Response to consultation Paper on Draft RTS on classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used the purposes of variable remuneration
Go back
We consider this is extremely important and the RTS would benefit in introducing a similar paragraph.
Besides, could it be clarified that in the case of an investment firm with unquoted shares (IFD Art. 32 (1) (j) (ii)), that the quoted shares of the parent company can be used in instruments in variable remuneration
Besides, because of the different types of investment firms we consider the definition of “credit quality” is inappropriate and should be replaced by “risk profile” in Art. 6 v and g (i) like in Art. 6 (a). Another option could be to create a new paragraph (vi) to add criteria based on the financial result.
Question 1: Are the provisions within Article 1-5 sufficiently clear?
In the introduction of the Investment Firm Directive, paragraph 41 provides that “the EBA should ensure that those regulatory technical standards can be applied by all investment firms concerned in a manner that is proportionate to the nature, scale and complexity of those investment firms and their activities”.We consider this is extremely important and the RTS would benefit in introducing a similar paragraph.
Besides, could it be clarified that in the case of an investment firm with unquoted shares (IFD Art. 32 (1) (j) (ii)), that the quoted shares of the parent company can be used in instruments in variable remuneration
Question 3: Are the provisions in Article 6 appropriate and sufficiently clear? Where respondents are of the view that the draft RTS should define a set of specific arrangements rather than providing conditions that such arrangements should meet, comments are most helpful, when they clearly describe the alternative arrangements that investment firms desire to use to ensure that variable remuneration is aligned with the long-term interest of the investment firm and its risk profile.
Where an investment firm does not issue any of the listed instruments in Art. 32 (1) and does not manage assets, we consider it would be extremely useful to provide with concrete examples of alternative arrangements. For instance, could an instrument partially indexed to the financial result of the parent company be considered as an option?Besides, because of the different types of investment firms we consider the definition of “credit quality” is inappropriate and should be replaced by “risk profile” in Art. 6 v and g (i) like in Art. 6 (a). Another option could be to create a new paragraph (vi) to add criteria based on the financial result.