Investment Firms Regulation & Directive (IFR / IFD): Overview, Scope & Reporting Requirements

Overview

The Investment Firms Regulation (IFR) and Investment Firms Directive (IFD) form the EU’s prudential framework specifically designed for investment firms, replacing the previous application of CRR/CRD rules that were originally designed for banks.

The IFR establishes directly applicable prudential requirements, while the IFD sets out authorisation, governance, and supervisory expectations to be transposed into national law. Together, they introduce a risk-sensitive framework tailored to the business models and activities of investment firms.

The IFR/IFD framework became applicable from 26 June 2021.

Legal Context

The IFR and IFD were developed at EU level and are overseen by the European Banking Authority (EBA), which is responsible for issuing Regulatory Technical Standards (RTS), Implementing Technical Standards (ITS), and reporting taxonomies.

Supervision and enforcement are carried out by national competent authorities, applying EBA standards consistently across Member States.

In the United Kingdom, similar prudential requirements for investment firms are implemented under the IFPR (Investment Firm Prudential Regime) and overseen by the Financial Conduct Authority (FCA).

Applicability

The IFR/IFD framework applies to EU-authorised investment firms, including:

• MiFID investment firms

• Portfolio managers

• Broker-dealers

• Proprietary trading firms

• Advisory and execution-only firms

Investment firms are categorised based on:

• Size

• Activities

• Risk profile

These categories determine the scope and frequency of reporting obligations.

Obligations

The IFR/IFD framework introduces:

• K-Factor capital requirements

• Own funds calculations

• Fixed overhead requirements

• Liquidity requirements

• Concentration risk monitoring

• Governance and remuneration rules (under IFD)

These obligations are supported by detailed EBA RTS and ITS to ensure consistent supervisory reporting.

Reporting

Investment firms subject to IFR are required to submit regular prudential reports to their competent authorities, including:

• Own funds and capital adequacy

• K-Factor calculations

• Concentration risk exposures

• Liquidity metrics

• Group-level reporting (where applicable)

Reporting must be submitted in EBA-defined XBRL formats, using official taxonomies and validation rules.

Manual preparation and spreadsheet-based processes significantly increase the risk of:

• Validation errors

• Inconsistent data

• Late submissions

Reporting

Common challenges faced by investment firms include:

• Complex K-Factor calculations across business lines

• Fragmented source data

• Frequent EBA taxonomy updates

• Manual XBRL preparation and validation

• Limited auditability of reported figures

These challenges increase operational burden and supervisory risk.

REGREP Solution

REGREP supports IFR / IFD exclusively as a regulatory reporting infrastructure, enabling investment firms to operationalise EBA reporting requirements.

REGREP provides:

• Structured ingestion of prudential and risk data

• Calculation support aligned with EBA reporting logic

• Automated generation of EBA-compliant XBRL reports

• Ongoing taxonomy and validation rule handling

• Audit-ready outputs for supervisory review

• API-first integration with finance and risk systems

REGREP supports the technical preparation and submission of IFR/IFD reports and does not replace internal governance, risk ownership, or supervisory responsibility.

• European Banking Authority (EBA)

• European Securities and Markets Authority (ESMA)

• Financial Conduct Authority (FCA, via IFPR)

Links are provided for reference purposes only. REGREP is not affiliated with or endorsed by any regulatory authority.

• EBA XBRL Reporting

• IFPR (UK Investment Firm Prudential Regime)

• Regulatory reporting infrastructure for investment firms