The European Parliament has published a press release announcing that its Committee on Economic and Monetary Affairs (ECON) has voted to adopt its draft reports on the EU Commission’s proposal for a Regulation on the prudential framework for investment firms (Investment Firms Regulation (IFR)) and a Directive on the prudential supervision of investment firms, which amends the CRD IV Directive and the MiFID II Directive (Investment Firms Directive (IFD)).

ECON suggests amendments to the Commission proposals on the following aspects highlighted in the press release:

  • enabling competent authorities to subject an investment firm below the more stringent CRD IV requirements when its activities are carried out at such a scale that the failure may pose a systemic risk;
  • extending the period during which thresholds must be exceeded before moving to the higher, more burdensome category;
  • increasing the number of investments that are subject to the lowest requirements;
  • tightening the equivalence rules for the third country investment companies. On top of fulfilling additional prudential organisational, internal control and business conduct requirements, these firms would be able to provide services of systemic importance to the EU only after a detailed assessment by the Commission paired with a regulatory monitoring by ESMA. They would also need to set up a proper subsidiary in the EU if they want to provide typical bank-like services;
  • requiring same or similar type of jobs to be equally remunerated regardless of gender, and adding a new disclosure requirement on investment policy; and
  • MEPs also agreed to take special account of exposures to environmental, social and governance (ESG) risks when setting out prudential requirements.

The European Parliament will now consider in plenary the motion for a resolution as set out in the draft reports. Last month, the European Central Bank published an opinion commenting on the Commission’s proposals. See our Investment Management Update of 12 September 2018 for more information on the issues flagged in the opinion.