The Investment Firm Regulation (IFR), a new prudential framework developed by the European Commission (EC), will soon apply to all MiFID investment firms. The IFR is intended to be simpler and more proportionate to a firm’s operations than existing requirements. Thus requiring the vast majority of investment firms to adapt to a new set of capital, liquidity, and reporting requirements.
For some firms, the IFR introduces a new obligation to conduct an ongoing Internal Capital Adequacy Assessment Process (ICAAP), to document the ICAAP in a formal report at least annually, and to make certain public disclosures.
When the IFR comes into force, some firms may be hit hard with requirements to maintain significantly greater levels of capital.