Regulatory Alerts2023-05-25
Added · Updated
Commission Delegated Regulation (EU) 2023/1668 on measurement of uncovered risks and additional own funds for investment firms
The European Commission adopted Delegated Regulation (EU) 2023/1668 to supplement Directive (EU) 2019/2034 by establishing regulatory technical standards for measuring risks not sufficiently covered by existing own funds requirements. Competent authorities are required to calculate additional capital for investment firms, excluding small and non-interconnected firms, to cover the risk of disorderly wind-down and other material risks across Risk-to-Client, Risk-to-Market, and Risk-to-Firm categories. The regulation mandates the use of specific indicative qualitative metrics and expert judgment to determine adequate capital levels, ensuring they are at least equal to the fixed overheads requirement for wind-down risks and not lower than the total K-factor requirement for ongoing activity risks.