The European Banking Authority (EBA) has proposed new rules for determining when large investment firms should be reclassified as credit institutions, with Cyprus’ regulator urging firms to review the changes.

Launched on Aug. 25, the EBA consultation covers draft regulatory technical standards (RTS) designed to make the assessment more proportionate, transparent and linked to the risks posed by individual firms and groups.

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The €30 Billion Threshold

Under Article 8a of the Capital Requirements Directive (CRD), investment firms with total assets above €30 billion are generally expected to seek authorisation as credit institutions rather than operate solely under a MiFID investment firm licence.

Proposed RTS would establish how the threshold is calculated at individual and group level, what firms must report to supervisors and which factors authorities should consider when assessing waiver requests.

Changes to Article 8a prompted the consultation as part of a broader EU effort to align prudential requirements with the size and risk profile of large investment groups.

New Method Would Narrow The Calculation

According to the EBA, amendments to Article 8a have narrowed the scope of the group-level calculation. Under the proposed methodology, only assets held by EU undertakings and their subsidiaries conducting MiFID activities 3 and 6, along with EU branches of third-country entities within the same group, would be included.

Compared with the previous global approach, the new methodology would simplify calculations and reduce the reporting burden for affected firms.

Investment firms with total assets above €5 billion would fall within the reporting requirements. Those firms would submit two reporting templates each quarter, with monthly figures derived through simple interpolation.

Regulators Would Assess More Than Asset Size

Waiver requests would be assessed using several factors beyond a firm’s balance sheet. Authorities would consider organizational structure, booking practices and asset allocation across entities, as well as the business model and share of transactions conducted for clients.

Other factors would include tools for measuring systemic risk, the size and complexity of derivatives portfolios and the firm’s broader market footprint. Decisions would therefore consider both the scale of a group and how its activities could affect financial-system risk.

CySEC Urges Cyprus Firms To Review The Rules

Cyprus’ Securities and Exchange Commission (CySEC) has urged local investment firms to examine the consultation paper and draft RTS, particularly their potential effects on business models, group structures and prudential reporting systems.

Firms are also encouraged to submit feedback before the rules are finalized. Comments are due by Nov. 25, 2026. A virtual EBA public hearing is scheduled for Sept. 30 at 10 am CEST, with registration open until Sept. 25.

Rules Could Affect Large Investment Groups

For firms approaching the €30 billion threshold, the proposed methodology could affect governance, capital planning and group structures. It also reflects closer EU supervision of investment firms whose scale and activities may create risks similar to those associated with banks.

Three areas are covered by the EBA’s work at the request of EU legislators: calculating CRD thresholds, collecting information for ongoing supervision and defining criteria for regulatory waivers.

Firms with complex group structures or rapidly growing asset bases will need to assess how the proposed framework applies to their operations before the standards are finalized.