Published: 8th September 2014

Regulatory Roundup 53 advised that the EBA had published draft Regulatory Technical Standards (RTS) relating to the calculation of own funds based upon fixed overheads required under CRR Article 97.

Although possibly of little more than passing interest to BIPRU firms, the RTS is very relevant to UCITS firms, full-scope AIFMs as well as CRD IV IFPRU firms. The reason for this is that whilst UCITS firms and AIFMs may fall under different Directives, their own funds are required to be calculated with reference to CRR Article 97. Whilst what does and does not constitute ‘fixed overheads’ is clear for BIPRU firms (CRD III), unfortunately the same is not true of CRD IV and the EBA, in consultation with ESMA, were requested to draft appropriate technical standards.

The EC has now published draft Delegated Regulation, based upon the EBA recommendations, on the methodology of calculating ‘fixed overheads’. The effect of the draft is to add an additional chapter to current Delegated Regulation 241/2014 which concerns technical standards for own funds requirements. The Regulation will come into force 20 days after being published in the Official Journal so until that time both documents will need to be read together.

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