This is to bring to your attention CySEC Circular C426, as all CIFs will be subject to a new prudential regime in accordance with the Investment Firms Regulation (EU) 2019/2033 (IFR) and Investment Firms Directive (EU) 2019/2034 (IFD). Both will come into force on the 26th June 2021.
As a matter of update:
1. European Banking Authority published seven final draft technical standards regarding IFD/IFR. The RTS can be found here.
2. The suggested templates and instructions for Reporting and disclosure requirements under IFR/IFD can be found in the link provided in the Circular. Upon issuance of the final version of the templates, CySEC will adopt and enhance the templates so as to publish the new forms that the CIFs will use for the calculation of their capital adequacy requirements based on IFD/IFR
3. The public consultation launced by EBA includes two (2) different Consultation Papers, as follows:
- Consultation paper on draft Guidelines on sound remuneration policies for Investment Firms under Directive (EU) 2019/2034 (EBA/CP/2020/26)
- Consultation paper on draft Guidelines on internal governance for Investment Firms under Directive (EU) 2019/2034 (EBA/CP/2020/27) with provision of details on the establishment of a risk culture, a code of conduct and the management of conflicts of interest, also in relation to related parties’ transactions to ensure that firms have appropriate decision management and oversight processes for such transactions.
- CIFs may provide their comments on above consultations by the 17th of March,2021.The public consultation launched by EBA includes two (2) different Consultation Papers, as follows:
4. CIFs should study the IFR/IFD carefully, along with the final draft RTS issued, so as to:
- Identify the class they will be categorized at from the 26th June 2021,
- Familiarise themselves with the new templates and the way their new capital requirement will be calculated,
- Identify the data needed to be collected and reported, especially in regards to the calculation of K-Factors,
- Review their internal records and systems and make the necessary changes to ensure that the required data for the K-Factors (i.e. assets under management, daily trading flow, clients’ orders held, etc.) will be available to calculate their new capital requirements.