On 26 June, major changes are expected for brokerage houses
June 26, 2021 is the deadline for the implementation in the EU Member States of Directive (EU) 2019/2034 of the European Parliament and of the Council of November 27, 2019 on the prudential supervision of investment firms. On the same day, Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms automatically becomes applicable (so called: the IFD Directive and the IFR Regulation). The content of the government’s bill introducing changes to EU law is still unknown.
The list of legislative works of the Government includes a draft act amending the act on trading in financial instruments and some other acts. In the announcement, we can read that the purpose of the IFD Directive and the IFR Regulation is to create a uniform, integrated regulatory framework for investment firms. The IFD Directive introduces regulations regarding:
– initial capital of investment companies,
– supervisory powers and tools for the prudential supervision of investment firms by competent authorities,
– imposing an additional requirement on own funds and liquidity requirements,
– risk and internal capital assessment process as well as supervisory audit and assessment process,
– principles of the remuneration policy,
– establishing colleges of supervisors,
– requirements for the publication by competent authorities of information in the area of the prudential regulation of investment firms and the prudential supervision of investment firms,
– the exchange of information on prudential supervision between competent authorities and professional secrecy.
From the organizational point of view, the key change will be the increase in the capital requirement for brokerage houses. For example, those who have so far benefited from the “matched principal” exemption, allowing in certain situations to acquire on their own account financial instruments to which investors’ orders relate, will have to show initial capital of PLN 750,000. euro (while so far the requirement amounted only up to 125 thousand). There will be more changes, but their final shape will result from a government bill, about which little is known yet.
One should expect a rapid pace of implementation and a lot of confusion among brokerage houses, whose situation is uncertain, especially in the context of the great unknown constituted by the transitional provisions, especially in the context of capital requirements. It is true that the Regulation number 2019/2033, specifying the time frame for the implementation of investment companies into new realities, enters into force automatically on June 26 throughout the European Union, however the approach of the Polish legislator will not be without significance for their implementation.
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