The European Commission (EC) recently proposed an overhaul of the prudential framework for E.U. investment firms. Investment managers based in the E.U. should monitor the proposal through the legislative process given its eventual implications for not only the level of regulatory capital that those managers would be required to hold, but also for the restrictions on the ways in which those managers would be able to pay their employees and the remuneration disclosures they would be required to make. In a guest article, Leonard Ng and Caitlin McErlane, partner and associate, respectively, at Sidley Austin, explore the implications of the EC’s proposed overhaul of the prudential framework for E.U. investment firms, particularly with respect to E.U. investment managers. For a discussion of other recent issues affecting the E.U., see “How ESMA’s Opinions on the Relocation of U.K. Financial Market Participants to the E.U. May Affect Fund Managers Post-Brexit” (Nov. 16, 2017). For additional insight from Ng, see “E.U. Market Abuse Scenarios Hedge Fund Managers Must Consider” (Dec. 17, 2015).