• Question ID: 2021/0003
• Date of publication: 25/06/2021
• Subject matter: Counterparty reference data
• AnaCredit Manual: Part II
• Data attribute: Institutional sector

Investment firms authorised as credit institutions may be classified as “Other financial intermediaries” under the S.125 institutional sector. As a result, there may be credit institutions that do not qualify as monetary financial institutions.

Question

Q&A 2021/0002 clarifies the obligation of investment firms authorised as credit institutions to report under AnaCredit. Following changes in the regulatory and prudential environment for investment firms, including an amendment to the definition of a credit institution laid down in Regulation (EU) No 575/2013 (CRR), investment firms which are authorised as credit institutions become AnaCredit reporting agents and are required to report information to AnaCredit in accordance with the requirements set out in the AnaCredit Regulation.

In this context, could you clarify whether investment firms which have been authorised as credit institutions should continue to be classified as “Other financial intermediaries” under the S.125 institutional sector or whether they should instead be classified under the S.122 institutional sector?

Answer

The sector classification of investment firms

The modification of the definition of a credit institution in the CRR as a result of Article 62(3)(a) of Regulation (EU) 2019/2033 (IFR) on the prudential requirements of investment firms implies that investment firms which pose significant risks to financial stability will become part of the AnaCredit reporting population once they have been authorised by the competent authority as credit institutions.

However, even if they have been authorised as credit institutions, investment firms which do not carry out business under Article 4(1)(1)(a) of the amended CRR should not be treated as monetary financial institutions (MFIs), because they do not belong to any MFI subsector, i.e. central bank (S.121), deposit-taking corporations except the central bank (S.122) and money market funds (S.123).

Consequently, for the purposes of institutional sector classification under AnaCredit investment, firms which do not carry out business under Article 4(1)(1)(a) of the amended CRR will continue to be classified as “Other financial intermediaries”, even if they have been authorised by the competent authorities as credit institutions.

More specifically, investment firms which meet the definition of other financial intermediaries as defined in paragraph 2.86 of Annex A to Regulation (EU) No 549/2013 and which are authorised to carry out business under point (b) but not point (a) of Article 4(1)(1) of the amended CRR definition of credit institution are classified as “Other financial intermediaries” in the S.125 institutional sector. Such institutions are non-MFI credit institutions.

Meanwhile, credit institutions which meet the conditions referred to in Article 4(1)(1) in point (a) of the amended CRR are classified in the S.122 institutional sector as MFI credit institutions. Similarly, an investment firm authorised as a credit institution is classified as an MFI credit institution in the S.122 institutional sector provided it conducts the business referred to in both point (a) and point (b) of Article 4(1)(1) of the amended CRR.

In the light of the above, the clarifications provided on page 300 of AnaCredit Manual II are complemented as follows:

• for AnaCredit reporting agents which meet the conditions referred to in point (a) of Article 4(1)(1) of the amended CRR, the institutional sector of the reporting agent is “Credit institutions” (S.122)
• for AnaCredit reporting agents that are investment firms which meet any of points (b)(i) to (b)(iii) of Article 4(1)(1) but not point (a), the institutional sector of the reporting agent is “Other financial intermediaries” (S.125)

Related questions

See also Investment firms − obligations as credit institutions under AnaCredit, Type of instrument in the case of credit extended to investment firms