Regulatory Alerts2020-09-23
Added · Updated
Introduction of IFR/IFD
The document establishes the prudential regulatory framework for investment firms under the Investment Firm Regulation (IFR) and Investment Firm Directive (IFD), categorizing firms into three classes with distinct capital and liquidity requirements. Class 2 firms must meet the highest of minimum own funds, fixed overheads, or K-factors, while Class 3 firms are subject to minimum own funds and fixed overheads only, with specific thresholds such as €75,000 for investment advisors. The regulations mandate consolidated supervision at the holding level, require internal capital adequacy assessment processes (ICARAP), and enforce quarterly reporting via FINREP and IFREP templates. Effective implementation involves a five-year transitional period for capital requirements that more than double and adherence to EBA and ESMA supervisory review guidelines.