Commission Delegated Regulation (EU) 2023/1118 of 12 January 2023 supplementing Directive (EU) 2019/2034 of the European Parliament and of the Council with regard to regulatory technical standards specifying the conditions under which colleges of supervisors exercise their tasks (Text with EEA relevance)

Commission Delegated Regulation (EU) 2023/1118 as regards the initiation and functioning of supervisory colleges for the effective supervision of investment firm groups was published in the Official Journal (OJ) of the EU. The delegated regulation is based on Article 48 of the Investment Firms Directive, which authorizes competent authorities being group supervisors to establish such colleges to more efficiently supervise the group as a whole and any of its member firms in other EU or non-EU member states.
The newly issued delegated regulation now specifies the following key issues in this context:
– the criteria the group supervisor shall apply to determine whether or not to establish a supervisory college (e.g. the number and locations of group member firms or the potential benefits for supervision);
– the preparatory work that needs to be done by the group supervisor to assess the significance of a firm and its member firms and the feasibility of more effective supervision via a supervisory college, including the determination of each member firm’s location, supervisory authority, and significance within the group and for the country where it is located;
– communication obligations of the group supervisor as to its decision (not) to establish a supervisory college;
– governance issues and obligations as regards the functioning of the supervisory college, including the written documentation of competent authorities joining the college, any potential observers, the group and entities subject to supervisory college supervision, the governance structure of the college, any confidentiality arrangements, communication among college participants, etc.;
– standards for the communication between members of the college and the supervised investment firm;
– the efficient assignment of supervisory tasks among members of the college to avoid duplicate efforts;
– the information that shall be exchanged between members of the supervisory college, including the outcomes of a supervisory review, the outcome of the liquidity adequacy assessment, or any supervisory or early intervention measures that may have been taken;
– the information that shall be exchanged if an investment firm no longer meets the criteria for using internal models, including information of any additional capital requirements that may now be required; and
– the coordination and communication activities that shall take place in „emergency situations“ such as significantly adverse developments in the financial markets that may jeopardize market liquidity or the stability of the financial system.
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As there are several other issues discussed in the delegated regulation, please refer to the original legal text for more detailed, comprehensive information.