Final and translated into the EU official languages
The Guidelines on internal governance under the Investment Firms Directive (IFD) specify the governance provisions that Class 2 investment firms should comply with, taking into account the proportionality principle. This governance framework aims at ensuring that investment firms have a clear organisational structure, effectively manage their risks and have adequate internal control mechanisms in place.
The European Banking Authority (EBA) launched today a public consultation on its new Guidelines on internal governance under the Investment Firms Directive (IFD), specifying the governance provisions that Class 2 investment firms should comply with, taking into account the proportionality principle. This governance framework aims at ensuring that investment firms have a clear organisational structure, effectively manage their risks and have adequate internal control mechanisms in place. The consultation runs until 17 March 2021.
In line with the proportionality principle and to take account of the specificities of investment firms, the consultation paper specifies a number of governance provisions laid down in the IFD, including the tasks, responsibilities of the management body as well as the organisation of investment firms. The aim of these provisions is to ensure the sound management of risks across all lines of defence as well as the adoption of transparent structures to allow the supervision of all investment firms’ activities.
In addition, 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.
To ensure that investment firms groups take a holistic approach to their risk management, the draft Guidelines apply at both individual and consolidated level.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 17 March 2021.
A public hearing will take place on 17 February 2021 from 14: 00 to 16:00.
All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft Guidelines have been developed in accordance with Article 26 of Directive 2019/2034/EU, which requires firms to have robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, processes and mechanisms and mandates EBA to develop Guidelines in this area.
The EBA Guidelines will apply to competent authorities across the EU, as well as to investment firms (Class 2) on a solo and consolidated basis.
The European Banking Authority (EBA) published today its revised Guidelines on internal governance for investment firms under the Investment Firms Directive (IFD).
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 specific provisions apply to class 2 investment firms[1]. All investment firms must also comply with the governance requirements under the Markets in Financial Instruments Directive (MiFID).
The Guidelines provide further details on how the IFD governance provisions should be applied by Class 2 investment firms, specifying the tasks, responsibilities and organisation of the management body, and the organisation 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 defence and, in particular, set out detailed requirements for the second line of defence (the compliance function and the independent risk management where applicable) and, the third line of defence (the internal audit function), where applicable.
These Guidelines have been developed on the basis of Article 26 of Directive (EU) 2019/2034, which requires investment firms to have robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, processes and mechanisms and mandates the EBA to develop Guidelines in this area. The Guidelines have been developed in cooperation with the European Securities and Markets Authority (ESMA).
The EBA Guidelines will apply to Competent Authorities across the EU, as well as to credit institutions and investment firms on an individual and consolidated basis. The Guidelines will enter into force on 30.4.2022.
[1] i.e. investment firms that are non-systemically relevant investment firms which do not qualify as small and non-interconnected investment firms either and to which the IFD and the Investment Firms Regulation (IFR) applies without limitation
The European Banking Authority (EBA) launched today a public consultation on its new Guidelines on internal governance under the Investment Firms Directive (IFD), specifying the governance provisions that Class 2 investment firms should comply with, taking into account the proportionality principle. This governance framework aims at ensuring that investment firms have a clear organisational structure, effectively manage their risks and have adequate internal control mechanisms in place. The consultation runs until 17 March 2021.
In line with the proportionality principle and to take account of the specificities of investment firms, the consultation paper specifies a number of governance provisions laid down in the IFD, including the tasks, responsibilities of the management body as well as the organisation of investment firms. The aim of these provisions is to ensure the sound management of risks across all lines of defence as well as the adoption of transparent structures to allow the supervision of all investment firms’ activities.
In addition, 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.
To ensure that investment firms groups take a holistic approach to their risk management, the draft Guidelines apply at both individual and consolidated level.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 17 March 2021.
A public hearing will take place on 17 February 2021 from 14: 00 to 16:00. All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft Guidelines have been developed in accordance with Article 26 of Directive 2019/2034/EU, which requires firms to have robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, processes and mechanisms and mandates EBA to develop Guidelines in this area.
The EBA Guidelines will apply to competent authorities across the EU, as well as to investment firms (Class 2) on a solo and consolidated basis.