Shearman & Sterling LLP | Financial Regulatory Developments Focus | European Central Bank Issues Opinion on Proposed Prudential Framework for Investment Firms
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  • European Central Bank Issues Opinion on Proposed Prudential Framework for Investment Firms
    08/22/2018
    The European Central Bank has published an Opinion on the legislative proposals adopted by the European Commission in December 2017 for a new framework for the prudential regulation of investment firms. The framework proposed by the European Commission comprises a proposal for a regulation on the prudential requirements of investment firms (including amendments to the Capital Requirements Regulation, the Markets in Financial Instruments Regulation and the European Banking Authority Regulation) along with a proposal for a directive on the prudential supervision of investment firms, which includes amendments to the CRD IV Directive and the revised Markets in Financial Instruments Directive. The ECB was asked by the European Parliament and the Council of the European Union to provide its opinion on the proposed framework in January 2018.

    In the Opinion the ECB states that it generally supports the objectives of the proposed framework, which are to create a prudential framework better suited to the risks and business models of different types of investment firms and to subject systemically important investment firms to the same prudential rules as credit institutions.

    The ECB's Opinion sets out detailed comments on and proposed amendments to the text of the Commission's proposals on the following issues:
    • classification of investment firms as credit institutions;
    • authorization of certain investment firms as credit institutions;
    • statistical implications of changing definitions;
    • macro-prudential perspective on investment firms;
    • provision of services by third-country firms; and
    • alignment of the proposals with the CRD IV Directive, the CRR and MiFID II.

    View the ECB Opinion.

    View details of the proposed prudential framework.

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