4.3 Criteria for the exemption

Competent authorities, after receiving a request from an investment firm, should assess whether that investment firm may be exempted from liquidity requirements based on the investment firm’s financial resources needs for an orderly wind-down or restructuring.

For the purpose of the assessment referred to in paragraph 18, competent authorities should take into account the investment firm’s risks to its clients and the firm itself, the nature, scope and complexity of its activities and the types of activities performed by the firm and, if available, any outcome of the supervisory review and evaluation carried out in accordance with Article 36 of Directive (EU) 2019/2034.

Competent authorities may exempt an investment firm which is providing portfolio management or investment advice on an ongoing basis when the investment firm manages assets which are delegated to it by other financial institutions.

The assessment of the needs for liquid financial resources should be performed both under normal conditions and under stressed conditions, which lead to an increased risk of mismatch between outflows and inflows, in particular with regard to payments related to off-balance-sheet positions or legal costs.