The EBA and ESMA have issued a discussion paper assessing the prudential framework for investment firms, three years after the implementation of the IFR/IFD regime. The paper identifies strengths and weaknesses in the current framework and proposes improvements. Key areas of focus include categorisation of investment firms, conditions for small and non-interconnected firms, fixed overhead requirements, review and inclusion of new K-factors, implications of the CRR3/CRD6 package, liquidity requirements, prudential consolidation, interactions with other regulations, remuneration, governance, and reporting requirements. The objective is to ensure the framework remains effective, risk-sensitive, and adaptable to the evolving financial landscape. Feedback from stakeholders will shape the final recommendations to the European Commission.
