Featured Product

    EBA Proposes Governance and Remuneration Guidance for Investment Firms

    December 17, 2020

    EBA is consulting on the guidelines on internal governance and remuneration policies under the Investment Firms Directive, or IFD. The guidelines specify the governance and remuneration provisions that Class 2 investment firms should comply with, taking into account the proportionality principle. The draft guidelines apply at both the individual and consolidated levels. EBA has been mandated to develop these guidelines under the Investment Firms Directive. The consultation period for these guidelines is open until March 17, 2021. The amended guidelines on internal governance are expected to be applied as of June 26, 2021 while the publication of final guidelines on remuneration policies is expected before the end of June 2021.

    Guidelines on Internal Governance. In terms of the governance requirements for investment firms, the Investment Firms Directive emphasizes the responsibility of the management body for sound governance arrangements, the importance of a strong supervisory function that challenges management decision-making, and the need to establish and implement a sound risk strategy and risk management framework. The EBA guidelines on internal governance complete the various governance provisions in the Investment Firms Directive, taking into account the principle of proportionality, by specifying the tasks, responsibilities, and organization of the management body and the organization of investment firms, including the need to create transparent structures that allow for supervision of all their activities. The guidelines also specify requirements aimed at ensuring the sound management of risks across all three lines of defense and, in particular, set out detailed requirements for the second line of defense (the independent risk management and compliance function) and the third line of defense (the internal audit function). The consultation paper provides details on the establishment of a risk culture, a code of conduct, and the management of conflicts of interest, also in relation to related parties’ transactions to ensure that firms have appropriate decision management and oversight processes for such transactions. 

    Guidelines on Remuneration Policies. The Investment Firms Directive mandates EBA to develop guidelines on remuneration policies for all staff as part of investment firm’s internal governance arrangements, remuneration policies for identified staff, and guidelines that facilitate the implementation of waivers by member states. Remuneration policies must be gender-neutral and respect the principle of equal pay for male and female workers for equal work or work of equal value. These guidelines further specify the application of the remuneration requirements and the principle of proportionality. The 2015 EBA guidelines on remuneration policies, which have been applicable for credit institutions and investment firms, form the basis for these guidelines. To a large extent these guidelines are aligned with the guidelines on remuneration policies under the Capital Requirements Directive, or CRD, to ensure a level playing field and cross-sectoral consistency. The draft guidelines apply at both individual and consolidated levels. Certain parts of the guidelines are applicable to all staff, ensuring that investment firms have in place sound and gender neutral remuneration policies, while other parts of the guidelines focus on specific provisions applicable for the remuneration policies for identified staff. 

     

    Related Links

    Comment Due Date: March 17, 2021

    Keywords: Europe, EU, Banking, Securities, IFD, Governance, ESG, Remuneration, Proportionality, Investment Firms, CRD, EBA

    Related Articles
    News

    BIS Innovation Hub Sets Out Work Program for 2021

    BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.

    January 22, 2021 WebPage Regulatory News
    News

    EC Plans to Consult on Crisis Management and EDIS Framework Revisions

    In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.

    January 21, 2021 WebPage Regulatory News
    News

    EBA Finalizes Remuneration Standards for Investment Firms in EU

    EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).

    January 21, 2021 WebPage Regulatory News
    News

    ECA Recommends Actions to Enhance Resolution Planning for Banks

    EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.

    January 20, 2021 WebPage Regulatory News
    News

    BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK

    BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.

    January 20, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules on Identity Verification of Depositor Protection

    PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).

    January 20, 2021 WebPage Regulatory News
    News

    FSB Publishes Work Program for 2021

    FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.

    January 20, 2021 WebPage Regulatory News
    News

    FCA Issues Update on Move to New Data Collection Platform

    FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.

    January 20, 2021 WebPage Regulatory News
    News

    Bundesbank Publishes Derivation Rules for Reporting by Banks

    Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.

    January 19, 2021 WebPage Regulatory News
    News

    FED Revises Capital Planning and Stress Testing Requirements for Banks

    FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.

    January 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6488