IFD/IFR implementation & advice

About the clients

The clients are brokerage firms and investment firms considered Class 2 or Class 3 according to the new prudential framework of the Investment Firms Regulation and the Investment Firms Directive.

The challenge

The European Commission and Council have developed a new prudential regime which is more tailored to the nature of risks that investment firms face. Investment firms (IFs) that are authorized under MIFID II must comply with the new prudential requirements defined in the Investments Firm Regulation EU 2019/2033 (IFR) and the Investment Firms Directive EU 2019/2034 (IFD).

Investment firms and brokerage firms had to prepare for this new prudential regime in order to become compliant since it became applicable in June 2021. The IFD and the IFR change the way liquidity and capital requirements are calculated and the new regulation also has significant consequences on reporting and disclosure obligations, internal governance and the remuneration framework in investment firms.

The extent to which an IF is affected depends on which class the IF is in. Several investment firms and brokerage firms in Belgium and Luxembourg asked b.fine to guide them through the preparation process.

How b.fine helped

It was important for the investment firms and brokerage firms to really prepare for the new regulation since, because of the proportionality principle, the new regulatory requirements are applied differently depending on how these firms are classified by the IFR.

Several investment firms and brokerage firms relied on b.fine to implement the requirements that applied to them. Thanks to our solid, in-depth knowledge of regulatory reporting and our expertise in technology, we were able to help the IFs prepare for the new regulation and implemented a suitable platform. First, we analyzed all the data to determine whether the investment firm was in class 1, class 2 or class 3. The requirements change depending on this classification. We assisted the IFs with the K-factor risk assessment to determine the capital and liquidity risk requirements.

We carried out an as-is analysis of the current reporting situation and implemented the b.rx platform to manage the regulatory reporting processes for the investment firms. An adapted set of templates was integrated and the reporting features in b.rx were adapted on the basis of the class to which each IF belonged. In this way, the b.rx technology manages the reporting supply chain so the clients did not have to worry about being compliant in time.

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