EU backs stiffer supervision of third-country investment firms
European Union member states have agreed on tighter supervision of foreign investment firms, in a move which will give Brussels greater power over City firms post Brexit.
Banks
4,061.31
16:59 26/04/24
Financial Services
14,051.23
16:59 26/04/24
Under the updated framework, the European Commission will assess whether foreign investment firms operate as banks. If found that they do, they will be subject to the same rules and supervision as banks, which are generally stricter.
Equivalence rules for the provision of investment services by firms based in non-member states will also be “strengthened and clarified”.
In a statement, the Commission said the revised legislation would “ensure that EU clients can continue to benefit from the investment options and services provided by firms based in countries outside the EU, with suitable safeguards to protect investors and financial stability within the union”.
Jyrki Katainen, the Commission’s vice president for jobs, growth, investment and competitiveness, added: “It levels the playing field between the largest investments firms and the largest banks; they will follow the same rules, and puts in place a more proportional prudent regime for the smaller ones.
“This is a major achievement which will deliver a suitable rulebook for EU investment firms and for the provision of services to EU clients by firms which are outside the union.”
According to Reuters, more than half of Europe’s 6,000 investment firms have their EU headquarters in the City, such as US giants such as Goldman Sachs. However, some are considering potentially moving head offices to remain within the EU post Brexit.