Supervisory disclosure for investment firms

Transparency is an essential factor in the effective supervision of investment firms. It is all the more significant at European level as it is important for the proper functioning of financial markets that the Community provisions are implemented in a harmonized manner and that supervisory practices converge.

Thus, Directive (EU) 2019/2034 on access to the activity of investment firms and the prudential supervision of investment firms (Investment Firms Directive, IFD) requires the competent authorities to publish certain information so that the internal investment firms market can operate with increasing effectiveness and citizens of the Union are afforded adequate levels of transparency. The information published should be sufficient to enable a meaningful comparison of the approaches adopted by the competent authorities of different Member States.

Article 57 (1) (a) of Directive (EU) 2019/2034 specifies the different categories of information that supervisors must publish:

• Text of laws, regulations and administrative provisions and general guidance adopted in each Member State in terms of prudential regulation;

• Conditions of exercise of options and national discretions available in Community legislation;

• General criteria and methods that supervisors apply for the purpose of the supervisory review and evaluation process;

• Aggregate statistical data on key aspects of the implementation of the prudential framework in each Member State.

To ensure a harmonized implementation of the IFD transparency requirements, and considering more broadly the importance of readability and comparability of the rules and procedures within a context of increasing complexity of prudential rules, the European Banking Authority (EBA) has published in June 2021 an Implementing Technical Standards on the format, structure, contents and annual publication date of the information to be disclosed by competent authorities. The European Commission has adopted these technical standards in the form of its Implementing Regulation (EU) 2022/389 of 8 March 2022. This regulation defines a common publication format designed to facilitate access to published information and enable their comparison. Under this regulation, the information provided by European supervisors must be consistent in substance and in form and updated annually.

The solution chosen by the European Banking Authority is based on the use of the Internet with a two-tier architecture. At European level, summary tables are developed and posted on the website of EBA. These tables show essential information and allow comparison between countries. They are connected to the Internet websites of the members of EBA, which contain all the information required by the IFD, with an organization and a presentation totally similar to those of the EBA website.

The organization of the EBA and national authorities websites follows, under four main headings, the elements referred to in Article 57 (1) of the IFD:

1. Rules and Guidance: this part contains the texts in force, but also detailed information on more specific issues such as exemptions from the application of prudential requirements, evaluation of internal risk measurement approaches and the process of approval of these approaches...

2. Options and national discretions (details of the choices made in the implementation process);

3. Methodology of the process of supervisory review and evaluation process ("Pillar 2" add-ons);

4. Statistical data on national investment firms sectors, the various risks and the activities of supervisors.

The applicable regulations include:

• Laws and regulations adopted by each Member State to implement the provisions of the Directive (EU) 2019/2034 and Regulation (EU) 2019/2033. The texts outline the primary legislative and regulatory framework for supervised investment firms.

• Administrative Rules: There is a variety of definitions of administrative rules. For the purpose of disclosure, they are understood as instructions to supervised entities to fulfil certain legislative and regulatory requirements.

• General guidance includes explicit disclosure requirements from the Directive (EU) 2019/2034 and explanations deemed necessary to set out how the rules should be applied by investment firms. Additionally such guidance will cover any other relevant information that competent authorities may wish to release to enhance the understanding of the new capital adequacy framework.

For an overview regarding rules and guidance in the EU Member States see the corresponding tables on the EBA homepage.

Rules and guidance 2023

• Transposition in France of the IFD package

Contents:

• Transposition table of IFD (tab Transposition of Directive (EU) 2019/2034)

• Model approval (tab Model approval)

• Specific disclosure requirements applied to investment firms (tab Specific disclosure requirements applied to investment firms)

• Regulatory and financial Reporting  (tab Reporting)

Directive (EU) 2019/2034 and Regulation (EU) 2019/2033 contain discretions and options which may be applied on the basis of national circumstances.

Options and national discretions France 2023

For an overview regarding options and national discretions in the EU Member States see the corresponding tables on the EBA homepage.

The following table gives an overview over the general criteria and methodologies used by the French supervisor in the review and evaluation referred to in Article 36 of Directive (EU) 2019/2034.

As defined in the CEBS guidelines on the Application of the Supervisory Review Process under Pillar 2, the Supervisory Review and Evaluation Process (SREP) is the comprehensive process which supervisors use to review and evaluate:

• the investment firms' exposure to risks (i.e. risk profile);

• the adequacy and reliability of the investment firms' Internal Capital Adequacy Assessment Process (ICAAP);

• the adequacy of the investment firms' own funds and internal capital in relation to the assessment of its overall risk profile;

• to monitor ongoing compliance with standards laid down in the Directive (i.e. supervisory evaluation of compliance) and to identify any weaknesses or inadequacies and necessary prudential measures.

As defined in these guidelines, the ICAAP is a comprehensive process including the management body and senior management oversight, monitoring, reporting and internal control reviews, that investment firms must have to identify and measure their risks, allowing them to ensure that adequate provision is made for holding internal capital in relation to their risk profile.

Additional information

For an overview regarding the general criteria and methodologies, the EU Member States use in the review and evaluation referred to in Article 36 of Directive (EU) 2019/2034 see the corresponding table on the EBA homepage.

Article 57 (1) (d) of Directive (EU) 2019/2034 requires the disclosure of aggregate statistical data on key aspects of the implementation of the prudential framework. The disclosure includes national statistical data about the Investment firms sector, market risk, supervisory measures and administrative penalties and exemptions.

Statistical data 2023

Contents:

• General remarks on filling in templates in AnnexIV (Tab « Templates and general remarks »)

• data per Competent Authority (Tab « Part 1 »)

• Data on market risk (Tab « Part 2 »)

• Data on supervisory measures and administrative penalties (Tab « Part 3 »)

• Data on exemptions (Tab « Part 4 »)

Statistical data from previous years

• 2022