Market Overview

EU Rolls Out Stricter Rules For Foreign Investment Managers


The European Union have reached an agreement to tighten the rules surrounding foreign asset managers and investment firms, Reuters reported on Wednesday. These firms include investment firms offering "bank-like" services, together with proprietary trading and underwriting of financial instruments.

The agreement confirmed a previous January agreement and will augment the European Commission's powers in finalizing the firms to be given access to EU clients, along with more control over London-based financial firms after Brexit, should it proceed.

The revamped rules will also imposd stricter liquidity and capital requirements on large European investment firms, tightening a proposal from December 2017.

"The agreement further strengthens the equivalence regime that would apply to third country investment firms," the EU noted in a statement. The European Commission will also be empowered to evaluate the compatibility of foreign rules with EU regulations.

About 3,000 European investment firms that are based in Britain will be affected by this move, including many of the bulge bracket banks.

EU member states have agreed to apply the strictest capital and liquidity rules to firms with assets above €30 billion. Thus, investment firms with assets of €15 billion or more would be exposed to the same requirements as large banks, while firms having assets between €5 billion and €15 billion will face lighter regulations unless their activities are seen to pose risks to financial stability.

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