Preparing For the New Investment Firms Regulation (IFR) – Complex Challenges

With the June 26, 2021 deadline looming, investment firms operating in Europe and authorized under MiFID must implement the Investment Firms Regulation’s complex new data collection, categorization, capital calculation, and reporting requirements. Further, firms need to be ready to react quickly once the UK-specific regulations will be set, post Brexit.

The Investment Firms Regulation, promulgated under the broader Investment Firms Directive (IFD), states that non-systemically important investment firms are no longer classified as credit institutions falling under CRR and will now be grouped as either class 2 or 3 institutions. This will be based on thresholds using K-factors (quantitative indicators) that reflect the risks which IFR aims to address. Class 2 firms must calculate capital based on the K-factor formula and, among other things, IFR places greater emphasis on fixed overheads. The new categorizations and capital calculations are only some of the challenges around IFR compliance.

To prepare for the new Investment Firms Regulation reporting, organizations should be asking key questions:

  • Do we understand the new data attributes and where we can acquire them?
  • Can we efficiently enrich the data to meet IFR requirements – would access to a comprehensive data dictionary help?
  • Does our approach enable us to operate IFR in parallel with our existing CRR requirements?
  • Are we adequately prepared to determine our IFR category based on K-factors and perform the new capital calculations?
  • Does our system enable us to submit reports according to the IFR taxonomy as well as the COREP taxonomy for Market Risk?
  • Are we able to maintain precise submission and resubmission histories that withstand audit scrutiny?
  • Does our solution demonstrate compliance with BCBS 239?
  • Do we have an intuitive interface to easily access key IFR-specific metrics?

 

AxiomSL provides end-to-end, automated, data-driven solutions. These include complex capital and liquidity requirements under the Investment Firms Regulation as well as other mandates impacting investment firms such as shareholding disclosures, trade and transaction reporting (MiFID, EMIR, SFTR, etc.) and AIFMD.

 

Related Regulatory Changes:

 

To discuss your questions about the new Investment Firms Regulation, please provide your details below:

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