On September 24, the European Parliament published a press release announcing that its Committee on Economic and Monetary Affairs (ECON) voted to adopt its draft reports on the European Commission’s proposals for a regulation on the prudential supervision of investment firms (Investment Firms Regulation (IFR)), and a directive on the prudential supervision of investment firms (Investment Firms Directive (IFD)).
Among other things, ECON’s draft reports suggest amendments to the IFR and IFD proposals relating to:
- enabling competent authorities to subject an investment firm below a certain asset threshold to the bank capital requirement rules when its activities are carried out at such a scale that their failure may pose a systemic risk;
- extending the period during which asset thresholds must be exceeded before moving to the higher, more burdensome prudential category;
- increasing the number of investments that are subject to the lowest requirements; and
- tightening the equivalence rules for third-country investment companies. Specifically, third-country companies, that either deal on own account or underwrite investments, will not be able to carry out such activities in the European Union or European Economic Area under an equivalence decision—meaning that a physical presence in the European Union or European Economic Area would be required for such activities once the new rules take effect.
ECON published its draft reports on the IFR and the IFD in April 2018 (for further details, see the April 20, 2018 edition of Corporate & Financial Weekly Digest).
The next step will be for the European Parliament to consider in plenary the motion for a resolution of the European Parliament, as set out in the draft reports.
The press release is available here.