European Banking Authority and European Securities and Markets Authority recommend targeted revisions to the EU investment firms prudential framework

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published joint technical advice to the European Commission on the Investment Firms Regulation and Investment Firms Directive, recommending targeted revisions rather than major changes. The advice reflects feedback from a joint consultation indicating the framework is broadly fit for purpose, while identifying adjustments to improve proportionality and strengthen the level playing field among investment firms and with other financial institutions conducting similar activities. The joint report points to areas where closer or looser alignment with the banking prudential framework would be beneficial and calls for improvements to definitions, calculation methodologies, and the monitoring of thresholds, alongside harmonisation of the scope of calculation to support consistent application. It also covers the adequacy of own funds requirements, implications of the EU Banking Package, prudential consolidation of investment firm groups, remuneration-related aspects, and interactions with other regimes including the Market in Crypto-Assets Regulation, the Undertakings for Collective Investment in Transferable Securities Directive, and the Alternative Investment Fund Managers Directive. The EBA and ESMA will submit the joint report to the European Commission.