MFA, AIMA and ACC Submit Comments to European Commission and European Banking Authority on Proposed Regime for Investment Firms

August 29, 2017

From: Stuart J. Kaswell (MFA)

To:

Gabriel Cardi (EBA) and Didier Millerot (EC)

On August 29, MFA, AIMA, and ACC jointly filed a comment letter with the European Banking Authority (EBA) and European Commission (EC) regarding the interim proposal from EBA on the design of a new prudential regime for investment firms.

In the letter, the Associations supported the goal of developing a prudential regime in lieu of a “one-size-fits-all” set of rules, however, flagged several issues as the current interim proposal is poorly tailored to investment firms, specifically asset managers.

In the letter, the Associations highlighted the following concerns:

  • AUM: We do not consider that levels of assets under management (AUM) are an appropriate metric for determining the level of risk posed by an asset management firm.
  • Systemic and bank-like: We are concerned that the interim proposal moves away from the proposed requirement for Class 1 that the firms in that class should be both systemic and bank-like and replaces that with a requirement that Class 1 contain firms that are “large or systemic”.
  • Artificial barrier to growth: It is also important to note that a firm’s AUM may grow for a number of reasons.
  • Frequency of calculation: With respect to the K-AUM factor, the definition of AUM and the required frequency of calculation are unclear.
  • Remuneration: We do not support the proposed extension of the CRD IV remuneration to investment firms that are asset managers, many of which fall within the scope of the grandfathered CRD III regime today.

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