CySEC urges investment firms to review proposed EU reclassification rules
CySEC has highlighted an EBA consultation on rules that could require large investment firms to obtain banking licences.
Nicosia, Cyprus. The Cyprus Securities and Exchange Commission (CySEC) has urged Cyprus investment firms to review proposed European rules that could require some of the largest firms to become credit institutions. The call follows a European Banking Authority consultation on draft standards for reclassifying investment firms.
Consultation on draft standards
CySEC issued the relevant circular shortly after the European Banking Authority (EBA) launched its consultation on August 25 covering draft regulatory technical standards (RTS) for the reclassification of investment firms as credit institutions.
The consultation follows changes to the Capital Requirements Directive (CRD) framework and is intended to make assessments of whether an investment firm should obtain a banking licence more proportionate, transparent and risk-based.
Asset threshold and reporting
Under Article 8a of the CRD, investment firms with total assets exceeding €30 billion are generally required to obtain authorisation as credit institutions rather than continue operating solely under a MiFID investment firm authorisation.
The EBA’s proposed rules set out how the €30 billion threshold should be calculated at individual and group level, as well as the information firms must report to regulators to allow the threshold to be monitored.
Investment firms covered by the reporting requirements would only have to submit information when their total assets exceeded €5 billion. They would be required to complete two reporting templates each quarter.
Revised group-level calculation
The draft RTS also establish factors competent authorities should consider when deciding whether to grant a waiver from the requirement to obtain credit institution authorisation.
The EBA said the revised methodology was needed following changes to Article 8a that narrowed the scope of the group-level calculation.
Under the revised approach, the calculation would include only the assets of EU undertakings and their subsidiaries conducting MiFID activities 3 and 6, along with EU branches of third-country entities belonging to the same group.
The EBA said the approach simplified calculation and reporting requirements compared with the previous global approach.
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