Commission Delegated Regulation (EU) 2021/2154 of 13 August 2021 supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages (Text with EEA relevance)

• Published date: 07 December 2021
• Subject Matter: Financial provisions,Freedom of establishment
• Official Gazette Publication: Official Journal of the European Union, L 436, 7 December 2021

7.12.2021 EN Official Journal of the European Union L 436/11

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COMMISSION DELEGATED REGULATION (EU) 2021/2154

of 13 August 2021

supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (1), and in particular Article 30(4), third subparagraph, thereof,

Whereas:

(1) While investment firms falling within the scope of Regulation (EU) No 575/2013 of the European Parliament and of the Council (2) and of Titles VII and VIII of Directive 2013/36/EU of the European Parliament and of the Council (3), in accordance with Article 1(2) and (5) of Regulation (EU) 2019/2033 of the European Parliament and of the Council (4), are subject to Commission Delegated Regulation (EU) 2021/923 (5), investment firms falling within the scope of Directive (EU) 2019/2034 of the European Parliament and of the Council are required to apply specific requirements to the variable remuneration of all members of staff whose professional activities have a material impact on the risk profile of the investment firm or of the assets that it manages. It is necessary to lay down appropriate criteria to identify those staff members. Those criteria should take into account the authority and responsibilities of such staff members, the investment firm’s risk profile or that of the assets it manages and performance indicators, the investment firm’s internal organisation, and the nature, scope and complexity of the firm concerned. Those criteria should also enable investment firms to set proper incentives in their remuneration policies to ensure that the staff members concerned act prudently when performing their tasks. Lastly, those criteria should reflect the level of risk of different activities within the investment firm.

(2) Members of the management body have the ultimate responsibility for the investment firm, its strategy and activities, and therefore should always be considered to have a material impact on the investment firm’s risk profile. This applies both to the members of the management body in its management function who take decisions and to the members of the management body in its supervisory function who oversee the decision-making process and challenge decisions made.

(3) Some staff members are responsible for providing internal support that is crucial to the operation of an investment firm’s business activities. Their activities and decisions can also have a material impact on an investment firm’s risk profile or that of the assets it manages because their activities and decisions may expose the investment firm to material operational and other risks.

(4) The professional activities of staff members with managerial responsibility can have a material impact on the investment firm’s risk profile or that of the assets it manages because they can make strategic or other fundamental decisions that have an impact on the investment firm’s business activities or on the control functions applied. Such control functions include, typically, risk management, compliance and internal audit. The risks taken by the business units and the way those business units are managed are the most important factors for an investment firm’s risk profile or that of the assets it manages. Certain business activities create higher risks than others and therefore the nature of the business activities should be taken into account.

(5) Appropriate qualitative criteria should ensure that staff members are identified as having a material impact where they are responsible for groups of staff whose activities could have a material impact on the investment firm’s risk profile or of the assets that it manages. This includes situations where the activities of individual staff members under their management do not individually have a material impact on the investment firm’s risk profile but the overall scale of their activities could have such an impact.

(6) The total remuneration of staff members depends typically on the contribution that those staff members make to the successful achievement of the investment firm’s business objectives. That remuneration thus depends on the responsibilities, duties, abilities and skills of staff members and on the performance of staff members and the investment firm. Where a staff member is awarded a total remuneration which exceeds a certain threshold, it is reasonable to presume that such remuneration is linked to that staff member’s contribution to the investment firm’s business objectives and is therefore related to the impact of the staff member’s professional activities on the risk profile of the investment firm or of the assets that it manages. It is therefore appropriate to apply quantitative criteria related to the total remuneration of a staff member, both in absolute and relative terms, to other members of staff within the same investment firm to determine whether the professional activities of such staff member could have a material impact on the investment firm’s risk profile or that of the assets it manages.

(7) Clear and appropriate thresholds should be established to identify staff members whose professional activities have a material impact on the investment firm’s risk profile or of the assets that it manages. Investment firms should be expected to apply the quantitative criteria in a timely manner. Quantitative criteria should follow developments in remuneration to be realistic. A first method to follow such developments is to base quantitative criteria on the total remuneration awarded in the preceding performance year, which includes the fixed remuneration paid for that performance year and the variable remuneration awarded in that performance year. A second method to follow such developments is to base quantitative criteria on the total remuneration awarded for the preceding performance year, which includes the fixed remuneration paid for that performance year and the variable remuneration awarded in the current performance year for the preceding financial year. The second method provides for a better alignment of the identification process with the actual remuneration awarded for a performance period but can only be applied where a timely calculation for the application of the quantitative criteria is possible. Where such timely calculation is no longer possible, the first method should be used. Under either method, the variable remuneration can include amounts that are awarded based on performance periods that are longer than one year, depending on the performance criteria used by the investment firm.

(8) A quantitative threshold of EUR 500 000 should be set for the identification of staff members whose professional activities have a material impact on the risk profile of the investment firm or of the assets that it manages.

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