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

CP13/6
CRD IV for Investment Firms
7. It is important to note that the major economic benefits arising from implementation of CRD
IV come from increased financial stability and reduced macro-prudential risk. Such benefits
generally arise from regulation of systemically important institutions. Most FCA regulated
firms will not fall under the systemically important category. When considering the overall
cost-benefit impact of CRD IV, therefore, the analysis contained in this document should be
considered alongside the CBA produced by the PRA.
8. The implementation of CRD IV will have a direct impact on the regulatory costs experienced
by investment firms. The large majority of such costs arise as a result of new Regulation (in
particular COREP/FINREP) and the transposition of the Directive. Such policy changes are not
subject to FCA discretion but we need to consider the cost arising from rule changes that result
from Directive transposition. In addition, although we would not usually assess the impact of a
Regulation as part of a CBA, this CBA presents estimates of costs arising from the Regulation as
they represent the bulk of the costs to be incurred by investment firms. It is important that any
incremental impact arising from UK optional policy changes should be placed in such context.
9. We have not presented detailed estimates for the costs associated with individual articles since:
• in many cases it is not possible to separate the incremental impact of each element of the
overall package; and
• it is difficult to differentiate the impacts from provisions in Regulations from those of
changed requirements arising from transposition of Directives.
10. Incremental costs and benefits arising from “optional” exercise of national discretions and
derogations are likely to be small relative to those due to the Regulation and transposition
of the Directive. As described in Chapter 1, where discretions and derogations have been
available, the general approach has been to ensure costs for incumbent investment firms are
minimised. Where appropriate and feasible, the estimates of impacts have been presented in
the relevant CP chapter.
11. This CBA estimates the overall impact of the Directive and the Regulation against a baseline in
which the Directive is not transposed and the Regulation is not introduced.
The market affected
12. The implementation of CRD IV will impact FCA-regulated markets including (activity types):
• venture capital/private equity;
• investment management;
• brokerage firms;
• inter-broker dealer;
• other non-capital-intensive business (custody, corporate finance, advice).
13. CRD IV implementation will alter the rules and guidance that apply to around 2,400 investment
firms regulated by the FCA. These investment firms are diverse in nature, as shown in Table 14,
below.
62 July 2013
Financial Conduct Authority