Financial services newsletter - Issue 2
Welcome to the second edition of our newsletter, where we cover some of the major developments across the financial services sector throughout the last quarter.
Class 2 investment firms must disclose information on a range of items, including:
Investment firms are required to disclose their risk management goals and strategies for each distinct risk category. This involves outlining the methods and processes employed to handle these risks effectively, along with an approved risk statement by the firm’s management body.
Firms must disclose the number of directorships held by members of the management body, the diversity policies related to the selection of management members and whether a risk committee has been established. If such a committee exists, firms must also disclose how many times it meets annually.
As per Article 49, investment firms shall disclose the following information regarding their own funds, in accordance with Article 46:
Firms must provide a summary of their internal capital adequacy process, K-factor calculations, and fixed overheads requirements. Required templates include I CC1, I CC2, and I CCA.
Investment firms are required to disclose key elements of their remuneration systems, including fixed-to-variable remuneration ratios, aggregated quantitative remuneration data, and whether they qualify for a derogation under Article 32(4) of Directive (EU) 2019/2034.
Firms whose average on- and off-balance sheet items exceed €10 million over the preceding four-year period must disclose information regarding their investment policy.
Firms not meeting the criteria outlined in Article 32(4) of Directive (EU) 2019/2034 are required to disclose ESG risks, including physical and transition risks. These must be disclosed biannually, with the first report due by 26 December 2022.
Class 3 firms that issue Additional Tier 1 instruments must disclose information related to:
This information must be published on the same day as their annual financial statements.
Below is an outline of the reporting requirements for firms subject to IFR/IFD, in line with Commission Implementing Regulation (EU) 2021/2284. Class 2 and Class 3 firms have different reporting obligations, with Class 3 firms having a less extensive reporting regime due to fewer templates and data points.
Requirement: | Template: |
---|---|
Own funds | I 01.00 |
Own funds requirement | I 02.01 |
Capital ratios | I 02.02 |
Fixed overheads requirements calculation | I 03.00 |
The level of activity – Threshold review as for Small and non-interconnected investment firms | I 05.00 |
Total K-factor requirement calculations (using templates I 06.01 – I 06.13) | I 04.00 |
Concentration risk | I 07.00 – I 08.06 |
Liquidity requirement | I 09.00 |
Requirement: | Template: |
---|---|
Own funds | I 01.00 |
Own funds requirement | I 02.03 |
Capital ratios | I 02.04 |
Fixed overheads requirements calculation | I 03.01 |
The level of activity – Threshold review as for Small and non-interconnected investment firms | I 05.00 |
Liquidity requirements | I 09.01 |
Our team of Prudential Risk experts understands that regulations are a key driver of strategic priorities for financial institutions. We specialise in helping clients within the financial services sector navigate complex regulatory frameworks. Working closely with our clients, we identify their regulatory obligations and develop strategies to ensure full compliance.
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