The European Commission and Council have developed a new prudential regime which is more tailored to the nature of risks that investment firms face. Investment firms (IFs) that are authorized under MIFID II must comply with the new prudential requirements defined in the Investments Firm Regulation EU 2019/2033 (IFR) and the Investment Firms Directive EU 2019/2034 (IFD).
Investment firms and brokerage firms had to prepare for this new prudential regime in order to become compliant since it became applicable in June 2021. The IFD and the IFR change the way liquidity and capital requirements are calculated and the new regulation also has significant consequences on reporting and disclosure obligations, internal governance and the remuneration framework in investment firms.
The extent to which an IF is affected depends on which class the IF is in. Several investment firms and brokerage firms in Belgium and Luxembourg asked b.fine to guide them through the preparation process.