In mid-December, the European Commission published a legislative proposal on the prudential requirements and supervision of investment firms in the Union. Comprising a directive and a regulation, the proposal aims to improve the oversight of investment firms by adjusting supervisory tools to reflect the specific features and diversity of these participants. To do this, investment firms are classified into three broad classes and made subject to the prudential rules associated with that class.

• Class 1 firms, whose activities and size expose them to the same risks as systemically important credit institutions, would be subject to the CRR/CRD prudential framework. This would include investment firms whose total assets exceed EUR 30 billion or that belong to a group whose total assets exceeds that amount.

• Small and non-interconnected investment firms would be placed in Class 3. They would be subject to extremely simplified prudential requirements based on fixed overheads.

• Intermediate or Class 2 investment firms would be subject to new rules, including capital requirements based on k-factors, which measure different types of risk (to customers, to markets and to firms themselves), liquidity requirements relative to fixed overheads, and specific transparency, governance and remuneration obligations.

AMAFI is reviewing the proposal, which contains a number of aspects that offer satisfactory responses to concerns that it raised earlier in the process. Even so, a number of difficulties have already been identified. Their reach now needs to be clarified and solutions found. With this in mind, AMAFI will be continuing the fruitful discussions it has had in recent months with French and European authorities on this issue. As a preliminary step, under the new "Give your feedback" system, summary observations will be submitted to inform discussions by the European co-legislators and the Commission.