Knowledge Base
Apply governance principles to ensure compliance with regulatory standards
Which directive requires financial instrument manufacturers to establish a product approval process?
Article 16(3) of MiFID II and Articles 9 and 10 of the delegated directive require financial instrument manufacturers to establish a product approval process. This process includes defining the target market and scenario analysis.
Which assessment criterion for members of the management body verifies that the candidate possesses the theoretical knowledge and practical experience corresponding to the position?
The joint ECB/ESMA/EBA guidelines identify five assessment criteria, including the knowledge and experience criterion, which requires that the candidate possesses the necessary theoretical knowledge and practical experience for the position.
The responsibility of the management body can be entirely delegated to third parties for certain tasks.
According to the text, the responsibility of the management body cannot be delegated, even when certain tasks are outsourced. Senior management remains accountable for the proper functioning of the compliance function.
Supporting documents for notification to the ACPR:
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In France, the notification procedure to the ACPR requires the submission of supporting documents: identity document, criminal record extracts, curriculum vitae and various certificates. This obligation also extends to any subsequent change affecting the fitness of the executive.
Distributors must refine the target market definition solely based on their own clientele without consulting the manufacturers.
Distributors obtain the necessary product information from the manufacturers, refine the target market definition based on their own clientele, and verify compatibility with client needs before making any recommendation. They also transmit information on completed sales to the manufacturers.
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Items to categorize:
Responsibilities of the management body
Requirements for members
The responsibilities of the management body include defining and supervising oversight arrangements and ensuring effective management. Requirements for members concern integrity, competence, and assessment criteria such as reputation or availability.
According to the CRD IV directive, what requirement does it impose regarding the collective competence of the management body?
Article 91 of CRD IV requires that the management body as a whole possess sufficient understanding of the institution's activities. This leads to a balanced composition with complementary skills in finance, risk, compliance, legal and strategy.
According to Article 9 of the MiFID II directive, what is the primary responsibility of the management body in terms of governance?
Article 9 of MiFID II defines the organisational governance requirements, emphasising that the management body must define and supervise oversight arrangements, ensure effective and prudent management, guarantee separation of functions and prevent conflicts of interest. This responsibility cannot be delegated, even if certain tasks are outsourced.