{"id":"circulars/cssf-20-757","title":"Circular CSSF 20/757","type":"circular","date":"2020-12-07","kind":"circular","html":"

Circular CSSF 20/757 is a CSSF circular, published 7 December 2020. Subject: Introduction of Circular CSSF 20/758 on central administration, internal governance and risk management, and repeal of Circular CSSF 12/552 for investment firms, as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655 and 20/750, on central administration, internal governance and risk management.

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Relevant for: Investment firms.

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Main topic: MiFID II. Keywords: Accounting, Audit Committee, Central administration, Internal governance, Outsourcing, Risk management, Whistleblowing.

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Text

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Circular CSSF 20/757 Introduction of Circular CSSF 20/758 on central administration, internal governance and risk management, and repeal of Circular CSSF 12/552 for investment firms (as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655 et 20/750) on central administration, internal governance and risk management

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We inform you that point 182 (8th indent) of the Annex to Circular CSSF 20/759 as well as point 184 (8th indent) of Annex 1 to Circular CSSF 20/757 have been updated on 11 December 2020.

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In case of discrepancies between the French and the English text, the French text shall prevail.

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Circular CSSF 20/757 Re: Introduction of Circular CSSF 20/758 on central administration, internal governance and risk management, and repeal of Circular CSSF 12/552 for investment firms (as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655 et 20/750) on central administration, internal governance and risk management

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Luxembourg, 7 December 2020

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To all investment firms

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Ladies and Gentlemen, 1. By way of this Circular, the CSSF, in its capacity as competent authority, complies with the guidelines of the European Banking Authority (EBA) and the joint guidelines of the EBA and the European Securities and Markets Authority (ESMA) listed in point 2. The CSSF has integrated these guidelines into its administrative practice and regulatory approach with a view to promote supervisory convergence in this field at European level. 2. The following guidelines are concerned: (a) Guidelines on internal governance (EBA/GL/2017/11); (b) Joint ESMA and EBA Guidelines on the assessment of the suitability of members

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the

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management

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body

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and

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key

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function

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holders

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(EBA/GL/2017/12); (c) Guidelines on the management of interest rate risk arising from non-trading book activities (EBA/GL/2018/02) 1; (d) Guidelines on corrections to modified duration for debt instruments under the second subparagraph of Article 340(3) of Regulation (EU) 575/2013 (EBA/GL/2016/09) 2. 3. This Circular repeals Circular CSSF 12/552 on the central administration, internal governance and risk management (hereinafter “Circular CSSF 12/552”) for investment firms and replaces it with Circular CSSF 20/758 on the central administration, internal governance and risk management (hereinafter “Circular CSSF 20/758”). Circular CSSF 12/552 shall remain applicable in its entirety to credit institutions and in part to professionals performing lending operations.

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1 EBA/GL/2018/02 only aims at CRR investment firms. 2 EBA/GL/2016/09 only aims at CRR investment firms.

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  1. The guidelines referred to under point 2 have been incorporated into Circular CSSF 20/758. The terminology and definitions of the circular have also been reviewed and some provisions have been specified. A “track changes” version of Circular CSSF 12/552 and Circular CSSF 20/758 is included in Annex 1. 5. The main changes in relation to Circular CSSF 12/552 concern: a.
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extension of the scope to financial holding companies and mixed financial holding companies;

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specification of the concept of proportionality by linking it to the notion of systemic institution within the meaning of the Law of 5 April 1993 on the financial sector;

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clarifications regarding the application of proportionality when implementing the internal control functions;

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strengthening of the management body, in its supervisory function, via

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enhanced

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provisions

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with

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respect

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diversity

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and

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independence; e.

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consideration of environmental, social and governance (ESG) risk factors with a view to ensuring viability of the business model.

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presentation of the main changes between Circular CSSF 12/552 and Circular CSSF 20/758 is included in Annex 2.

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  1. This Circular shall apply as from 1 January 2021.
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The text above is the opening of the document; the PDF carries the whole.

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Document page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.

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