4.4 Group capital test permission: conditions for deeming that the investment firm group does not pose significant risks to clients or to the market

Competent authorities should not be prevented from deeming that an investment firm group not meeting the criteria set out in Section 4.2 does not pose a significant risk to clients or the market for the purposes of Article 8(1) of Regulation (EU) 2019/2033 if all the following conditions are met:

• (a) the own funds requirements calculated in accordance with Article 8(3) of Regulation (EU) 2019/2033 remain sufficiently close to the own funds requirements calculated in accordance with the Article 7 of that regulation, at an indicative percentage greater than 90% of the latter;
• (b) none of the undertakings of the investment firm group, including undertakings located in third countries, have outstanding issuance of equity or debt instruments which are not listed on a regulated exchange held by retail clients in the EU, as defined in Article 4(1)(11) of Directive (EU) 2014/65; this criterion does not include the owners of the majority of the voting rights, the managers and the employees of any of the undertakings of the investment firm group;
• (c) there is a maximum of one undertaking within the group that is a clearing member as defined in Article 4(1) (3) of Regulation (EU) 2019/2033;
• (d) if one or more undertakings of the group hedge positions subject to K-NPR or K-TCD for other undertakings of the group via internal risk transfer agreements, there are in place, within the group, satisfactory organisational arrangements and sufficient risk control functions, proportionate to the size of the investment firm group and to the risk managed by the undertakings that hedge those positions, and the overall risk stemming from the trading positions of the investment firm group and their hedges would not be better supervised under the prudential consolidation framework;
• (e) if a competent authority deems that an investment firm group has a sufficiently simple structure but does not meet the criteria in either paragraph 14(a) or paragraph 14(c), the own funds requirements calculated in accordance with Article 8(3) of Regulation (EU) 2019/2033 remain sufficiently close to the own funds requirements calculated in accordance with Article 7 of that regulation, at a indicative percentage greater than 95% of the latter. If a competent authority deems that an investment firm group has a sufficiently simple structure but does not meet any of the criteria in paragraphs 14(a) and 14(c), the own funds requirements calculated in accordance with Article 8(3) of Regulation (EU) 2019/2033 should preferably be at least equal to the own funds requirements calculated in accordance with Article 7 of that regulation.

If any of the undertakings of the group is subject to any proceedings referred to in Article 18(1) of Directive (EU) 2019/2034, the competent authority should assess whether the infringements related to these proceedings pose significant risks to clients or to the market.

For the purposes of assessing the condition referred to in paragraph 15(a), competent authorities may exempt the Union parent investment firm, Union parent investment holding company or Union parent mixed financial holding company from the obligation to calculate the own funds requirements of the investment firm group according to Article 7 of Regulation (EU) 2019/2033 if they deem that the effort required to perform such a calculation would be disproportionate. If competent authorities grant this exemption, the own funds requirements of the investment firm group according to Article 7 of that regulation should be replaced with the sum of the individual own funds requirements of all undertakings of the group that are Union parent investment firms, Union parent investment holding companies, Union parent mixed financial holding companies and any other parent undertakings that are investment firms, financial institutions, ancillary services undertakings or tied agents. If an undertaking is not an investment firm, the individual own funds requirements are those applicable under the relevant prudential framework. If an undertaking is a subsidiary undertaking located in a third country, the individual own funds requirements should be calculated in accordance with paragraph 20.