The European Banking Authority (EBA) has published a roadmap for implementation of its mandates arising from the Investment Firms Directive and Regulation (IFD/IFR). The IFD/IFR entered into force on 26 December 2019 and will apply from 26 June 2021.  In contrast to the recent announcements made on deferral by one year of the amended Capital Requirements Directive and Regulation (CRD V/CRR2) there has – so far – been no indication from EU authorities that the IFD/IFR package will be similarly deferred.  Indeed, the EBA’s roadmap sets out implementation timeframes for the various delegated mandates under the IFD/IFR in line with the original intended timetable, with the delivery of the first phase of delegated requirements by December 2020.

The EBA mandates cover a broad range of areas related to the prudential treatment of investment firms. These include 18 regulatory technical standards (RTS), three implementing technical standards (ITS), six sets of guidelines, two 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.

The EBA roadmap is high level and starts with a summary of the guiding principles to be applied when developing these mandates.  This includes the proportionality principle (particularly with respect to reporting), level playing field considerations between investment firms subject to the IFD/IFR and those firms covered by the CRDV/CRR 2 regime, and the need for careful management of operational risk.

The EBA also groups the various mandates thematically as follows and includes very brief discussions of each area:

  • thresholds and criteria for IFs to be subject to the CRR;
  • capital requirements and composition;
  • reporting and disclosure;
  • remuneration and governance;
  • supervisory convergence and the supervisory review process; and
  • mandates concerning environmental, social and governance (ESG) aspects.

The IFD/IFR will not apply in the UK, provided that there is no extension of the Brexit transitional period to overlap with the June 2021 implementation date.  The FCA has indicated that it intends to publish a discussion paper this summer on proposed comparable reforms to the UK prudential regime for investment firms.  It is possible that the EBA roadmap could be taken into account in developing the UK regime, to the extent relevant and appropriate.

Clive Cunningham
Clive Cunningham
Partner, London
+44 20 7466 2278
Mark Staley
Mark Staley
Senior Associate, London
+44 20 7466 7621
Katherine Dillon
Katherine Dillon
Of Counsel, London
+44 207 466 2522