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REMUNERATION REQUIREMENTS FOR INVESTMENT FIRMS
According to the European Commission and European Council, many years of observation of the European financial market have shown that investment firms require tailored prudential requirements. In response to these specific needs, new legal regulations have been created, which are to have a positive impact on maintaining the financial stability of investment firms. These requirements will result in new reporting obligations, the meeting of which can be supported with specialised reporting systems.
Investment firms will be divided into three classes, depending on their size and complexity, and each will be subject to a particular prudential framework:
- Class 1: systemically important firms which will be subject to the CRD/CRR
- Class 2: residual category in which firms will be subject to the full IFR/IFD regime
- Class 3: small and non-interconnected investment firms subject to the IFR/IFD regime in a limited scope
IFD (Investment Firms Directive) – Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU
IFR (Investment Firms Regulation) – Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014
The IFD came into force on 25 December 2019, and EU member states had 19 months for its transposition into national law systems, which means that the schedule of implementation began on 26 June 2021.
From 26 June 2021 the IFRS are directly applicable in all member states, and the IFD should be transposed into local law on the same day, with the exception of disclosed environmental, social and management risks, including physical and transitional risk, which are delayed until 26 December 2022. Requirements concerning capital are subject to a five-year period of gradual implementation.
Class 3 investment firms are expected to report by February using the data available to them up to December 31, 2021.