(1)

Considering that not all investment firms are required to have audited financial statements, rules specifying own funds requirement for investment firms based on fixed overheads should allow investment firms to calculate fixed overheads requirement also on the basis of non-audited financial statements, where investment firms are not obliged to have audited financial statements. Furthermore, where the audited financial statements do not cover a period of 12 months, a calculation should be performed by the investment firm to produce an equivalent annual amount, in order to ensure consistency with the requirement of Article 13(1) of Regulation (EU) 2019/2033.

(2)

Given that the difference between the gross and net profits with regard to a firm’s financial situation are represented by the fixed costs of running the firm’s business, the deduction from the total costs of an investment firm of the employees’, directors’ and partners’ shares in profit referred to in Article 13(4) of Regulation (EU) 2019/2033 should be understood to refer to the net profits.

(3)

Moreover, since payment of staff bonuses and other remuneration may be deferred over time and could follow different agreement structures, those staff bonuses and other remuneration should be considered as dependent on net profit where this would have no impact on the firm’s capital position, either due to payments having already been made or due to the absence of the obligation of payment in case of absence of net profit.

(4)

Investment firms are to include fixed costs of third parties in the calculation of their total expenses. However, where those costs are not fully incurred on behalf of the investment firms, they should be included up to the amount attributable to the investment firm.

(5)

Not all investment firms use International Financial Reporting Standards and there are differences in the applicable accounting standards in the calculation of the total costs. Elements to be deducted by investment firms from their total expenses used for the calculation of the fixed overheads requirement should be further specified, in addition to those provided in Article 13(4) of Regulation (EU) 2019/2033, in order to ensure comparability in the calculation of the fixed overheads requirement.

(6)

Consistently with the particularity of the business of commodity and emission allowance dealers, expenses related to raw materials should be deducted by commodity and emission allowance dealers from the total expenses used in calculating their fixed overheads requirement.

(7)

In case an investment firm that is a market maker is wound down, it stops providing its market making services and hence no longer incurs the trading fees it normally incurs when providing those services. So those fees should be excluded from the total expenses used to calculate the fixed overheads requirement. At the same time, in case of a wind down, the market maker may continue to have an inventory of securities that it normally uses in its market making activities. If that inventory is liquidated, it would give rise to trading fees that should be included in the total expenses used for calculating the fixed overheads requirement.

(8)

Fixed overheads can evolve at a similar pace as the activities of the investment firm, and in that case should not be considered material changes for the purposes of Article 13(2) of Regulation (EU) 2019/2033. However, there may be circumstances where changes, such as shifts in the business models or mergers and acquisitions, may occur and result in significant variations in the projected fixed overheads. Therefore, rules specifying own funds requirement for investment firms based on fixed overheads should establish objective thresholds based on the projected fixed overheads for the purpose of specifying the notion of material change.

(9)

This Regulation is based on the draft regulatory technical standards submitted by the European Banking Authority to the Commission after having consulted the European Securities and Markets Authority.

(10)

The European Banking Authority has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (2).