In December 2015 the EBA in its Report on investment firms issued two fundamental recommendations. First, it is necessary to make a distinction between those investment firms for which the CRD and CRR provide appropriate prudential requirements and the investment firms for which those requirements are not appropriate. Second, a specific prudential regime should be designed for those investment firms for which the CRD and CRR would not be applicable.
Following to those previous recommendations, the EBA in September 2017 issued an Opinion where it presents the findings and lists a series of new recommendations to provide a more proportionate and less complex prudential regime for investment firms, based on appropriate risk sensitivity parameters. One of those recommendations includes a new categorisation of investment firms, which will distinguish between systemic and "bank-like" investment firms to which full CRD/CRR requirements should apply, and other investment firms, "not systemic" or "not interconnected", for which specific requirements should be defined.
The EBA's recommendations represent a systematic approach to address the issue of proportionality in the sector of investment firms. We informed about the issue of proportionality also in a separate article.