# Underwriting or placing on a firm commitment basis

Source page: https://protegra.io/licensing/activities/underwriting-firm-commitment/

Guaranteeing to buy whatever is left unsold in a securities issuance, firm commitment underwriting, needs an investment firm licence or a banking licence under MiFID II Annex I, Section A(6). The underwriter holds substantial regulatory capital to absorb inventory risk during a large distribution, and can passport syndicated offerings across the EEA.

## Definition

Guaranteeing the sale of an issue of financial instruments by committing to buy what is not sold to investors.

- MiFID II, Annex I, Section A(6): [official text](https://eur-lex.europa.eu/eli/dir/2014/65/oj)

## Which licence you need

Licence families that typically permit this activity:

- [Investment firm / broker-dealer](https://protegra.io/licensing/licences/investment-firm/)
- [Bank / credit institution](https://protegra.io/licensing/licences/bank/)

- [IF · CyprusCyprus Investment Firm (CIF) authorisationCySEC](https://protegra.io/licensing/licences/investment-firm/cyprus-cif/)
- [IF · Czech RepublicInvestment Firm licenceCNB](https://protegra.io/licensing/licences/investment-firm/czech-republic/)
- [IF · EstoniaAuthorisation as an investment firmFI](https://protegra.io/licensing/licences/investment-firm/estonia/)
- [IF · GermanyInvestment firm licenceBaFin](https://protegra.io/licensing/licences/investment-firm/germany/)
- [IF · IrelandInvestment Firm Authorisation (MiFID II)CBI](https://protegra.io/licensing/licences/investment-firm/ireland/)
- [IF · ItalyInvestment firm licence (SIM)CONSOB](https://protegra.io/licensing/licences/investment-firm/italy-sim/)
- [IF · LatviaInvestment firm licenceLB](https://protegra.io/licensing/licences/investment-firm/latvia/)
- [IF · LithuaniaFinancial brokerage firm licenceLB](https://protegra.io/licensing/licences/investment-firm/lithuania/)
- [IF · LuxembourgInvestment firm authorisationCSSF](https://protegra.io/licensing/licences/investment-firm/luxembourg/)
- [IF · MaltaInvestment services licence (Category 1, 2, or 3)MFSA](https://protegra.io/licensing/licences/investment-firm/malta/)
- [IF · NetherlandsInvestment firm licenceInvestment firm licence (Vergunning beleggingsonderneming) under Wft Article 2:96 and MiFID IIAFM](https://protegra.io/licensing/licences/investment-firm/netherlands/)
- [IF · PolandBrokerage House licence (dom maklerski)KNF](https://protegra.io/licensing/licences/investment-firm/poland-brokerage/)
- [IF · SlovakiaInvestment firm licenceNBS](https://protegra.io/licensing/licences/investment-firm/slovakia/)

## Where it can be licensed

| | EU/EEA passport | Domestic |
| --- | --- | --- |
| [Cyprus: Cyprus Investment Firm (CIF) authorisation](https://protegra.io/licensing/licences/investment-firm/cyprus-cif/) | ✓ | |
| [Czech Republic: Investment Firm licence](https://protegra.io/licensing/licences/investment-firm/czech-republic/) | ✓ | |
| [Estonia: Authorisation as an investment firm](https://protegra.io/licensing/licences/investment-firm/estonia/) | ✓ | |
| [Germany: Investment firm licence](https://protegra.io/licensing/licences/investment-firm/germany/) | ✓ | |
| [Ireland: Investment Firm Authorisation (MiFID II)](https://protegra.io/licensing/licences/investment-firm/ireland/) | ✓ | |
| [Italy: Investment firm licence (SIM)](https://protegra.io/licensing/licences/investment-firm/italy-sim/) | ✓ | |
| [Latvia: Investment firm licence](https://protegra.io/licensing/licences/investment-firm/latvia/) | ✓ | |
| [Lithuania: Financial brokerage firm licence](https://protegra.io/licensing/licences/investment-firm/lithuania/) | ✓ | |
| [Luxembourg: Investment firm authorisation](https://protegra.io/licensing/licences/investment-firm/luxembourg/) | ✓ | |
| [Malta: Investment services licence (Category 1, 2, or 3)](https://protegra.io/licensing/licences/investment-firm/malta/) | ✓ | |
| [Netherlands: Investment firm licence](https://protegra.io/licensing/licences/investment-firm/netherlands/) | ✓ | |
| [Poland: Brokerage House licence (dom maklerski)](https://protegra.io/licensing/licences/investment-firm/poland-brokerage/) | ✓ | |
| [Slovakia: Investment firm licence](https://protegra.io/licensing/licences/investment-firm/slovakia/) | ✓ | |

## Frequently asked questions

### What is the main operational risk in firm commitment underwriting?

The underwriter agrees up front to buy all unsold securities from the issuer at a set price. If demand falls short, that inventory lands on the underwriter's own balance sheet, and so does any valuation loss that follows.

### How do capital adequacy rules impact underwriting firms?

Underwriting puts the firm's own balance sheet at risk, so prudential regulators charge a specific underwriting risk capital add-on under the Investment Firms Regulation (IFR) or CRD. The firm has to hold enough liquid capital to absorb a market downturn during the syndication period.

## Sources

1. [MiFID II Annex I, Section A(6)](https://eur-lex.europa.eu/eli/dir/2014/65/oj): retrieved 2026-09-24

Last verified 2026-09-24 · Author: Danil Marmysh · Reviewed by Anastasia Sidorenkova · © Protegra. Data: CC BY 4.0, cite "Protegra Licensing Atlas". Not legal advice.