The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have published a joint final report on guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms under the Investment Firms Directive ((EU) 2019/2034) (IFD) (the Guidelines). The EBA and ESMA consulted on draft versions of the Guidelines in November 2021.
The Guidelines set out the process and criteria for the main SREP elements: business models; governance arrangements and firm-wide controls; risks to and adequacy of capital; and liquidity risk and adequacy. The Guidelines also cover the proportionate application of a scoring system depending on a firm’s nature, size and activities; the monitoring of key indicators; cross-border application; and the use of supervisory measures.
Following the consultation, the EBA and ESMA have incorporated minor drafting amendments to the Guidelines, and have amended the Guidelines to clarify that the clearing members’ collateral requirement should be considered in the overall SREP assessment.
The Guidelines will be translated into the official EU languages and published on the EBA and ESMA websites. National competent authorities must report whether they comply with the Guidelines two months after their publication. The date of application for the Guidelines is not specified. However, they state that they are immediately applicable to the 2023 SREP exercises.
Final Report: Joint EBA and ESMA Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) under Directive (EU) 2019/2034 (EBA/GL/2022/09) (ESMA35-56-2621)
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