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