ECB to Start Supervising Large Investment Firms as Law Changes

(Bloomberg) -- The European Central Bank said it will start overseeing “systemic” investment firms as a long-planned legal change adds to responsibilities that have steadily expanded in recent years.

Firms with more than 30 billion euros ($35.8 billion) of assets that underwrite or trade financial instruments on their own account will now have to apply for banking licenses under new legislation that takes effect this week, the central bank said in a statement on Friday.

European authorities are putting securities firms on a tighter leash to ensure that risks in trading businesses are supervised appropriately. The ECB has steadily expanded its remit since taking on supervision of euro area banks at the end of 2014 and again when international banks started moving operations to the bloc because of Brexit.

A first group will probably enter ECB oversight in the second half of the year, the ECB said.

The ECB already oversees the investment banking arms of significant euro area lenders and is scrutinizing the expansion of those banks that moved assets to the bloc after Brexit.

Citigroup Inc. said earlier this month that its EU broker dealer saw its assets jump more than fourfold last year and the entity is preparing for direct supervision by the ECB.

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