The European Banking Authority (EBA) consultation paper EBA/CP/2020/07 sets out the particulars relating to reporting under the new Investment Firms Directive and Investment Firms Regulations (IFD/IFR). There are two sets of standards considered in this consultation paper, each of which are summarised below. Interested parties have until 4 September 2020 to submit their responses.
Draft Implementing Technical Standards on reporting requirements for investment firms under Article 54(3) and on disclosures requirements under Article 49(2) of IFR (the Draft ITS)
For those investment firms operating under CRD, the requirements will be familiar although there will be some changes to reporting requirements following the adoption of these new standards.
The new Investment Firms Directive and Investment Firms Regulation will allow for a risk based approach to the regulation of investment firms depending on the type of investment firm with higher impact firms being subjected to more intensive regulation. This proportionate regulation of firms is apparent in the proposals for Draft ITS on reporting requirements for investment firms under IFR.
IFR mandated the European Banking Authority (EBA), in consultation with the European Securities Markets Authority (ESMA), to develop draft implementing technical standards (ITS) to specify, in respect of reporting requirements, the formats and reporting dates and definitions and associated instructions describing how to use those formats. These requirements include reporting on the level and composition of own funds, own funds requirements, own funds requirements calculations, the level of activity in respect of the conditions for small and non-interconnected investment firms, concentration risk (including the levels of certain concentration risks) and liquidity requirements so as to enhance transparency for investors and the wider market.
It is interesting to note the proportionate regulatory reporting framework that has been developed by the EBA taking into account the business of investment firms, their scale, complexity, size and interconnectedness. Small and non-interconnected firms are not subject to the same level of detail and have been distinguished from other investment firms in the Draft ITS.
All investment firms are required to report the necessary information in line with the template introduced by this Draft ITS, which has been developed in a flexible and proportionate manner. Differentiated reporting intervals are set out in the Draft ITS, along with the requirements for the format of reports and the details required.
Draft Regulatory Technical Standards on the monitoring of information related to the thresholds for credit institutions reporting requirements for investment firms under Article 55(5) of IFR (the Draft RTS)
IFR sets out the requirement for certain investment firms to verify the value of their total assets on a monthly basis and to report quarterly if the total value of the consolidated assets of the investment firm is equal to or exceeds €5bn, calculated as an average of the previous 12 months.
This requirement applies to group assets in relation to investment firms who are part of a group. The Draft RTS develop the format and specifications for complying with this reporting obligation.