EUROPE: EBA Roadmap on Investment Firms

Thursday June 4 2020

On 2 June 2020, the European Banking Authority (EBA) published a roadmap setting out its intentions concerning the mandates given to it under the Investment Firm Directive (IFD) and the Investment Firm Regulation (IFR).

The Investment Firm Directive (IFD) and Investment Firm Regulation (IFR) were published in the Official Journal on 5 December 2019 and entered into force 20 days later. The IFD and IFR will be applicable 18 months after their entry into force. In the IFR/IFD, a significant number of mandates has been given to the European Banking Authority (EBA), often in consultation with the European Securities and Markets Authority (ESMA), which has direct implications for the implementation of the framework.

In order to ensure transparency about the EBA’s work and expected timelines, this roadmap sets out the intentions of the upcoming EBA workplan. The individual mandates given to the EBA will be subject to public consultations, and the roadmap therefore does not provide an in-depth view of the EBA’s intentions, but it does set out a number of principles, which the EBA will rely on during the development of the framework.

The EBA mandates cover a broad range of areas related to the prudential treatment of investment firms. These include 18 regulatory technical standards (RTS), 3 implementing technical standards (ITS), 6 sets of guidelines, 2 reports, the requirement for the EBA to maintain a list of capital instruments and a database of administrative sanctions, and a number of notifications in various areas. Overall, the mandates are divided into four phases, mostly in accordance with the legal deadlines. All the regulatory products will be accompanied by a cost-benefit analysis supported, when necessary, by dedicated data collections.

During the development, ESMA will also be actively involved in the development of these regulatory products, as most of the EBA mandates are ‘in consultation’ or working in ‘close collaboration’ with it, with only a few mandates to be developed jointly. Similarly, the EBA collaborates actively with all securities and market authorities that are prudential supervisors of investment firms (IFs).

The work on the EBA mandates under the IFR and IFD is, to a large extent, set out in detail in the IFR/IFD. The EBA roadmap has therefore grouped its work in terms of, first, the deadlines set in the IFR/IFD and, second, the area of the mandate. With this in mind, EBA mandates have consequently been grouped into the following thematic areas: (i) thresholds and criteria for IFs to be subject to the CRR; (ii) capital requirements and composition; (iii) reporting and disclosure; (iv) remuneration and governance; (v) supervisory convergence and the supervisory review process; and (vi) mandates concerning environmental, social and governance (ESG) aspects.

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