Commission Delegated Regulation (EU) 2023/1118 of 12 January 2023 supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying the conditions under which colleges of supervisors exercise their tasks (Text with EEA relevance)

• CELEX: Delegated Regulation (EU) 2023/1118
• Articles: 19

Article 1 Mapping of investment firm groups

1.   The group supervisor shall map an investment firm group to identify the following group entities:

(a)

investment firms authorised in a Member State and branches established in a Member State, other than investment firms to which Article 1(2) of Regulation (EU) 2019/2033 of the European Parliament and of the Council  ( 3 ) applies;

(b)

financial institutions, ancillary services undertakings, tied agents and branches thereof authorised or established in a Member State;

(c)

investment firms, financial institutions, ancillary services undertakings, tied agents and branches thereof authorised or established in a third country.

2.   For the purposes of paragraph 1, point (a), the following information shall be reflected in the mapping:

(a)

the Member State where the investment firm is authorised or the branch is established;

(b)

the competent authority responsible for the supervision of the investment firm or the competent authority of the host Member State where the branch is established, and other relevant financial sector authorities of that Member State, including competent authorities responsible for the supervision of markets in financial instruments, for the prevention of the use of the financial system for the purposes of money laundering or terrorism financing, for consumer protection and for resolution;

(c)

for an investment firm, authorised in a Member State, whether it meets the criteria to be deemed to be a small and non-interconnected investment firm as referred to in Article 12(1) of Regulation (EU) 2019/2033.

3.   For the purposes of paragraph 1, points (b) and (c), the following information shall be reflected in the mapping:

(a)

the Member State or the third country where the group entity or branch has been authorised or established;

(b)

the authority responsible for or involved in the supervision of that group entity or branch;

(c)

information on the importance of the group entity or branch for the Member State referred to in point (a) and for the investment firm group, and the relevant criteria used by the competent authorities to determine that importance.

Article 2 Determination of whether the establishment of a college of supervisors is appropriate

1.   When determining whether the establishment of a college of supervisors is appropriate, the group supervisor shall take into account the mapping of the group referred to in Article 1 and verify whether any of the following conditions is met:

(a)

the investment firm group consists of at least two investment firms authorised and operating in two different Member States;

(b)

the exercise of the tasks referred to in Article 48 of Directive (EU) 2019/2034 would be facilitated by the establishment of a college of supervisors;

(c)

the coordination and cooperation with relevant third-country supervisory authorities would be performed more effectively under a college of supervisors;

(d)

coordination and cooperation are needed to exchange with the supervisory authorities of the clearing members of the qualifying central counterparties (‘QCCPs’) or the supervisory authorities of QCCPs for the purposes of Article 23(1), first subparagraph, point (c), and Article 23(2) of Regulation (EU) 2019/2033, and to update that information.

2.   Where any of the conditions set out in paragraph 1, points (a), (b), (c) or (d) have been met, the establishment of a college shall be deemed appropriate, except where the group supervisor considers that such establishment would not be appropriate having regard in particular to the mapping of the group referred to in Article 1 and in particular where investment firms are deemed to be small and non-interconnected investment firms as referred to in Article 12(1) of Regulation (EU) 2019/2033.

Article 3 Communication about the establishment of a college of supervisors

1.   Where a college of supervisors has been established, the group supervisor shall, without undue delay:

(a)

notify the competent and supervisory authorities referred to in Article 48(5) of Directive (EU) 2019/2034 of their membership in the college of supervisors;

(b)

inform the EBA and the Union parent investment firm, Union parent investment holding company or Union parent mixed financial holding company (any of these entities being also designated as ‘Union parent undertaking’) concerned about the establishment of the college of supervisors, about the identity of its members and observers, as well as about any changes in the composition of that college.

2.   Where a college of supervisors has not been established although the conditions set out in Article 2(1), point (a), have been met, the group supervisor shall, without undue delay, notify the EBA of its decision not to establish a college of supervisors and substantiate its decision.

