The European Banking Authority (EBA) published the revised guidelines on internal governance and on sound remuneration policies for investment firms under the Investment Firms Directive (IFD). The final guidelines provide further details on how certain provisions under IFD apply to class 2 investment firms. All investment firms must also comply with the governance requirements under the Markets in Financial Instruments Directive (MiFID). The guidelines have been developed in cooperation with the European Securities and Markets Authority (ESMA) and will apply from April 30, 2022.
The revised guidelines on internal governance provide further details on how the IFD governance provisions should be applied by Class 2 investment firms, specifying the tasks, responsibilities and organization of the management body, and the organization of investment firms; this includes 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 compliance function and the independent risk management where applicable) and, the third line of defense (the internal audit function), where applicable. The IFD contains specific governance requirements for investment firms in parallel to and consistently with the ones already applicable under the Capital Requirements Directive (CRD). These guidelines apply on an individual and consolidated basis within the scope of application set out in accordance with Article 25 of Directive (EU) 2019/2034.
The revised guidelines on sound remuneration policies further detail how the provisions under IFD on remuneration policies and variable remuneration of identified staff should be applied by class 2 investment firms. The guidelines are as far as possible consistent with the existing guidelines under the Capital Requirements Directive (CRD). Relevant differences between IFD and CRD (for example, the absence of a bonus cap and differences in instruments and the length of deferral periods) have been taken into account. All aspects of the remuneration policy must be gender-neutral in accordance with IFD remuneration requirements. Institutions should, therefore, comply with the principle of equal pay for equal work or equal value of work. The provisions on anti-discrimination and equal opportunities have been retained as they are important to foster diversity in the longer term and to reduce the gender pay gap over time. Investment firms should implement any adjustments of their remuneration policies by April 30, 2022. Where shareholder approvals are required for such revisions, approvals should be requested before June 30, 2022. The remuneration policy should be applied in line with these guidelines for the performance year starting after December 31, 2021.
Keywords: Europe, EU, Banking, Investment Firms, IFD, CRD, Remuneration, Governance, MIFID, Guidance, ESMA, EBA
Previous ArticleBIS Paper Examines Impact of Direct Lending on Policy Mechanism
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.