Prudential regulation of investment firms in the European Union (ZIFO nr. 32) 2021/7.2.2.0:7.2.2.0 Introductie

Prudential regulation of investment firms in the European Union (ZIFO nr. 32) 2021/7.2.2.0

7.2.2.0 Introductie

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260. After determining which initial capital requirements are applicable, an investment firm has to determine the own funds requirement to which it will be subject. All credit institutions which fall within the scope of the CRR are subject to the own funds requirements of Article 92 of the CRR in which the exposures to all different risks, for instance credit risk, counterparty credit risk, market risk and operational risk, are addressed.1 Investment firms, however, can be subject to three distinct capital requirement regimes. This paragraph will discuss the three distinct own funds requirements and will determine which investment firms, or ‘firms’ excluded from the definition of investment firm in the CRR, are subject to the various own funds requirements. Table 7 provides an overview of the various initial capital requirements and own funds requirements applicable to different categories of investment firms as determined in the CRD 2013 based on the activities performed by the investment firm.

Table 7: Overview of applicable initial capital requirement and own funds requirement.2

Initial capital and own funds requirements

Initial capital

Own funds

Local firm, CRR.4.1.4

€ 50.000 (CRD.30)

Not applicable

Firms falling under CRR.4.1.2.c that only provide reception/transmission and/or investment advice

€ 50.000 (CRD.31.1)

Not applicable

Firms falling under CRR.4.1.2.c that only provide reception/transmission and/or investment advice and are registered under the Insurance Mediation Directive (IMD)

€ 25.000 (CRD.31.2)

Not applicable

Firms falling under CRR.4.1.2.c that perform, at least, execution of orders and/or portfolio management

€ 50.000 (CRD.31.1)

CRR.95.2

Investment firms not authorised to deal on own account and/or underwriting/placing with firm commitment that do not hold client funds/securities

€ 50.000 (CRD.29.3)

CRR.95.1

Investment firms not authorised to deal on own account and/or underwriting/placing with firm commitment but hold client funds/securities

€ 125.000 (CRD.29.1)

CRR.95.1

Investment firms that operate an MTF or OTF

€ 730.000 (CRD.28.2)

CRR.95.1

Investment firms that only deal on own account to execute client orders

€ 730.000 (CRD.28.2)

CRR.96.1.a

Investment firms that do not hold client funds/securities, only deal on own account, and have no external clients

€ 730.000 (CRD.28.2)

CRR.96.1.b

Commodity derivatives investment firms that are not exempt under the MiFID

€50 000 to 730 000 (CRD 28 or 29)

CRR 493 & 498

Investment firms that do not fall under the other categories

€ 730.000 (CRD.28.2)

CRR.92

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