In a development which has received relatively little attention compared to other recent changes such as MiFID II and the Senior Managers and Certification Regime, the European Commission has adopted legislative proposals for a revised prudential framework for investment firms.  This somewhat dry title belies potentially significant changes to the regulatory capital requirements which apply to certain firms that had previously only had to comply with a relatively benign regulatory capital regime.  In particular, this may impact so-called "adviser / arranger" firms, requiring them to calculate (and hold) regulatory capital equal to a quarter of fixed annual expenditure for the first time.  

This development could be significant for many participants in the alternative asset management sector (including private equity), where entities regulated as "adviser / arranger" firms are frequently used as part of business structures.  The article below sets out more detail on what has been proposed.