CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

CP13/6
CRD IV for Investment Firms
5.
Definition of ‘significant institution’
Background
5.1 Throughout the CRD IV package there are several policies that only apply to institutions which
are ‘significant in terms of size, internal organisation and nature, scope and complexity of their
activities’. To clarify which firms these policies apply to, this chapter outlines a proposal for an
objective definition with pre-defined thresholds that firms can use to determine whether these
policies apply to them.
5.2 For clarity, this proposal would apply to FCA authorised firms that would be subject to CRD IV
and has direct impact on the FCA implementation of the following articles:
• Article 76 of the Directive regarding the requirement to establish an independent risk committee;
• Article 88 of the Directive regarding the requirement to establish an independent
nominations committee;
• Article 91 of the Directive regarding the requirement to separate the CEO and chairperson
role, and limitations on the number of directorships an individual may hold;
• Article 95 of the Directive regarding the requirement to establish an independent
remuneration committee;
• Article 100 of the Directive regarding supervisory stress testing to facilitate the review and
evaluation process under Article 97 of the Directive;
• Articles 129 and 130 of the Directive on applicability of the capital conservation buffer and
the countercyclical capital buffer (but provided that an exemption from the application of
these articles does not threaten the stability of the financial system of the Member State);
• Article 6 of the Regulation regarding the scope of liquidity reporting on an individual basis;
• Article 11 of the Regulation regarding the scope of liquidity reporting on a consolidated
basis; and
• Article 450 of the Regulation regarding remuneration disclosure.
5.3 We recognise that these articles reflect a broad range of policy areas which are not necessarily
directly linked to each other. However, we propose that by defining an objective criteria, tailored
where required, producing a definition of ‘significant’ firms will provide clarity to firms about
which policies apply to them. Were each reference to be defined independently, this would
create substantial complexity without significantly improving risk mitigation.
42 July 2013
Financial Conduct Authority