Council agrees investment firms prudential standards change

The EU Council has confirmed its position on the compromise proposals on a package of changes to the CRR/CRD4 , comprising a Regulation and a Directive, to allow prudential and supervisory requirements to be proportionate to the risk and business profile of regulated firms while ensuring financial stability. The new measures would divide investment firms into:

  • “bank like” Class 1 firms, that would be treated in the same way as credit institutions. Firms that deal on own account and/or underwrite financial instruments will be automatically subject to CRR/CRD4 if their consolidated assets exceed €15 bn, and may be required by their supervisor to be subject to these standards if their consolidated assets exceed €5 bn;
  • smaller firms, which would have a new bespoke regime.

The Council has also set out greater detail for the equivalence regime for third country firms and gives powers to the Commission as well as to ESMA.