Position Paper on IFR/D Level II

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FESE fully supports the objective of policymakers to ensure robust and transparent financial markets, and well-capitalised investment firms. We also agree with the principle that the prudential rules for investment firms should be appropriate to the specific risks of each investment firm.

Given the sensitivity of proprietary trading firms to prudential requirements introduced with the IFR framework, we clearly welcome legislators’ efforts to further strengthen the principle of proportionality. Should capital requirements be set at disproportionate levels for proprietary trading firms, such firms will encounter difficulties to continue to provide liquidity under MiFID II/R, thereby reducing the ability of EU markets to thrive in a global setting.

In this paper, we provide an overview of the priorities for Exchanges in the context of the prudential requirements and classifications set in the Investment Firms Regulation and Directive (IFR/IFD) for the purposes of EBA’s Level II work.

FESE’s main priorities reflect the importance of having both a well-tailored classification regime for investment firms, especially proprietary trading firms, and capital requirements rules technically consistent across instruments, especially ETDs.