are authorised under MiFID are largely regulated under the Capital Requirements Directive ("CRD IV") and Capital Requirements Regulation ("CRR"), which also establish the prudential framework for credit institutions. The Commission is proposing to change this for certain categories of investment firm and introduce a more bespoke set of prudential standards which will fall under the umbrella of an Investment Firms Directive.

Proposals

Under the proposals, there will be three categories of investment firm, with two of the categories being subject to the new regime and one category remaining subject to CRD IV and CRR. The categories are as follows (the reference to class reflects the descriptive terminology used by the European Banking Authority):-