Question
What are the prudential requirements for the following firms? a) investment firms that are authorised to provide the investment service referred to in point (3) of Section A of Annex I to Directive 2004/39/EC but are not authorised to provide the investment service referred to in point (6); b) investment firms that are authorised to provide the investment service referred to in point (6) of Section A of Annex I to Directive 2004/39/EC but are not authorised to provide the investment service referred to in point (3); c) investment firms that are authorised to provide both the investment services referred to in point (3) and (6) of Section A of Annex I to Directive 2004/39/EU.
Background on the question
Articles 6(4) and 11(3) of Regulation (EU) No 575/2013 (CRR) refer to “investment firms that are authorised to provide the investment services and activities listed in points (3) and (6) of Section A of Annex I to Directive 2004/39/EC” which is ambiguous for the following firms: a) investment firms that are authorised to provide the investment service referred to in point (3) of Section A of Annex I to Directive 2004/39/EC but are not authorised to provide the investment service referred to in point (6); b) investment firms that are authorised to provide the investment service referred to in point (6) of Section A of Annex I to Directive 2004/39/EC but are not authorised to provide the investment service referred to in point (3); Therefore a clarification needs to be given with respect to the above firms in order to specify whether or not they can be considered as investment firms mentioned in Article 6(4) of the CRR.
Answer
In accordance with Article 6(4) of Regulation (EU) No 575/2013 (CRR) investment firms that are authorised to provide the investment services referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU shall comply with liquidity requirements laid down in Part Six of the CRR on an individual basis unless the obligation to comply with Part Six has been waived by the competent authority in accordance with Article 6(4). This should be understood as including any of the following: i) investment firms that are authorised to provide the investment services referred to in point (3); ii) investment firms that are authorised to provide the investment services referred to in point (6); iii) investment firms that are authorised to provide both the investment services referred to in points (3) and (6). This also applies on a consolidated basis pursuant to the application of Article 11(3) of the CRR. This answer is without prejudice to the effects of future work carried out by the European Commission in the context of Article 508 of the CRR.