A primer in the European Commission’s proposed new prudential rules for investment firms

Ian Kelly

Journal of Financial Compliance, 2019, vol. 2, issue 4, 380-387

Abstract: This paper considers the European Banking Authority (EBA) and European Commission proposals for a new prudential rulebook for investment firms. It is relevant to staff in finance, risk and compliance functions at asset management, securities trading and broker-dealer firms and their advisers. The paper opens by considering the EBA’s objectives in proposing a new prudential regime for investment firms. It then goes on to consider the European Commission’s proposal for new legislation that would give effect to these new requirements. It examines the scope of the new rules and the new categorisation of investment firms. The following requirements of the new rules are considered in detail: capital requirements, internal risk management processes, reporting to regulators, disclosure to the market and the minimum liquid assets buffer. The reader will glean an elementary understanding of the new rule requirements on each of these areas. For readers in the UK, there is an assessment of how changes in the UK’s future relationship with the European Union may have an impact on the introduction of this proposed legislation. Finally, the paper considers the most likely practical impact of the new rules on different types of investment firms.

Keywords: prudential; asset manager; broker dealer; capital requirements (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jfc000:y:2019:v:2:i:4:p:380-387

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