New EU agreement on prudential rules investment firms

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The European Parlimant and the member states have reached an agreement on the rules governing investment firms, creating a different set of rules for firms based on their activities and size.

The agreement, which still needs to be approved by the EU Parlimant and the EU council introduces stricter rules on capital, liquidity and other risk management requirements. Investment firms which carry out bank-like activities and pose similar risks as bank will become, subject to the same rules and supervision as banks. Firms with a more restricted business model will benefit from a fully revised rulebook tailored to their activities. Equivalence rules for the provision of investment services by third-country firms will also be strengthened and clarified.

The EPTA, the association representing proprietary trading firms cautiously welcomed the new agreement, stressing the importance of the activities of proprietary trading firms and that the necessity to be handled differently than banks.