Article 4 Establishment of the written arrangements

1.   The written arrangements referred to in Article 48(6), third subparagraph, of Directive (EU) 2019/2034 shall contain all of the following:

(a)

information on the overall structure of the group concerned, covering all group entities, including the Union parent undertaking;

(b)

the identification of the members of the college of supervisors, including those members that are third-country supervisory authorities, and of the observers referred to in Article 5(1) of this Regulation;

(c)

a description of the terms covering the participation for the third-country supervisory authorities referred to in Article 48(5), point (b), of Directive (EU) 2019/2034 in the college of supervisors, in particular regarding their involvement in the various dialogues and processes of the college of supervisors and their rights and obligations with regard to exchanging information within the college of supervisors;

(d)

whether the group supervisor may invite observers as referred to in Article 5(1) of this Regulation and the terms of their participation in the activities of the college of supervisors;

(e)

the arrangements for exchanging information, including the scope of the information, the frequency and channels of communication, including the exchange of information with third-country supervisory authorities and the resolution authorities referred to in Article 4(2), point (v), of Regulation (EU) No 1093/2010 that have been invited to participate in the college as observers;

(f)

the arrangements for dealing with confidential information;

(g)

the procedures for the collection of information from the entities of the investment firm group, and the procedures for the verification of that information;

(h)

the process for coordinating information requests from the supervisory authorities of the clearing members of the QCCPs or the supervisory authorities of the QCCPs;

(i)

the arrangements for delegating tasks and responsibilities, where relevant;

(j)

a description of any substructures of the college, where relevant;

(k)

the arrangements for the planning and coordination of supervisory activities in going concern situations;

(l)

the arrangements for the planning and coordination of supervisory activities in preparation for and during emergency situations, including contingency planning, communication tools and procedures;

(m)

the procedures for informing the group supervisor and the members of the college of supervisors before and after significant sanctions are imposed on entities of the investment firm groups;

(n)

the communication policy of the group supervisor and of the members of the college of supervisors with the Union parent undertaking and with the group entities;

(o)

agreed procedures and time frames for circulating the documents for meetings of the college of supervisors;

(p)

any other agreement between the members of the college of supervisors, including agreed indicators for identifying early warning signs, potential risks and vulnerabilities;

(q)

arrangements for the situation in which a member or an observer terminates its participation in the college, and, in particular, on duties to store and provide access to the data that has been exchanged before such a termination.

2.   The written arrangements referred to in Article 48(6), third subparagraph of Directive (EU) 2019/2034 may provide for other elements agreed between the consolidating supervisor and the members of the college.

Article 5 Identification of observers

1.   The group supervisor shall, where appropriate and in addition to the members of the college of supervisors and the EBA, invite the following authorities to participate in the meetings and activities of the college of supervisors as observers:

(a)

the competent authorities of those host Member States where branches that have been determined as important in accordance with Article 1(3), point (c), are established;

(b)

the ESMA;

(c)

the national central bank of a Member State in which a group entity, including the Union parent undertaking, is authorised or established, or the European Central Bank;

(d)

the public authorities or bodies in a Member State that are responsible for or involved in the supervision of any entity of the investment firm group, including competent authorities responsible for the supervision of markets in financial instruments, the prevention of the use of the financial system for the purpose of money laundering or terrorism financing, and consumer protection and competent authorities of a clearing member’s home Member State or competent authorities of the QCCP referred in Article 48 of Directive (EU) 2019/2034;

(e)

the resolution authorities referred to in Article 4(2), point (v), of Regulation (EU) No 1093/2010.

2.   The group supervisor, in consultation with the members of the college of supervisors, shall in the written coordination and cooperation arrangements referred to in Article 4 specify the arrangements covering the participation in the college of supervisors of the authorities referred to in paragraph 1, points (a) to (e), of this Article. The group supervisor shall inform all members and observers of the college of supervisors about those arrangements.

Article 6 Participation in meetings of college of supervisors

1.   When organising a college meeting as referred to in Article 48(6) of Directive (EU) 2019/2034, the group supervisor shall take into account all of the following:

(a)

the topics to be discussed, the activities to be considered and the objectives of the meeting, in particular with regard to their relevance for all the entities of the investment firm group as per the mapping performed in accordance with Article 1 of this Regulation;

(b)

the importance of any entity of the investment firm group, as per the mapping performed in accordance with Article 1 of this Regulation, both for the investment firm group and for the Member State where that entity has been authorised or established.

