I would like to request a general clarification on the interpretation of the ESMA Guidelines ESMA/2015/1886 (rev.) regarding record-keeping requirements for “under supervision” (in particular paragraphs 19, 20(c) and 20(g)).

In practice, client communication, suitability documentation and system completion are often performed in a segregated and digital manner (e.g. different staff members involved in the client interaction, documentation and approval). This raises, in particular, the following questions:

1. Minimum requirements for records / traceability
What minimum requirements arise from the Guidelines regarding records to enable the competent authority to verify that supervision actually takes place and is carried out to an appropriate extent?

2. Objective evidence of assumption of responsibility
Is the mere formal naming of a qualified person in the documentation (e.g. in the suitability statement) sufficient, or do the Guidelines expect objectively verifiable review/approval/sign-off evidence?

3. Digital processes / segregated documentation
What requirements apply in digital systems and segregated documentation workflows where client communication, suitability documentation and system completion are not carried out by the same person?

4. Use of user credentials / role awareness
How should “under supervision” be assessed under the Guidelines if user credentials of a qualified person are used for system documentation/system completion, but that person does not provide a conscious assumption of responsibility (review/approval/sign-off) or is not aware that they are intended to act as the supervisor?

I would like to request a general clarification on the interpretation of the ESMA Guidelines ESMA/2015/1886 (rev.) regarding “under supervision” in the context of investment advice, in particular paragraphs 4(j), 19 and 20(d)–(g).

In practice, investment firms use supervision/tandem models in which a supervised staff member communicates the personal recommendation to the client, while a qualified/experienced person performs supervision and carries out documentation/approval steps.

Against this background, I kindly request clarification on the following points:

1. Real-time supervision vs. ex post review
Do the Guidelines typically require that, for “under supervision”, the supervisor is able to intervene in real time (e.g. by attending, listening-in/reading along, and having an immediate stop-go capability), or can an exclusively ex post review/approval be sufficient?

2. “Under the responsibility of” / “same responsibility”
How should the requirement be understood that the activity is performed “under the responsibility of” a qualified/experienced person (para. 4(j)) and that the supervisor assumes “the same responsibility” (para. 20(g))?
Which organisational minimum features are typically expected where the supervised staff member communicates the personal recommendation to the client?

3. Explicit assignment and awareness of the supervisory role
Does “under supervision” require that the supervisory role is explicitly assigned and that both the supervised staff member and the supervisor are aware of their respective role, responsibilities and limits?

4. Conscious assumption of responsibility / sign-off
Is the signing of the suitability statement by the supervisor mentioned in para. 20(g) to be understood as a standard expectation (or, in digital processes, a functional equivalent such as a documented review/approval/sign-off)?
Is the mere presence of a qualified person without a conscious assumption of responsibility sufficient?

May I ask you for further clarification of your answer to ESMA_QA_774.

Q1 :
The example in your answer shows the very specific example of deducting the performance fee from excess
performance before calculating the performance fee. The example is not the the normal calculation described
in the first bullet point where the performance fee is not deducted from excess performance for calculating
the performance fee. Correct?

Q2:
The normal calculation described in the first bullet point where the performance fee is not deducted from
excess performance for calculating the performance fee means that also a possible performance fee accrued
until the day before (D-1) is not deducted from excess performance because otherwise the mathematical
incorrectness which I described in my question still exists for the current performance fee calculation period
(usually the fiscal year of the fund) with the false result just not including the false effect for the day of
calculation (D). Correct?

Q3
In your answer you formulated the example where the performance fee is deducted from excess performance
for the calculation of the performance fee as follows:
EXAMPLE: According to the prospectus, the Management Company will receive a performance fee, equivalent
to 9% of the positive net earnings of the fund.
However, as you showed in your mathematical expression the actual, resulting performance fee is not 9% but
8,26%. As I mentioned in my question normal business as well as legal understanding of "x% of something"
always means that the result of x% is not deducted from the something before calculating the "final" x%.
Wouldn't the a.m. wording of the example be the right description for the performance fee calculation
without deducting the performance fee from the earnings before calculating it; and the correct wording for
the mathematical expression you showed rather be for example the Management Company will receive a
performance fee, equivalent to 9% of the positive net earnings of the fund after that performance fee is
deducted from the net earnings so that the actual performance fee is 8,26%?

Q5 – Contacting EU and non-EU sovereign issuers

When an investment firm pays a third party (e.g law firms, accounting firms) any commission in connection with the provision of an investment service or ancillary service to the client must ensure that all the conditions set out in Article 24(9) of Directive 2014/65/EU and requirements set out in paragraphs 2-5 are met at all times. One of the requirements is that the fee and commission shall be considered to be designed to enhance the quality of the relevant service to the client if it is justified by the provision of an additional or higher level service to the relevant client, proportional to the level of inducements received. Which is responsible to enhance the quality of the relevant service to the client? The investment firm or the third party (e.g the law firms, the accounting firms)