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Where can I find out more about regulatory disclosures?
Where can I find out more about regulatory disclosures?

Pillar 3

 

National regulators are required to implement laws and regulations requiring firms to make pillar 3 disclosures. These rules are based on two European Directives. You can find out more about these requirements as follows:

Other European countries have transposed the relevant European Directives into their national laws.

 

Stewardship Code

 

 

 

The Stewardship Code “aims to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities.” It sets out good practice on engagement with investee companies and is to be applied by asset managers on a “comply or explain” basis. The Code can be found at the Financial Review Council. 

FCA rule COBS 2.2.3R requires a firm other than a venture capital firm, which is managing investments for a professional client that is not a natural person must disclose clearly on its website, or if it does not have a website in other accessible form:

 

1 - the nature of its commitment to the Financial Reporting Council's Stewardship Code; or

 

2 - where it does not commit to the Code, its alternative investment strategy. 

 

Remuneration

 

The original regulations intended for banks were implemented across Europe in 2009 by the G20 and provoked by the banking crisis.  

 

As part of an update to the Capital Requirements Directive (CRD) the scope was extended in 2010 to capture non-banking institutions with a significant impact on the market.

 

The European Securities and Markets Authority (ESMA, formerly CESR) provided updated guidance on the application of the requirements, including limiting the application of the detailed rules for firms which have a limited impact on the market.

 

The FSA (FCA as of 1st April 2013) subsequently created 4 proportionality tiers, placing standalone investment managers in the lowest tier – proportionality tier 4.

 

Such investment managers need to have a Remuneration Code Policy and apply most of the remuneration principles firm wide. They are also required to make limited disclosures (intending to indicate their impact on the market) as appropriate to their size. Certain limitations on pay are applied to senior management and individuals that are considered to have a material impact on the risk profile of the Firm. Firms which are part of larger groups in higher tiers, may be subject to more detailed disclosure requirements.

 

The Remuneration Code requirements have been adopted as part of a UK firms systems and controls requirements (SYSC 19A). The disclosure requirements have been added to Pillar 3 Disclosure requirements under the Prudential rules applied to investment firms (BIPRU 11).

 

The FSA (FCA as of 1st April 2013) has created a number of documents to help firms in all tiers implement these rules:

 

 

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