Financial services newsletter - Issue 2
Welcome to the second edition of our newsletter, where we cover some of the major developments across the financial services sector throughout the last quarter.
These new regulations aim to bolster the fairness and transparency of the market within the EU while ensuring that non-complex firms, which pose minimal risk to the market, were not unduly burdened. To achieve this balance, investment firms are now classified into three distinct categories, each subject to differing regulatory requirements as outlined in the relevant legislation and discussed below.
These are firms that are neither classified as ‘Class 1’ or ‘Class 3’ as they are too small for Class 1 but bigger and more interconnected than Class 3 firms. These firms are subject to the full suite of IFR/IFD requirements.
These are firms that fulfil the following conditions to be deemed as a Small and Non-Interconnected (SNI) investment firm:
Class 3 firms minimum own funds will be the higher of their Permanent Minimum Capital Requirements (PMR) or their Fixed overhead requirements (FOR) and will not be required to calculate own funds requirement based off their K-factors. They may also receive an exemption regarding their Fixed overhead requirements (FOR), but this is dealt with on a case by case basis
Note: If a firm no longer meets the SNI requirements, it will lose its SNI status. However, there is an exception for firms breaching criteria in points 'a', 'b', 'h', or 'i' while still meeting conditions 'c' through 'g'. In these cases, the firm has a grace period of three months before losing its SNI classification. Conversely, if a firm subsequently meets all SNI criteria, it will not regain SNI status until six months after fulfilling the conditions.
How can we help?
At Forvis Mazars, our Prudential Risk experts understand that regulatory compliance is crucial to the strategic priorities of financial institutions. We specialise in guiding clients in the financial services sector through the complex regulatory landscape. Working closely with our clients, we help identify their regulatory obligations and develop tailored strategies to ensure full compliance with IFR, IFD and other applicable regulations.
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