There are over 6,500 investment firms in the EU under the MiFID and the majority are in the UK. The new regime puts all these firms into one of three classes.
These are large systemic investment firms which take on principal trading risk and have assets over €15 billion; they will remain subject to the current CRD/CRR regime as their risk profiles are considered to be similar to those of significant credit institutions. Very large Class 1 firms with total assets over €30 billion will even be treated, and be required to apply for authorisation, as credit institutions. Commodity and emission allowance dealers are excluded from Class 1 - these are firms which undertake a main business which is exclusively providing services or engaging in activities in relation to certain MiFID commodity derivatives contracts and emissions trading. In addition, investment firms which are part of banking groups will be allowed (subject to regulatory approval) to continue to apply the CRD/CRR regime.
These are firms which do not meet the large firm test for Class 1 or the small firm test for Class 3 (see below). They will be broadly subject to the full range of new measures under the IFD/IFR regime.