Prudential regulation of investment firms in the European Union

As of June 2021, a new regulatory regime for investment firms will come into force. What are the building blocks of the past and present legislation and how should they be interpreted? What risks do investment firms face and are these adequately addressed in the new regime? This publication discusses these questions in detail. Traditionally, the prudential regulatory response for investment firms in the European Union has been closely linked with the prudential regulatory response for banks. However, as the actual risk profile of these types of enterprises can differ significantly, the European Commission voiced the need for a new regulatory regime tailored to investment firms. Therefore, as of June 2021, new legislation will come into place for all investment firms within the European Union. Prudential regulation of investment firms in the European Union discusses the risk profile of investment firms. What are the typical risks an investment firm is exposed to when providing investment services or performing investment activities? To what extend is the prudential risk profile of an investment firm comparable to that of a bank? This publication will examine the new regulatory regime in detail and will discuss if the risks that investment firms are exposed to are adequately addressed. The author compares the former and new legislation, allowing the reader to understand and interpret the core underpinnings of the new regime. Investment firms risk So far, few other publications have examined the prudential and financial risks faced by investment firms. In addition, this is the first comprehensive publication on the new European regulatory regime that will come into force in June 2021. As such, this title covers unexplored territory in the financial literature that will appeal to a wide audience of financial firms across Europe.