Part II Investment Firms and Investment Services, 3 Governance of Investment Firms Under MiFID II
Edited By: Danny Busch, Guido Ferrarini
- Credit risk — Enforcement — Investment business — Regulated activities — Supervision
In response to widespread concerns about the quality of governance arrangements in financial intermediaries as a source of systemic risk, the revised framework for the regulation of investment services in the EU has reinforced the governance requirements that have been in place for a long time, and increased significantly their complexity and intensity. Investment firms, subject to both the CRD IV and the MiFID II, must now comply with numerous regulatory requirements. While the underlying policy—to address systemic implications of financial intermediation irrespective of the business model—is consistent, the equal treatment of banks and investment firms under broadly identical regulatory frameworks, albeit with additional requirements imposed by MiFID II, is nonetheless questionable, in view of the diversity of existing business models and activities. Starting with an analysis of the underlying history and policy of the new approach, this chapter seeks to identify potential weaknesses and implications for its implementation.