We are pleased to share with you a number of important updates relating to the Investment Firms Directive EU/2019/2034 (“IFD”) and the Investment Firm Regulation EU/2019/2033 (“IFR”).
Further down in this article we outline the reporting requirements for MiFID Investment Firms in relation to the submission of prudential returns on the 30 June 2021.
Exercise of National Discretions under IFD / IFR
As the introduction of the new prudential regime for investment firms under the Investment Firms Directive EU/2019/2034 (“IFD”) and the Investment Firm Regulation EU/2019/2033 (“IFR”) edges closer, we still await the publication of the Irish implementing legislation. However, we have got some clarity on the proposed exercise of national discretions.
On 24 May 2021, the Department of Finance published its Feedback Statement on the exercise of a small number of national discretions under the IFD. These national discretions relate to the appointment of a national competent authority (“NCA”) and to the remuneration rules and applicable exemptions (detailed in the table below). The majority of the provisions under the IFD will be transposed on a fully harmonised basis.
However, we are still waiting for a clear picture on exactly what the Irish implementing legislation will look like, as the IFD and IFR also provide for a number of discretions to be exercised by NCAs. The Central Bank of Ireland (the “Central Bank”) published its consultation paper on this (CP135) in January of this year, but has not yet indicated how it will exercise these discretions.
| National Discretion | Exercise of National Discretion |
| Article 4(1) - The Minister has the discretion to designate a body as a single NCA for IFD / IFR. | Article 4(1) - The Minister for Finance will designate the Central Bank as the NCA for IFD / IFR. |
| Article 32(3) - Member States or the NCA have the discretion to place additional restrictions on the types and designs of instruments, or additional prohibitions on the use of certain instruments, for the purposes of variable remuneration. | Article 32(3) - The Minister for Finance will not exercise this discretion. The default provisions of the Directive will not be amended. |
Article 32(5) & (6) - Member States or the NCA have the discretion to exempt certain Firms from the restrictions on variable remuneration.
| Article 32(5) & (6)
|
Article 32(7) - Member States or the NCA may decide that an individual (i.e. staff member) in a Firm, entitled to variable remuneration below a certain threshold, shall not be entitled to the exemption because of specificities in terms of remuneration practices or because of the nature of the responsibilities and job profile of those staff members.
| Article 32(7) - The Minister for Finance will not exercise this discretion. The default provisions of the Directive will not be amended. |
Central Bank Publishes Important Information in relation to Reporting Requirements for MiFID Investment Firms
On 13 May 2021, the Central Bank updated the Reporting Requirements for MiFID Investment Firms in relation to the submission of prudential returns for the period ending 30 June 2021 and the timing of first reporting under the IFR.
Reporting Period ended 30 June 2021
The Central Bank requires all MiFID investment firms to report under the fourth Capital Requirements Directive EU/2013/36 (“CRD IV”) taxonomy 2.9 or the relevant capital reports for non-CRD IV investment firms, for 30 June 2021 as scheduled.
CRR / IFR Reporting
- Capital Requirements Regulation EU/2013/575 (“CRR”) reporting will commence for all class one minus investment firms under taxonomy 3.0 for the period beginning 1 July 2021 (Including monthly liquidity returns).
- IFR reporting will commence for all class two investment firms on 30 September 2021.
- IFR reporting will commence for all class three investment firms on 31 December 2021.
| Class Two Investment Firms | Class Three Investment Firms |
Class two investment firms will be required to report all of the following on a quarterly basis:
| Class three investment firms will be required to report all of the following on an annual basis:
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For further information, please contact Joe Beashel, Ian O'Mara, Megan Fennell or your usual Matheson contact.