Recital 2

(2)Investment firms that meet the conditions for qualifying as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033 of the European Parliament and of the Council ² are deemed to have only a limited liquidity risk relative to other investment firms. That is why competent authorities, pursuant to Article 43(1), second subparagraph, of Regulation (EU) 2019/2033, may exempt such investment firms from the liquidity requirement laid down in Article 43(1), first subparagraph, of that Regulation. That exemption is, however, optional. To cater for small and non-interconnected investment firms that have not been exempted by their competent authority from that liquidity requirement, it would be disproportionate to subject those investment firms to the same liquidity requirements as bigger and interconnected investment firms. It is therefore appropriate to lay down that competent authorities, when they measure the liquidity risk and elements of liquidity risk referred to in Article 42(1), first subparagraph, point (a), of Directive (EU) 2019/2034, should only measure the liquidity risk or elements of liquidity risk that stem from those activities and from other factors, specific to small and non-interconnected investment firms, which are highly likely to lead to a liquidity risk that is material and that is not covered by the liquidity requirements laid down in Part Five of Regulation (EU) 2019/2033. Those factors include activities of providing portfolio management, operating a multilateral trading facility as defined in Article 4, point (22), of Directive 2014/65/EU of the European Parliament and of the Council ³ or an organised trading facility as defined in Article 4, point (23), of that Directive, granting credits and loans to investors, as well as the funding risk, and the group structure’s relevance to liquidity risk.