Breach of European Union Law

On December 6, the Breach of Union Law Panel of the European Banking Authority (EBA) published a press release relating to a breach of European Union (EU) law (BUL) investigation against the Dutch central bank, De Nederlandsche Bank (DNB), relating to the latter’s prudential framework for proprietary traders.

Since January 2014, the DNB had designated investment firms licensed to perform the investment activity of proprietary trading (that is, dealing on own account) with the status of “local firms”, according to the DNB’s interpretation of Article 4(1)(4) of the Capital Requirements Regulation (CRR). This therefore exempted such firms from the scope of the EU’s framework of capital requirements under the CRR (including, significantly, the bonus cap rules (restricting bonuses to no more than 2 x the individual’s salary), which apply to banks and investment firms subject to the CRR). Instead, the DNB had historically imposed a national framework of capital requirements that reflected the risk exposure of the relevant firms—and exempted Dutch “local firms” from the bonus cap.
Continue Reading EBA Closes Breach of EU Law Investigation Relating to Dutch Prudential Regime for Proprietary Traders