On Thursday, 22 February, representatives of Member States met in Brussels to hold first comprehensive discussion on the European Commission’s December 2017 proposal for a directive on prudential supervision of investment firms (“Investment Firms Directive” or IFD). The corresponding proposal for a regulation on prudential requirements for investment firms (“Investment Firms Regulation” or IFR) was also partially subject to the discussion but only in respect of provisions linked directly with the relevant IFD articles.

The meeting hosted by the Bulgarian Presidency of the Council was intended to conduct detailed examination of the key provisions of IFD, including the controversial classification mechanisms for distinction between three classes of investment firms and provisions on increased initial capital requirements for investment firms. Other items discussed included the supervisory framework for investment firms, including the powers of national competent authorities and the organisation of supervision for investment firm groups. We understand that the intention of the Presidency is to conduct an overall assessment of the proposal in the early stages and identify the key controversial areas, before focusing on in-depth examination of select provisions. However, we also understand that the last week’s meeting was shorter than originally foreseen and not all agenda items were discussed at sufficient length. Amongst the issues that we understand are due to be re-visited during the upcoming meetings is the choice of the legal basis for the proposal for class 1 (bank-like) investment firms and the scope of Level 2 delegation, as a number of Member States would like to address the maximum of technical calibration parameters of the new regime in the final legislative text and not in the implementing measures. Subsequent meeting has been scheduled for 27 March.

In the European Parliament, legislative review of the IFD / IFR package is in the initial stages. The rapporteur, Markus Ferber (DE, EPP) is yet to schedule first exchange of views for members of the Economic and Monetary Affairs Committee (ECON).

For more detail on the IFD / IFR package please see Norton Rose Fulbright’s Government Relations and Public Policy practice video: