Consultation on Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP)
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) launched today a public consultation on their Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP). The consultation runs until 18 February 2022.
The Investment Firms Regulation (IFR) and Directive (IFD) introduced a dedicated prudential framework for investment firms which reflects specific risks faced and posed to others by investment firms. This framework specifies the structure of own funds requirements for those investment firms, which are not considered systemic and are not treated as credit institutions.
The draft joint SREP Guidelines set out the process and criteria for the assessment of the main SREP elements such as:
- business model;
- governance arrangements and firm-wide controls;
- risks to capital and capital adequacy; and
- liquidity risk and liquidity adequacy.
As part of this assessment, a scoring system is introduced to facilitate the comparability across firms. In addition, the proposed joint Guidelines provide clarifications on the monitoring of key indicators, on the application of SREP in the cross-border context, and on the use of supervisory measures.
Consultation process
Comments can be sent via the consultation page on the EBA website.
A public hearing will take place via conference call on 18 January 2022 from 11:00 to 12:30.
All contributions received will be published following the end of the consultation, unless requested otherwise.