CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

CP13/6
CRD IV for Investment Firms
2.
Application to investment firms
Introduction
2.1 This chapter:
• explains the overall outcome of CRD IV for investment sector firms;
• provides a summary of key derogations in CRR and the Directive by type of firm;
• explains the impact of CRD IV for AIFM and UCITS management companies; and
• reminds firms of the implications of the new Common Reporting (COREP) and Financial
Reporting (FINREP) framework.
Overall outcome of CRD IV for investment sector firms
2.2 This CP concerns changes that have been made by CRD IV. There have not been changes in
the initial scope, which is determined by MIFID. However, the definition of ‘investment firms’ in
the CRR has been amended, so that there will be specific prudential requirements for different
types of investment firms that carry out MIFID investment activities.
2.3 At the same time, it is important to note that CRD IV was designed for banks yet it is also
applied to investment firms in the EU. This means that the overall outcome of CRD IV for
investment firms results in placing more requirements on investment firms.
2.4 However, this is mitigated through a combination of provisions – either derogations or national
discretions – that effectively dis-apply certain requirements in the CRR and/or in the Directive
for different types of investment firms. In line with our overall approach to CRD IV transposition,
our proposals have made use of discretions – where allowed – and in accordance with the
FCA’s own objectives.
2.5 The Commission is required to review the appropriateness of the whole prudential regime
for all firms 3 carrying out investment activities under MIFID (including local firms, specialist
commodities firms, other firms exempted from the definition of ‘investment firm’ in article 4.1(2)
(c) of the CRR) by the end of 2015. We therefore wish to minimise changes in the meantime
and focus policy efforts upon this review to secure an appropriate EU-wide solution that caters
for all the different types of investment sector firms.
2.6 The following diagram seeks to illustrate, in a simple way, the overall outcome of CRD IV for
our population of investment sector firms:
3 Other than credit institutions.
14 July 2013
Financial Conduct Authority