9.4 Fund managers with MiFID top-up under IFR and IFD

476. As discussed in Section 2.1.7, fund managers authorised under the AIFMD or UCITS are, under conditions, allowed to perform certain MiFID investment services. Although these fund managers with MiFID top-up do not need to apply for a MiFID license, the requirements in the CRD 2013 and CRR were drafted in such a manner that the own funds requirements for investment firms would also apply to the MiFID business of those fund managers with MiFID top-up. The IFR and IFD, however, contain a very specific change to their scope which now seems to exclude these fund managers with MiFID top-up altogether. The scope of CRD 20131 and CRR2 was limited to those types of companies that classified as ‘institution’3 under the definitions of the CRR, and to certain investment firms that were excluded from the definition of investment firm. The CRD 2013 and CRR are therefore, for the application for investment firms, primarily focussed on the activities performed and not on the type of license the company might possibly have. This has changed significantly within IFR and IFD. Both the IFR4 and IFD5 have now limited their scope to “investment firms authorised and supervised under [MiFID II]”. For some reason the European legislators added the requirement that, for an investment firm to be subjected to the IFR and IFD requirements, it would have to have a MiFID II license. With this change, the European legislators appear to have ignored those institutions which also perform MiFID investment services, but which are exempt from obtaining a MiFID II authorisation as set forth in the AIFMD and UCITS. This has therefore created a significant regulatory arbitrage opportunity for asset managers: if they obtain a UCITS or AIFMD license with MiFID top-up, they will not be subject to any requirement of the IFR and IFD, while still being able to perform the same investment services for their clients.6