Generally speaking, the proposed regulation aims at enhancing
financial stability in the EU by means of structural reform of
large banks. More specifically, and subject to certain thresholds
and exceptions, the proposed regulation prohibits credit
institutions and entities within the same group from (a) engaging
in "proprietary trading" in financial instruments and
commodities, or, (b) with their own capital or borrowed money and
for the sole purpose of making a profit for their own account, (i)
acquiring or retaining, directly or indirectly, units or shares of
alternative investment funds (AIFs) or (ii) investing, directly or
indirectly, in derivatives, certificates, indices or any other
financial instrument the performance of which is linked to shares
or units of AIFs. The proposed regulation would apply to EU credit
institutions and their EU parents, their subsidiaries and branches,
including those in non-EU countries, and to branches and
subsidiaries in the EU of banks established in third countries;
however, foreign subsidiaries of EU banks and EU branches of
foreign banks could be exempted from the prohibition if they are
subject to a legal framework deemed to be equivalent to the
In addition to the prohibition on proprietary trading, the
proposed regulation provides that trading activities of a bank
(i.e. market making, investing in and sponsoring risky
securitisation and trading in certain derivatives) must be
separated from the bank's non-trading activities (i.e. taking
deposits that are eligible under the Deposit Guarantee Scheme,
lending, financial leasing and money brokering, safekeeping and
administration of securities) if the risks related to such
activities are found to exceed certain thresholds and meet certain
conditions linked to these metrics. Furthermore, a competent
authority can require separation of a particular trading activity
if it considers that the activity in question threatens the
financial stability of the bank or the EU, taking into account the
objectives of the proposed regulation.
Provided that the final text of the proposed regulation is
adopted by the European Parliament and Council by June 2015, the
prohibition on proprietary trading is scheduled to become effective
on January 1, 2017 and the provisions relating to the separation of
trading activities from credit institutions will become effective
on January 1, 2018.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).