1. On 23 June 2022, the House of Representatives adopted the text of several bills, including those to (partially) transpose Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the Prudential Supervision of Investment Firms (the so-called "DTI Directive").

The objective of the DFI Directive is in essence to better reflect in the EU prudential framework the differences between the risks incurred and generated by investment firms as compared to credit institutions and to harmonise the application of the prudential framework in the different Member States.

In Belgium, the European concept of investment firm is, since the transposition of Directive 2014/65/EU of 15 May 2014 on markets in financial instruments ("MiFID II"), broken down into "brokerage firms", on the one hand, and "portfolio management and investment advisory companies" (hereinafter PMACs), on the other, which are essentially distinguished by the investment services they are authorised to provide and the supervisory authorities in charge of their supervision (the NBB and the FSMA supervise brokerage firms, while only the FSMA supervises ICPMS).

2. Prudential supervision of stock exchange companies and ICPMS is organised by separate laws, namely :

• the law of 24 April 2014 on the status and supervision of credit institutions and brokerage companies (referred to as the "Banking Law"); and
• the law of 25 October 2016 on access to the activity of providing investment services and the status and supervision of portfolio management and investment advisory companies. However, the latter law applies to all investment firms, in that it regulates, in its Title 2, the access to investment activities and to the activity of providing investment services. Its other provisions apply only to ICPMS.

The two bills essentially aim to transfer the provisions applicable to stock exchange companies from the Banking Act to a new law ad hoc on the status and control of securities firms and on miscellaneous provisions (Cf. Doc. Parl.Chamber, 2021-2022, no. 55-2763/001) and to adapt the above-mentioned law of 25 October 2016 (Cf. Parl.Chamber, 2021-2022, no. 55-2765/003).

Fundamentally, the adoption of a new law on the status and supervision of securities companies is more a matter of legalistic considerations, in particular to anticipate future changes to the DTI Directive itself; the draft law, as it stands, does not imply a substantial reform of the existing regime.

3. However, some changes in substantive law are worth mentioning:

• In line with the Directive, the draft introduces a new categorisation of securities firms, based on the DTI criteria, with varying degrees of prudential requirements. Brokerage firms will be considered as "small", "large" (or as belonging to the residual category to which a common set of rules will apply);
• the minimum initial capital requirements have been revised for both brokerage firms and ICSDs to meet the DFI Directive's objective of maximum harmonisation. It is now set at EUR 750,000, 150,000 or 75,000 depending on the investment services offered;
• the governance of brokerage firms and ICPFs is also reviewed, in particular in that the constitution of an executive committee will no longer be imposed as a matter of principle (but could be, if necessary, by the NBB or the FSMA). However, they will have to set up a risk committee and a remuneration committee within their administrative body. The NBB or the FSMA may, if necessary, also require the establishment of an audit committee and/or a nomination committee.

As the deadline for transposition of the DTI Directive (expiring on 26 June 2021) is already well past, the legislator has not provided for a deferred entry into force for the vast majority of the provisions of the two adopted drafts (which will therefore enter into force following the ordinary deadline).

However, for stock exchange companies previously exempted from setting up specialised committees within their board of directors, a transitional period of 18 months is foreseen to allow them to comply with the new governance requirements.

It is therefore important not to underestimate the extent of compliance and the time available for compliance once the laws are adopted.

For more information, please contact: Marc-David Weinberger (marc-david.weinberger@cew-law.be) and Antoine Mairesse (antoine.mairesse@cew-law.be), lawyers, CEW & Partners.