Council of the European Union and European Parliament 14 June 2006, Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast)

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Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 recasts the capital adequacy framework for investment firms and credit institutions, establishing harmonised minimum capital requirements, rules for their calculation, and prudential supervision standards applicable across Member States. Key provisions set differentiated initial capital thresholds for investment firms based on their authorised activities (ranging from EUR 50,000 to EUR 730,000), define the composition and alternative determinations of own funds, and prescribe capital requirements for trading book position risk, settlement and counterparty credit risk, foreign-exchange risk, commodities risk, and large exposures, with detailed methodologies set out in Annexes I through VII. Member States were required to transpose the substantive provisions by 31 December 2006 for application from 1 January 2007, while retaining discretion to impose stricter requirements on authorised institutions.AI