The Cyprus Securities and Exchange Commission (CySEC)
has issued a notification to entities it regulates and to
participants in the market in general of the consultation
process regarding a proposed amendment of the EU prudential
rules for investment firms.
The existing prudential framework governing the provision of
investment services stems from the Capital Requirements
Directive (CRD) and the Capital Requirements Regulation (CRR).
This framework was designed for credit institutions, and does
not specifically address the particular risks that the
investment services sector faces. The CRD/CRR system is
regarded as complex and burdensome for most non-bank firms
providing investment services and, depending on factors
including their size and the range of services they provide,
some investment firms are exempt from prudential regulation,
some are subject to lighter prudential regulation, and others
are subject to the full set of CRD and CRR provisions.
Under a proposal adopted by the European Commission in
December 2017 for a regulation and a directive to amend the
existing rules, only the largest and most systemic investment
firms would remain under the existing CRD/CRR prudential
framework. The vast majority of investment firms would be
subject to a new bespoke regime with simpler, more appropriate
Comments on the proposed legislation may be made via the
European Commission's website until March 8 2018.