On 29 January, FIA EPTA submitted a response on behalf of its 27 members to the European Commission’s call for evidence on the EU regulatory framework for financial services. The call for evidence concerns rules affecting capital allocation and growth, regulatory burdens, inconsistencies and gaps between legislation and unintended consequences of legislation.
The FIA EPTA response cites member concerns regarding:
- Current proposals for capital requirements under CRR. FIA EPTA members currently face uncertainty as regards prudential requirements for investment firms under CRR beyond 2017. The application of Part 3 CRR own fund requirements to investment firms regardless of their activity, size, market or systemic risk profile casts doubt on the economic viability of market making in the future, which could reduce the diversity of participants in the markets ecosystem as well as liquidity.
- Current proposals for remuneration under CRD4. FIA EPTA supports tangible incentives for risk-awareness and risk alignment and understands the objectives pursued by CRD4 remuneration rules. However, the impact of the application of the remuneration principles in Articles 92-94 CRD4 to investment firms engaged solely in proprietary trading would have a serious, detrimental impact on these firms and adversely impact their risk and prudential management - which rests on a flexible cost base.