Investment Firm Review

MFA supports the EU objective to design a tailored prudential and supervisory framework for investment firms. However, the rules on capital and remuneration remain too bank-like. To address this, MFA urges more proportionality. For example, rigid rules on variable pay will make it challenging for small and mid-sized investment firms to maintain low fixed costs in the EU, align the incentives of managers and investors, and will create barriers to entry for all but the largest firms. MFA is also concerned that the thresholds that determine whether a firm is in Class 2 or Class 3 are poorly calibrated and will force too many small firms into onerous Class 2 rules.