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04 May 2010

EFAMA concerned about Commission’s definition of “high quality liquid assets” in CRD IV consultation


Some of the Commission proposals would have a considerable indirect impact on the fund industry as credit institutions represent an important investor group, EFAMA argues. It also hopes that CRD IV will facilitate the qualification of fund units as collateral eligible for credit risk mitigation.

Although  fund  management  companies  themselves  are  in  most  cases  not  subject  to  the CRD,  credit  institutions  represent  an  important  investor  group  and  the  application  of  some  of  the  proposals  set  out  in  the  consultative  document  would  have  a  considerable  indirect  impact  on  the  fund  industry.   EFAMA is  particularly  concerned  about  the  consequences  of  the  proposed  definition  of  “high  quality  liquid  assets”  for  European  investment  funds.   EFAMA  also  hopes  that  the  forthcoming  legislative  proposal  dealing  with  the  CRD  will  facilitate  further  the  qualification  of  fund units  as  collateral  eligible  for  credit  risk  mitigation.  Our  specific  comments  on  these  issues  are  detailed  in  sections  1  and  2  below.    
  
In  addition,  EFAMA  strongly  advocates  that  the  amendments  to  the  Basel  II  framework  that  are  currently  being  drawn  up  by  the  Basel  Committee  are  applied  in  a proportionate  manner,  taking  due  account  of  the  differences  between  large internationally  active  banks  –  for  which  Basel  II  was  designed  –  and  the  variety  of  firm  types  of  varying  sizes  and  activities  that  fall  under  the  CRD.   EFAMA’s  key  concern  in  this  regard  is  that  investment  management  companies,  as  firms  operating  under  a  limited  license  with  a  completely  different  risk  profile  to  that  of  either  a  credit  institution  or  an  investment  firm  that  is  capable  of  dealing  on  own  account,  be  subject  to  a  prudential  regime  that  is  appropriate  to  the  risks  they  represent.
 
 


© EFAMA - European Fund and Asset Management Association

Documents associated with this article
10-4036_EFAMA_CRD_(8_April_2010)[1].pdf

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