On 17 December 2018, the Dutch Minister of Finance (the Minister) sent a letter to the Dutch Parliament on the decision-making progress with regard to the revised EU prudential framework for investment firms. This framework consists of a proposal for a regulation on prudential requirements for investment firms (the Investment Firm Regulation) and a proposal for a directive on prudential supervision of investment firms (the Investment Firm Directive) (together the Proposals).
In its letter, the Minister addressed the most important elements of, and amendments to, the Proposals for the Netherlands. Amongst other things, the Minister indicated that:
- Categories of investment firms: Systemic investment firms – investment firms that have assets over €30 billion which deal on own account and/or place financial instruments on a firm commitment basis – will remain subject to the prudential framework that also applies to banks. A new sub-category will be introduced to class 1, referred to as “class 1 minus”. Investments firms with assets between €15 and €30 billion which deal on own account or that place financial instruments on a firm commitment basis will fall under this new category. National competent authorities will be able to also include investment firms with assets between €5 and €15 billion in this category.
- Capital requirements and MiFID II: The new ‘K-factor’ methodology for capital requirements calculation will take into account the organisational requirements of the (revised) EU Markets in Financial Instruments Directive (MiFID II).
- Initial capital: In light of the objective of the Capital Market Union to facilitate alternative ways for financing, the initial capital for investment firms operating a trading venue (while not also dealing on own account) will be reduced from €750.000 to €150.000.
- Remuneration: Earlier versions of the Proposals did not include a bonus cap for investment firms. Although the Netherlands argued for stricter remuneration rules in line with the current Dutch model, there was insufficient support from other EU Member States. However, upon request of several EU Member States the Proposals now provide for a Member State option to impose a bonus cap at national level.
View the letter from the Minister (Dutch only), 17 December 2018.