2.   The group supervisor, the members and the observers in the college of supervisors shall, based on the topics discussed and objectives pursued, ensure that the most appropriate representatives participate in the meetings or activities of the college of supervisors. Those representatives shall have the power to commit their authorities as members or observers in the college, to the maximum extent possible, for the discussions and decisions planned during those meetings.

3.   The group supervisor may, based on the topics and objectives of the meeting of the supervisory college, invite representatives of entities of the investment firm group to participate in those meetings.

Article 7 Delegation of tasks and responsibilities

1.   When establishing and updating the college supervisory examination programme referred to in Article 14, the group supervisor and the members of the college of supervisors shall consider the possibility of agreements on the voluntary delegation of tasks and responsibilities referred to in Article 48(2), point (e), of Directive (EU) 2019/2034, in particular where such delegation is expected to lead to more efficient and effective supervision, in particular by removing unnecessary duplications of supervisory requirements, including in relation to information requests.

2.   The conclusion of an agreement on delegation of tasks and responsibilities shall be notified by the group supervisor to the Union parent undertaking, and by the competent authority that delegates its powers to the investment firm concerned.

Article 8 Exchange of information between the members of the college of supervisors and an investment firm group

1.   The group supervisor and the members of the college of supervisors shall coordinate the communication of information to, and the request for information from, any entity of the investment firm group as follows:

(a)

the group supervisor shall communicate information to, and request information from, the Union parent undertaking;

(b)

the members of the college of supervisors shall communicate information to, and request information from, the entities of the investment firm group which are under their supervisory remit as per the mapping performed in accordance with Article 1.

2.   A member of the college of supervisors that exceptionally intends to communicate information to, or request information from, the Union parent undertaking, shall inform the group supervisor thereof in advance.

3.   Where, exceptionally, the group supervisor intends to communicate information to, or request information from, an entity of the investment firm group which is outside its direct supervisory remit as per the mapping performed in accordance with Article 1, it shall inform the member concerned of the college responsible for supervising that entity thereof in advance.

Article 9 General conditions for the exchange of information within the college of supervisors

1.   The group supervisor, the members and the observers of the college of supervisors shall exchange all information necessary to facilitate the exercise of their functions and duties, including tasks referred to in Articles 48 and 49 of Directive (EU) 2019/2034.

2.   The information referred to in paragraph 1 shall include all relevant information, whether received from a group entity or a branch, a competent or supervisory authority, or any other source and shall be exchanged in an adequate, accurate, and timely manner.

Article 10 Exchange of information to increase the efficiency of supervision of investment firm groups

1.   The group supervisor and the members of the college of supervisors shall regularly exchange the following information:

(a)

the information referred to in Article 13(1) and (2) of Directive (EU) 2019/2034, as further specified in Commission Delegated Regulation (EU) 2023/1117  ( 4 ) ;

(b)

information necessary for meeting the cooperation requirements laid down in Article 49 of Directive (EU) 2019/2034;

(c)

where relevant, information on the macroeconomic environment in which the investment firm group and its entities operate.

2.   Based on the information exchanged in accordance with paragraph 1, the group supervisor and the members of the college of supervisors shall identify and exchange quantitative information to identify early warning signs, potential risks and vulnerabilities and to inform the supervisory review and evaluation process.

Article 11 Exchange of information for the purposes of supervisory review and evaluation process

1.   The group supervisor and the members of the college of supervisors shall exchange information on the outcomes of the supervisory review and evaluation process carried out in accordance with Article 36 of Directive (EU) 2019/2034.

2.   The information referred to in paragraph 1 shall contain at least the following:

(a)

the elements referred to in Article 36(1), points (a) to (g), of Directive (EU) 2019/2034 that have been subject to a supervisory review and evaluation;

(b)

the results of the assessment that one of the situations referred to in Article 40(1) of Directive (EU) 2019/2034 have been identified, including, where applicable, information about any additional own funds requirements that have been imposed in accordance with Articles 39 and 40 of Directive (EU) 2019/2034 and any information about the conclusions of the review performed in accordance with Article 41 of that Directive and, where applicable, any related requests for additional own funds;

(c)

the results of the liquidity adequacy assessment performed in accordance with Article 42(1) of Directive (EU) 2019/2034, and, where applicable, information about any specific liquidity requirements imposed in accordance with Article 39(2), point (k), and Article 42(1) of Directive (EU) 2019/2034;

(d)

information about other supervisory measures or early intervention measures taken or planned to be taken to address the inefficiencies identified as a result of the supervisory review and evaluation process;

(e)

information about findings from on-site inspections and off-site monitoring that are relevant for the assessment of the risk profile of the investment firm group or any of its entities.

