On 27 June 2022, the Minister for Finance signed three Statutory Instruments to complete the transposition of Directive (EU) 2019/2034 (the "Investment Firms Directive" or "IFD") and the implementation of Regulation (EU) 2019/2033 (the "Investment Firms Regulation" or "IFR") into Irish law (published on 5 July).
- SI 302 of 2022 – European Union (Investment Firms) (Amendment) Regulations 2022.
- SI 303 of 2022 – European Union (Investment Firms) (No. 2) (Amendment) Regulations 2022.
- SI 304 of 2022 – European Union (Markets in Financial Instruments) (Amendment) (No. 2) Regulations 2022.
The IFD / IFR puts in place a new prudential framework for investment firms authorised under Directive 2014/65/EU ("MiFIDII"). Large investment firms remain subject to the prudential requirements of the Capital Requirements Directive ("CRD") and Capital Requirements Regulation ("CRR") while Article 62(6) of IFD requires Member States to impose an obligation on large systemic investment firms ("Class 1 Firms") to apply for re-authorisation as credit institutions.
The IFD / IFR came into force in January 2020 with final transposition into Irish law required to take place by 26 June 2021. The Irish legislation transposing the majority of the IFD and implementing the IFR came into effect on 21 September 2021 with the only provision remaining to be transposed into Irish law being Article 62(6) of the IFD.
These regulations, which should be read along with the European Union (Investment Firms) Regulations 2021 (S.I. No. 355 of 2021) and European Union (Investment Firms) (No. 2) Regulations 2021 (S.I. 356 of 2021), transpose Article 62(6) of IFD into national law by inserting a new authorisation process (Part IIA) into the Central Bank Act, 1971 (the "1971 Act") enabling Class 1 Firms to apply for re-authorisation as credit institutions.
European Union (Investment Firms) (Amendment) Regulations 2022 (S.I. No. 302 of 2022): These regulations amend the 1971 Act to:
- provide for the prohibition of certain investment services and activities (‘Class 1 business’) in the State by Class 1 firms operating without the requisite permission (‘Class 1 authorisation’ or banking licence);
- set out the application process for a Class 1 authorisation and the associated conditions of authorisation; and
- set out the process and grounds for the withdrawal of a Class 1 authorisation.
European Union (Investment Firms) (No. 2) (Amendment) Regulations 2022 (S.I. No. 303 of 2022): These regulations amend 1971 Act to:
- provide for undertakings referred to in point (1)(b) of Article 4(1) of the CRR, which have been authorised under Part 2 of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017) (the "2017 Regulations"), to apply for re-authorisation as a credit institution, as required by the IFD; and
- set out certain requirements for the Central Bank in relation to such applications.
- In addition, these regulations amend S.I. No. 355 of 2021 to update internal referencing.
European Union (Markets in Financial Instruments) (Amendment) (No. 2) Regulations 2022 (S.I. No. 304 of 2022): These regulations amend:
- the 2017 Regulations to provide that a Class 1 investment firm’s authorisation as an investment firm shall be deemed withdrawn upon it being granted a credit institution authorisation/licence; and
- the 1971 Act to require the Central Bank to establish to its satisfaction that an applicant for a credit institution authorisation, who intends to provide investment services or perform investment activities, will comply with the relevant provisions of the 2017 Regulations.
This article was co-authored by partners Louise Dobbyn & Joe Beashel, senior associates James O'Doherty and Ian O'Mara, associate Ciarán Moloney and solicitors Nicole Ward and Wayne Flanagan. For further information or advice in respect of the topics covered in this insight, please get in touch with a member of the team or your usual Matheson contact. Full details of Matheson's Financial Institutions Group together with further updates, articles and briefing notes written by members of these teams, can be accessed at www.matheson.com.
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