Asset Management

European Banking Authority

IFD - EBA publishes final report on draft RTS on specific liquidity measurement - 14 November 2022

The European Banking Authority (EBA) has published a final report (RTS/2022/11) on draft regulatory technical standards (RTS) in relation to specific liquidity measurement for investment firms in accordance with Article 42(6) of the Investment Firms Directive (EU) 2019/2034 (IFD). The EBA consulted on the draft RTS in December 2021.

Article 42 of the IFD gives national competent authorities (NCAs) the power to impose additional Pillar 2 liquidity requirements on an individual investment firm, where that firm is exposed to liquidity risk or elements of liquidity risk that are material.

In order to have a harmonised application of the specific liquidity requirements, the RTS address in detail the main elements that may affect liquidity risk of an investment firm. In particular, in setting additional liquidity requirements NCAs must assess:

• all elements specific to each service provided by the investment firm under Section A of Annex I to the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II); and
• other elements that could have a material impact on liquidity risk, such as external factors, group structure and operational or reputational risks.

EBA Final Report: Draft RTS on specific liquidity measurement for investment firms in accordance with Article 42(6) of Directive (EU) 2019/2034

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