Megan Fennell, solicitor: "Although the transposition deadline for the national legislation implementing the new prudential regime for investment firms under the Investment Firms Directive EU/2019/2034 ("IFD") and the Investment Firm Regulation EU/2019/2033 ("IFR") passed on 26 June 2021, we are still awaiting the publication of the Irish legislation. However, we have recieved some clarity on the proposed exercise of national and competent authority discretions.
Department of Finance Feedback Statement
On 24 May 2021, the Department of Finance published its Feedback Statement on the exercise of a small number of national discretions under the IFD. These national discretions relate to the appointment of a national competent authority ("NCA") and to the remuneration rules and applicable exemptions. The majority of the provisions under the IFD will be transposed on a fully harmonised basis.
The Department of Finance has unsurprisingly indicated that the Central Bank will be appointed as the single NCA for Ireland. The only other national discretion that the Department of Finance has indicated it will avail of relates to the default threshold of on and off balance sheet assets that must be met for firms to be exempt from the restrictions on variable remuneration. The Minister for Finance will set the threshold to €300 million (rather than the default threshold of €100 million in the IFD), but with a discretion being granted to the Central Bank to specify a lower threshold in particular circumstances.
Central Bank of Ireland Feedback Statement
On 24 June 2021, the Central Bank also published its Feedback Statement in response to its January consultation on competent authority discretions in the IFD and IFR.
As was expected, it seems that the Central Bank will be taking a cautious approach in relation to 'Class 3 Firms'. The Central Bank has indicated that it will not be exercising the optional discretion to exempt 'Class 3 Firms' from the minimum liquidity requirements under IFD / IFR, but instead 'Class 3 Firms' can apply to the Central Bank for a waiver from this requirement (which will only be granted in exceptional circumstances). Similarly, it appears that the Central Bank will not be exercising the available discretion to exempt 'Class 3 Firms' from the requirement to perform the IFD's version of the ICAAP (ie, an assessment of internal capital and liquid assets).
More surprisingly, the Central Bank has confirmed that Alternative Investment Management Fund Managers and UCITS Management Companies authorised to provide MiFID services should continue to comply with the current prudential regime specified in their conditions of authorisation – pending further engagement by the Central Bank on the future prudential regime to be applied."
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