Prudential Supervision of Investment Firms (Directive)

The supervision of investment firms in the EU should be more adapted to their respective business models and risks. With this aim, the EU Commission has developed a proposal for a Directive which, by dividing investment firms into three classes, counteracts the consolidation of the sector brought about by regulation.


In cep’s view, full harmonisation of the provisions on initial capital, with which investment firms have to comply, may reduce distortions of competition. However, graded regulation, by its very nature, harbours the risk of such distortions. cep also criticises the fact that regulating the remuneration of “main players” in investment firms constitutes a major intervention in the freedom of contract which also puts European investment firms at a disadvantage in the competition for qualified staff.