by Andria Papageorgiou

COMPLIANCE, CYSEC, News, REGULATORYJune 7, 20230 comments

CySEC Circular C576 – Adoption of the European Banking Authority Guidelines

We would like to draw your attention to Circular C576 (the “Circular”) issued by the Cyprus Securities and Exchange Commission (the “CySEC”) on the 2^nd of June 2023, for the purposes of informing the Cyprus Investment Firms (the “CIFs”) about its decision to adopt the following European Banking Authority’s (the “EBA”) guidelines, that have been previously published within 2022, by incorporating them into its supervisory practices and regulatory approach:

• (a) Guidelines on the benchmarking exercises on remuneration practices and the gender pay gap under the Directive (EU) 2019/2034 (the “Guidelines on benchmarking”). Our previous notification email is attached herein; and
• (b) Guidelines on data collection exercises regarding high earners under Directive 2013/36/EU and under Directive (EU) 2019/2024 (the “Guidelines on high earners”). Our previous notification email is attached herein.

In brief, kindly note the below:

1. Guidelines on benchmarking:

The relevant guidelines specify how competent authorities shall collect from investment firms the remuneration and the gender pay gap data and how they will then submit them to EBA. It is noted that the said data shall be collected and submitted at the individual level whereas where Article 7 of IFR applies, this data shall be collected and submitted only at the level of consolidation set out therein. Please note that the Guidelines on benchmarking should be read in conjunction with the EBA Guidelines on sound remuneration policies under IFD.

In view of the above and pursuant to Section 28(1) of the Prudential Supervision of Investment Services Law of 2021 (the “Prudential Supervision Law”), CySEC shall collect the information disclosed in accordance with Article 51(1)(c) and (d) of IFR as well as the information provided by CIFs on the gender pay gap and use that information to benchmark remuneration trends and practices. Pursuant to Section 28(4) of the Prudential Supervision Law, CySEC shall provide the collected information to EBA in order to benchmark remuneration trends and practices at the Union level.

Therefore, the following actions should be taken by CIFs in regard to the topics presented below:

*It is clarified that the remuneration data outlined above should be submitted by the 31^st of August 2023 the latest, regarding the financial year 2022.

2. Guidelines on high earners:

The objective of the data collected on high earners is to analyse and publish year-to-year developments in the number of individuals in institutions and investment firms earning at least EUR 1 million within the European Union (the “EU”) and the European Economic Area (the “EEA”), and within the different Member States, and to assess the major components of remuneration awarded to high earners in different business areas. The said information can be used together with other remuneration benchmarking data to analyse the application of remuneration policies within the EU and EEA and the trends in remuneration practices so as to improve the relevant legal framework.

In view of the above, CIFs should submit to CySEC data regarding high earners (i.e. staff member(s) earning a remuneration of at least EUR 1 million in the reported financial year) so as for the latter to submit such information to EBA.

Please note that high earners data should be reported, as applicable, at the level of consolidation set out in Article 7 of IFR and should concern all the high earners’ data for all entities and branches within the highest level of prudential consolidation. In the case of standalone investment firms, high earner’s data should be reported on an individual basis. The data submitted should also include data relevant to EU/EEA branches.

In this respect, please note the following:

• Where CIFs do not have high earners to report, it is not necessary to submit this information, unless explicitly requested by the CySEC.
• High earners data should be submitted to CySEC each year for any given financial year by the 15^th of June of the next calendar year.
• It is clarified that high earners’ data should be submitted by the 31^st of August 2023 the latest, regarding the financial year 2022.

3. Method of submission:

The information outlined in points 1 and 2 above should be submitted through CySEC’s XBRL Portal only, which is expected to be updated by the 30^th of June 2023.

CIFs are urged to consider the Guidelines on benchmarking & Guidelines on high earners and where necessary, take actions to ensure compliance with their provisions.

Should you have any further questions, please do not hesitate to contact us at [email protected].

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as financial or investment or legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.