FIA EPTA response to the European Commission’s Review of the appropriate prudential treatment for investment firms

19 April 2017

FIA European Principal Traders Association (FIA EPTA) submitted its response to the European Commission’s inception impact assessment on the Review of the appropriate prudential treatment for investment firms.

In its response, submitted on April 19 2017, FIA EPTA noted its members support the initiative and welcome a prudential regime tailored to the specific structures and market activities of investment firms.

The FIA EPTA response highlights the following points:

Level playing field:

We agree that the new regime should avoid unnecessary burdens and regulatory disparities. However, we do not agree with the assertion that investment firms and credit institutions compete in providing investment services.

Orderly wind-down:

FIA EPTA members strongly believe the overarching objective of any prudential regime should be to ensure that investment firms have sufficient liquid funds to facilitate an orderly wind-down.

Categorisation of investment firms:

We broadly support the EBA’s recommendation to propose a three-fold classification of investment firms: Many FIA EPTA members will be categorised as class 3 as their business is non-complex and relatively small.

EBA Data Collection Exercise:

We are concerned that the voluntary nature of submissions in certain key jurisdictions and the lack of consideration for the volatility in daily trading rates will lead to a distorted picture of the market.