Article 12 Exchange of information with regard to the ongoing review of the permission to use internal models

1.   The group supervisor and the members of the college of supervisors shall exchange all relevant information about the outcome of the ongoing review of the permission to use the internal models referred to in Article 37 of Directive (EU) 2019/2034.

2.   Where the group supervisor or any member of the college of supervisors has identified that an entity of the investment firm group, including the Union parent undertaking, no longer meets the requirements for applying internal models or has identified deficiencies in accordance with Article 37 of Directive (EU) 2019/2034, that group supervisor or member of the college of supervisors shall immediately exchange the following information, as applicable:

(a)

an assessment of the effect of the deficiencies identified and any issues of non-compliance with the requirements for using internal models and the materiality of those deficiencies and issues;

(b)

an assessment of the plan presented by the relevant entity of the investment firm group to restore compliance and to address the deficiencies identified, including information on the timeline for the implementation of that plan;

(c)

information about the intention of the group supervisor or any relevant member of the college of supervisors to revoke the permission to use the internal model or to restrict the use of that model to compliant areas or to those areas where compliance can be achieved within an appropriate timeline or to those areas that are not affected by the deficiencies identified;

(d)

information about any proposed additional own funds requirements imposed pursuant to Article 39(2), point (a), in conjunction with Article 40(1), point (d), of Directive (EU) 2019/2034, as a supervisory measure to address the issues of non-compliance or deficiencies identified.

3.   The group supervisor and the members of the college of supervisors shall also exchange information about extensions of the permission to use the internal model or information about changes to those internal models.

Article 13 Cooperation with regard to non-compliance and sanctions

1.   The members and observers in the college of supervisors shall communicate to the group supervisor information about any situations in respect of which they have determined that an entity of an investment firm group which is under their supervisory remit:

(a)

has not complied with requirements in relation to the prudential supervision or market conduct supervision, laid down in:

(i)

Regulation (EU) 2019/2033, and, where relevant, Regulation (EU) No 575/2013 of the European Parliament and of the Council  ( 5 ) ;

(ii)

Directive (EU) 2019/2034;

(iii)

Regulation (EU) No 600/2014 of the European Parliament and of the Council  ( 6 ) ;

(iv)

Directive 2014/65/EU of the European Parliament and of the Council  ( 7 ) ;

(v)

Directive 2014/59/EU of the European Parliament and of the Council  ( 8 ) ;

(b)

is subject to any of the administrative penalties or other administrative measures that have been imposed in accordance with Article 54 of Directive (EU) 2019/2034.

2.   Based on the information exchanged in accordance with paragraph 1, the members and observers in the college of supervisors shall discuss with the group supervisor the possible impact of the issues of non-compliance or sanctions for the group entities concerned or for the investment firm group as a whole.

Article 14 Implementation of the supervisory review and evaluation process

1.   For the purpose of performing the supervisory review and evaluation process carried out in accordance with Article 36 of Directive (EU) 2019/2034, the group supervisor, in consultation with the members of the college of supervisors, shall establish and maintain an updated college supervisory examination programme.

2.   Where the supervisory examination programme is established, the group supervisor, in consultation with the members of the college of supervisors, shall identify the supervisory activities to be undertaken in relation to the group entities or the investment firm group as a whole. That college supervisory examination programme shall contain all of the following:

(a)

the areas of joint work identified as a result of the supervisory review and evaluation carried out in accordance with Article 36 of Directive (EU) 2019/2034 or as a result of any other activities undertaken by the college of supervisors, including efforts to contribute to efficient supervision and to remove unnecessary duplication of supervisory requirements as referred to in Article 48(2), point (f), of that Directive;

(b)

the respective supervisory examination programmes of the group supervisor and of the members of the college of supervisors for the Union parent undertaking and the entities or branches of the investment firm group;

(c)

the areas of focus of the work of the college of supervisors and its planned supervisory activities, including planned on-the-spot checks and inspections as referred to in Article 14 of Directive (EU) 2019/2034;

(d)

the members of the college of supervisors responsible for undertaking the planned supervisory activities;

(e)

the expected timelines, both in terms of timing and duration, for each of the planned supervisory activities.

