Death of CRD IV?

On 20 December 2017, the European Commission approved the new prudential framework for investments firms, along with CRD V enhancing the existing framework - is this the end for CRD IV as we know it? Once passed into law, there is a proposed 18 month implementation period with the potential of transitional provisions for 5 years.

Under this new framework, investment firms will fall under three categories, each with different capital, liquidity and reporting requirements:
  • Class 1 (large or systemic investments firms which are exposed to the same types of risks as credit institutions) will fall under the new CRD-V framework;
  • Class 2 (other non-systemic) and Class 3 (small and non-interconnected) will fall under a new framework for investment firms. The capital, liquidity and disclosure requirements for these firms will be significantly different from current requirements.
Class 2 and Class 3 firms are able to apply the CRR in the version it stood before CRD-V comes into force, or until the new prudential framework for investment firms is in place.

Below are details of the requirements based on each class: