MFA and AIMA Submit Comments to European Banking Authority on Designing a New Prudential Regime for Investment Firms

On February 2, MFA and AIMA submitted a joint letter to the European Banking Authority in response to the EBA’s consultation paper, Designing a new prudential regime for investment firms.  In the letter, we expressed general support for developing a prudential regime that has rules which are appropriately tailored for investment firms, rather than relying on a “one-size-fits-all” set of rules originally designed to apply to banks.  We also encouraged the EBA to amend its proposed framework for capital and liquidity rules for investment firms to: (1) better tailor the framework to focus on factors relevant to the winding down of asset management firms, which should be the focus of any capital rules for asset managers; (2) avoid applying factors related to systemic risk concerns for asset managers that do not present systemic risk and focus on factors relevant to investor protection instead; (3) avoid creating a one-size fits all framework for all asset managers and other investment firms, in light of the variety of business models in the industry; and (4) ensure that the proposed framework appropriately distinguished the asset management firm from any investment funds or other investment accounts that the firm manages on behalf of clients.