Consultation Supervisory Regulation usage business projections

80-051-1
DNB
Regulation of De Nederlandsche Bank N.V. of [..] amending the Specific Provisions IFR and IFD Regulation in connection with the use of business projections for the calculation of K-factors in the absence of historical data (Regulation on the use of business projections) De Nederlandsche Bank N.V., [After consultation]; Having regard to Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014, in particular Articles 17(2), 18(2), 19(3), 20(3), and 33(4); DECIDES:
ARTICLE 1
The Specific Provisions IFR and IFD Regulation is amended as follows:
A
After Article 3:3, an article is inserted, reading:
Article 3:4. – Use of business projections in the absence of historical data
An investment firm replaces missing historical data referred to in Articles 17(2), 18(2), 19(3), 20(3), and 33(4) of the IFR with data based on the business projections submitted by the investment firm in accordance with Article 7 of Directive 2014/65/EU.
ARTICLE 2
This regulation enters into force on the day after the date of issue of the Staatscourant in which this regulation is published.
Consultation version – Regulation on the use of business projections

80-051-2
ARTICLE 3
This regulation is cited as: Regulation on the use of business projections.
This regulation will be published in the Staatscourant with the explanatory memorandum.
Amsterdam, [date]
De Nederlandsche Bank N.V, [Director's name]
Director of Supervision

80-051-3
EXPLANATORY MEMORANDUM
The K-factors K-AUM, K-CMH, K-ASA, K-COH, K-DTF, as referred to in Part 3 of the IFR, must be calculated by an investment firm based on the rolling average of the historical data relevant for the respective K-factor. If an investment firm does not have, or only partially has, historical data because it has not yet (long enough) provided the relevant investment service or performed the relevant investment activity, or has done so as a small non-interconnected investment firm but no longer qualifies as such, the IFR requires the investment firm to use historical data as soon as they become available. To the extent that historical data are not yet available, the IFR grants competent authorities the discretion to replace missing historical data with business projections submitted in accordance with Article 7 of the Markets in Financial Instruments Directive 2014 (MiFID II). DNB makes use of this possibility by providing in the new Article 3:4 that an investment firm must replace missing historical data with data based on the business projections. The use of business projections will therefore phase out gradually as historical data become available and will no longer be permitted once the investment firm can calculate the K-factor based on historical data. When an investment firm uses business projections for the calculation of a K-factor based on Article 3:4, Article 7(1) of the IFR requires that these business projections also be used for the aggregated calculation of the respective K-factor requirement on a consolidated basis.