What Are the Implications for Investment Managers of the Revised Prudential Framework for E.U. Investment Firms?

In late 2017, the European Commission (EC) 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); and “ECHR Decision Imposes New Criteria for Email Monitoring Practices on Fund Managers With European Operations” (Sep. 28, 2017).

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