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IFR/IFD: Implementation Finalised for Investment Firms

IFR/IFD: Implementation Finalised for Investment Firms

20th January 2020

Last April, the European Parliament approved the texts of the Investment Firm Regulation (IFR) and the Investment Firm Directive (IFD) as had been agreed with the Council of the EU. Then, last month on 5th December 2019, the final texts were published in the Official Journal of the EU. This set out that IFR will enter into force on the twentieth day after publication and applies 18 months after entry into force, this being from 26 June 2021.

We have previously introduced IFR/IFD as the New Capital Requirements Framework for Investment Firms, however in recap, IFR and IFD will essentially introduce a new classification system for investment firms that is based upon their activities, systemic importance, size and interconnectedness.

Dependent upon classification, there will then be a different set of prudential requirements under IFR/IFD applicable to each class of investment firms, with some systemically important and larger investment firms remaining under the existing Basel-founded CRR/CRD regime.

The new harmonised prudential regime will include new rules for fixed and variable remuneration, new disclosure and reporting obligations and requirements for some firms to establish a remuneration committee. Firms should start to act now to ensure they are prepared for the application of the new regime.

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