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These RTS harmonise the calculation of capital requirements for those investment firms that have limited authorisation to provide investment services, as well as the conditions under which competent authorities can make adjustments to such requirements. These final draft RTS will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in Europe.
For the calculation of the fixed overheads, these final draft RTS use the so-called ‘subtractive' approach whereby variable cost items are deducted from the total expenses as calculated according to the applicable accounting framework. They also introduce a special treatment of tied agents, since a tied agent exposes an investment firm to the same risk it is exposed to when it carries out business on its own.
These final draft RTS also introduce thresholds above which competent authorities can make adjustments to the capital requirements as well as minimum thresholds below which firms are exempted from the adjustments in capital requirements. This would help them avoid too burdensome requirements, especially if they are in a start-up phase. The final draft standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.