#Brexit - European People's Party calls for level-playing field for EU investment firms post-Brexit

Shadow Rapporteur Sven Giegold MEP (Green) said: "The new rules for investment firms are a big step forward for a strong European financial markets regulation. In future, all investment firms registered in the EU will have to abide by European rules on capital, liquidity and reporting. The new uniform set of rules not only overcomes the patchwork of national legislation, but also aligns capital requirements with the actual risks of investment firms. Unfortunately, Parliament's compromise falls short of the Commission proposals particularly with regard to liquidity requirements.

"In response to Green amendments, Parliament has called for large investment firms such as Blackrock, State Street and Vanguard to make their investment policies more transparent to the public. This would be a first step towards regulating in a more European manner the ever-increasing power of large asset managers in the management of many EU corporates. They are now asked to make public in which companies they hold shares of more than 5% and how they vote at general meetings. Unfortunately, the right-wing conservatives blocked our proposal to also make public the meetings of investment firms with the management of the companies whose shares they hold.

"Like the banking package, the compromises on the regulation of investment firms contain requirements for the consideration and disclosure of environmental, social and governance (ESG) risks. This will allow the financial markets to become a bit greener again and strengthen sustainable investment."

More than 6,000 companies registered in the EU with a MiFID licence are currently subject to no or only national regulatory requirements regarding capital, liquidity and reporting. The influence of investment firms has recently been increasing significantly compared to traditional banks. Certain activities have required the calculation of capital requirements in accordance with banking rules (CRR/CRD), because even though investment firms hardly take any credit risks they are exposed to high operational risks that can have knock-on effects for the wider economy, similar to banks.

The new framework divides investment firms into three classes. 20 large firms with a balance sheet total of more than €30 billion will have to fully apply the banking rules and will henceforth be supervised by the Single Supervision Mechanism (SSM) within the ECB. Supervisors can also subject firms with a balance sheet total of less than €30 billion to European SSM supervision if they carry out bank-like activities. For all other firms, the new framework applies, under which the required capital is measured on the basis of the actual risks of the business activities. The smallest firms may apply simplified rules, but are also subject to the new European prudential regime.

The Committee on Economic and Monetary Affairs (ECON) adopted the parliamentary position with a large majority from all political groups. The report now awaits approval by ministers in Council, whose common negotiating position is still pending. Only then can the final trilogues between the EU institutions begin.