FSA Rules on Data Collection on Remuneration Policies
On November 1, the FSA published policy statement 12/18 ‘Data collection on remuneration policies’ (PS12/18). PS12/18 sets out the FSA’s rules in line with the requirements in the capital requirements directive CRD3 and the EBA’s guidelines on a Benchmarking Information Report and the High Earners Report to be submitted by firms annually, and follows the FSA’s consultation CP12/18.
The Benchmarking Information Report requires firms to provide certain information in respect of Remuneration Code Staff in their group, including the number of Code Staff in each business division and total remuneration for Code Staff in each business division broken down by fixed and variable remuneration in cash and shares.
The High Earner Report requires firms to submit data on all employees in their group (excluding subsidiaries and branches established outside the EEA) with total annual remuneration of EUR 1 million or more, and the total number of High Earners split between Code Staff and non-Code Staff in each business division.
Both reports apply to banks, building societies and investment firms, but not to BIPRU limited licence and BIPRU limited activity firms (unless these firms are part of a group that does fall in scope). Firms should file two versions of each report by December 31 – one for each of the last two complete financial years. Thereafter firms required to submit a report annually, within four months of their accounting year end.
OTC Derivative Market Reforms – Financial Stability Board Progress Report
On November 1, the Financial Stability Board (FSB) published the fourth in a series of progress reports on implementing OTC derivative market reforms. The report looks particularly at OTC market infrastructure across the FSB’s member countries, reviewing the ability to provide clearing services, collect and disseminate data and provide organised trading platforms.
The key messages contained in the report are:
market structure is already in place and can be scaled up without impeding progress in meeting G20 commitments for OTC derivatives trading, central clearing and reporting;
international policy work on the four safeguards for global clearing is completed and implementation is proceeding at a national level; and
regulatory uncertainty remains the most significant impediment to further progress and to comprehensive use of market infrastructure.
The deadline for submitting feedback on the report is November 30.
Approach to Implementing CRD IV Transitional Provisions – FSA Announcement
On October 30, the FSA announced its approach to implementing the transitional provisions in the proposed Capital Requirements Directive IV framework (CRD IV). The announcement, published on an FSA webpage, was made in advance of political agreement having been reached on the final CRD IV legislation, highlighting the FSA’s recognition of the importance of these measures to firms’ capital planning.
The FSA confirmed that it expects to exceed the minimum transitional standards relating to the following deductions from Common Equity Tier 1 capital:
deductions of interim losses in respect of firms regulated by the new Prudential Regulation Authority;
investment in own shares not previously removed to meet accounting standards; and
deferred tax assets not arising from timing differences.
A formal consultation on the proposals will be undertaken by the FSA once the final CRD IV legislation has been adopted.