FIA responded to the EBA-ESMA discussion paper on the European Commission call for advice on the investment firms' prudential framework.
On investment firms, FIA emphasized the importance for EU policy makers to ensure that EU Investment Firms Regulation/Directive (IFR/D) is fit for purpose and that it includes requirements that are proportionate and risk-based, reflective of the type of business activity and size of EU IFR firms. A disproportionate and unduly onerous regime may ultimately lead to certain EU IFR firms relocating to jurisdictions outside of the EU.
On commodity firms, FIA agrees with previous assessments that the application of prudential rules to commodity firms would be inappropriate, unduly complex, disproportionate and would establish a barrier to market entry for many small-size market participants. Any proposal to introduce prudential requirements for firms in commodity markets should be based on clear evidence of the specific systemic risk or significant market failures that such requirements would aim to solve or mitigate.
Read the letter in full.
