On 19 January 2023, the CSSF issued circular 23/829 (the "Circular") on the application of the guidelines on the criteria for the exemption of investment firms from liquidity requirements in accordance with Article 43(4) of Regulation (EU) 2019/2033 (the “Investment Firms Regulation”).
The Circular applies to all investment firms that meet the conditions for qualifying as small and non-interconnected investment firms set out in Article 12(1) of the Investment Firms Regulation.
With this Circular, the CSSF informs that, in its capacity as competent authority, it applies the Guidelines on the criteria for the exemption of investment firms from liquidity requirements in accordance with Article 43(4) of Investment Firms Regulation published on 29 July 2022 by the European Banking Authority (the “Guidelines”).
In-Scope Entities
As a reminder, the Guidelines have been drafted in the context of the mandatory liquidity requirements that apply under Article 43 of the Investment Firms Regulation.
The Guidelines set out the criteria that competent authorities (i.e. CSSF for Luxembourg) should take into account when exempting small and non-interconnected investment firms from liquidity requirements set out in the Investment Firms Regulation.
The Guidelines specify that small and non-interconnected investment firms as defined in Article 12(1) Investment Firms Regulation (the “In-Scope Entities”) are eligible for the exemption if they fulfil the criteria set out in sections 4.1 and 4.2 and point 20 of section 4.3 of the Guidelines.
Prior authorisation from the CSSF
In-Scope Entities that wish to be exempted from the aforementioned liquidity requirements must receive prior authorisation from the CSSF.
The CSSF performs a case-by-case assessment in accordance with sections 4.3 and 4.4 of the Guidelines, taking into account In-Scope Entities’ risks to its clients and the firm itself, the nature, scope and complexity of its activities and the types of activities performed by the firm and, if available, any outcome of the supervisory review and evaluation carried out in accordance with Part III, Chapter 4, Section 4 of the law of 5 April 1993 on the financial sector as well as any other relevant information.
In-Scope Entities shall submit their authorisation request by email to their usual point of contact at the CSSF with copy to ei@cssf.lu.
Entry into force of circular
The Circular enters into force with immediate effect.
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