The Cyprus Securities and Exchange Commission (CySEC) has urged Cyprus investment firms to review proposed European rules that could require some of the largest firms to become credit institutions.

CySEC issued the relevant circular shortly after the European Banking Authority (EBA) launched a consultation on August 25 covering draft regulatory technical standards (RTS) for the reclassification of investment firms as credit institutions.

The consultation follows changes to the Capital Requirements Directive (CRD) framework and is intended to make the assessment of when an investment firm should obtain a banking licence more proportionate, transparent and risk-based.

Under Article 8a of the CRD, investment firms with total assets exceeding €30 billion are generally required to obtain authorisation as credit institutions rather than continue operating solely under a MiFID investment firm authorisation.

The EBA’s proposed rules set out how the €30 billion threshold should be calculated at both individual and group level, as well as what firms must report to regulators so the threshold can be monitored.

The draft RTS also establish the factors that competent authorities should consider when deciding whether to grant a waiver from the requirement to obtain credit institution authorisation.

The EBA said the revised methodology was necessary following changes to Article 8a, which have narrowed the scope of the group-level calculation.

Under the revised approach, only the assets of EU undertakings and their subsidiaries carrying out MiFID activities 3 and 6, together with EU branches of third-country entities belonging to the same group, would be included in the calculation.

The EBA said this represented a simplification of calculation and reporting requirements compared with the previous global approach.

Investment firms covered by the reporting requirements would only have to submit information where their total assets exceeded €5 billion, with two reporting templates to be completed each quarter.

Monthly figures could then be derived through simple interpolation, reducing the reporting burden on firms.

The proposed rules also set out how regulators should assess waiver requests, including by examining a group’s organisational structure, booking practices and allocation of assets.

Authorities would also assess an entity’s business model and the proportion of its transactions conducted on behalf of clients, use available regulatory tools to measure systemic risk and examine the size and complexity of its derivatives portfolio and overall footprint.

CySEC encouraged Cyprus investment firms to review the consultation paper and draft RTS, assess their potential effect on business models, group structures and prudential reporting processes and consider submitting comments.

The regulator also urged firms to monitor further developments as the EBA finalises the standards.

Interested parties have until November 25, 2026 to submit comments directly to the EBA through its consultation process.

The EBA will also hold a virtual public hearing on September 30, 2026 at 10am CEST, with registration open until September 25.

The consultation is intended to implement requests from EU legislators covering the methodology for calculating the CRD thresholds, the information required for regulatory monitoring and the factors to be considered when granting waivers.

Cyprus investment firms are therefore being encouraged by CySEC to assess the proposed framework ahead of its finalisation, particularly those whose asset levels or group structures could bring them within the scope of the new requirements.