Article 15 College framework in anticipation of possible emergency situations

1.   The group supervisor, in consultation with the members of the college of supervisors, shall establish a college framework in anticipation of possible emergency situations, taking into account the specific features and structure of the investment firm group.

2.   The college framework referred to in paragraph 1 shall be formalised in the written arrangements concluded in accordance with Article 4 and shall contain all of the following:

(a)

the college-specific procedures that shall apply where an emergency situation as referred to in Article 47 of Directive (EU) 2019/2034 arises;

(b)

information that shall be exchanged when an emergency situation as referred to in Article 47 of Directive (EU) 2019/2034 arises.

3.   The information referred to in paragraph 2, point (b), shall contain all of the following:

(a)

an outline of the emergency situation which has occurred, including the underlying cause of the emergency situation, and the expected impact of the emergency situation on the entities of the investment firm group or on the group as a whole, its clients, the markets and the stability of the financial system of the European Union;

(b)

an explanation of the measures and actions that have been taken or are planned to be taken by the group supervisor or any of the members of the college of supervisors or the entities of the investment firm group in response to the emergency situation;

(c)

the latest available quantitative information regarding liquidity and capital position of the investment firms of the investment firm group.

Article 16 The exchange of information during emergency situations

1.   The group supervisor and the members of the college of supervisors shall exchange all information necessary to facilitate the exercise of the tasks referred to in Article 47 of Directive (EU) 2019/2034.

2.   When alerted of an emergency situation by any member or observer in the college of supervisors, or after having identified an emergency situation, the group supervisor shall communicate to the members of the college of supervisors who supervise the investment firm or its branches that are affected or likely to be affected by the emergency situation, the EBA and the European Systemic Risk Board the information referred to in Article 15(2), point (b), following the procedures established in accordance with point (a) of that paragraph.

3.   Depending on the nature, severity, potential systemic impact or other impact, and on the likelihood of contagion of the emergency situation, the members of the college of supervisors who supervise the group entities or branches that are affected or likely to be affected by the emergency situation and the group supervisor may decide to exchange additional information.

4.   The information referred to in paragraphs 2 and 3, where applicable, shall be updated immediately when new information is available.

5.   Where the communication referred to in this Article is made orally, the competent authorities concerned shall confirm the content of that communication in writing in a timely manner.

Article 17 Coordination of the supervisory assessment and response to an emergency situation

1.   Where an emergency situation occurs, the group supervisor shall coordinate the assessment of the emergency situation in cooperation with the members of the college of supervisors and shall consult the observers in the college as appropriate. This assessment shall cover in particular the following:

(a)

the nature and severity of the emergency situation;

(b)

the impact or potential impact of the emergency situation on the entities or branches of the investment firm group and on the group as a whole, as well as on its clients and on markets;

(c)

the risk of cross-border contagion, in particular considering the potential systemic consequences in any of the Member States where the entities of the investment firm group are authorised or established.

2.   The group supervisor shall, on the basis of the assessment referred to in paragraph 1, coordinate the development of a supervisory response to the emergency situation in cooperation with the members of the college of supervisors and shall consult with the observers in the college of supervisors as appropriate.

3.   The coordinated supervisory response shall specify the supervisory actions needed, their scope, and the timetable for their implementation.

4.   The group supervisor and the members of the college of supervisors responsible for the supervision of the entities or branches of the investment firm group that are affected or likely to be affected by the emergency situation shall monitor and exchange information on how the coordinated supervisory response is to be implemented.

Article 18 Coordination of the external communication in an emergency situation

The group supervisor and the members of the college of supervisors responsible for the supervision of the entities or branches of the investment firm group who are affected or likely to be affected by an emergency situation shall coordinate their external communications as much as possible, taking into account legal obligations and constraints under Union and national law.

Article 19 Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .