Jurisdiction(s):
European Union

EU investment firms prudential regime (IFR/IFD): classes, capital/liquidity, systemic firms, consolidation, governance, third-country equivalence, ESG, transitional rules, SI tick sizes and IPU requirement

Published by a LexisNexis EU Law expert

Practice notes

The Investment Firms Regulation (EU) 2019/2033 (IFR) and the Investment Firms Directive (EU) 2019/2034 (IFD) took legal effect on 25 December 2019. Application of the IFR started on 26 June 2021, subject to certain limited exceptions. Member States had to implement the IFD in domestic legislation by 26 June 2021, and to apply most of those national measures from that same date across their jurisdictions. Under the IFR and IFD, the majority of EU investment firms are subject to new, streamlined prudential requirements, while large, systemic firms that conduct bank‑type activities and pose comparable risks are regulated and supervised as banks accordingly.

Background to the IFR and IFD

Across all Member States in the European Economic Area (EEA), there are several thousand investment firms in operation. Most are small to medium‑sized and concentrate primarily on providing investment advice, receiving, transmitting and executing orders, and managing portfolios. Unlike credit institutions, they neither accept deposits nor extend loans of any kind. Consequently, they are far less exposed to credit risk and to the possibility of depositors withdrawing funds at short notice. A review of the prudential framework for investment firms was undertaken as part of the Commission’s Regulatory Fitness...

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Web page updated on 21/05/2026

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