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Prudential framework for investment firms qualifying as "local firms" - expired from 13 November 2017

Attention – As from early September 2017, an update is available on the information in this fact sheet, that was updated for the last time on 24 November 2015. The current update relates to the development by the European Banking Authority (EBA) of a new, EU harmonised prudential regime for investment firms. Existing market participants and potential new market entrants to whom the information in this fact sheet is relevant, are urgently advised to take due note of this newest update.

Published: 04 March 2024

Investment firms that have own-account trading as their sole investment activity and come under the scope of Article 4(1), under 4, of the Capital Requirements Regulation (no 575/2014, CRR) are subject to the national prudential regime described below. This specific, national regime deals with the minimum own funds requirement and the solvency requirement ensuing from the Financial Supervision Act (Wet op het financieel toezicht – Wft).

An investment firm in the Netherlands qualifying as a "local firm" within the meaning of Article 4(1), under 4, of the CRR, is subject to a minimum own funds requirement of EUR 730,000 (see Section 3:53 of the Wft in conjunction with Section 48(1) of the Decree on Prudential Rules for Financial Undertakings (Besluit prudentiële regels Wft – Bpr) and a solvency requirement (see Section 3:57(1) of the Wft) that is at all times equal to the total net margin requirements of the clearing member under whose responsibility and guarantee the firm is dealing for its own account. Such "local firms" must also comply with the requirements of sound operational management as described in the Capital Requirements Directive (no 2013/36/EU, CRD IV), in particular with the requirement governing the Internal Capital Adequacy Assessment Process (ICAAP).

Please note that the investment firm is not allowed to provide other investment services or to conduct other investment activities besides "dealing for its own account" if it wishes to remain under the scope of the national prudential regime for "local firms".