1. (1)

   2Subject to (2) and (3), the requirements in this chapter apply to a non-SNI MIFIDPRU investment firm.

2. (2)

   MIFIDPRU 8.2 (Risk management objectives and policies), MIFIDPRU 8.4 (Own funds) and MIFIDPRU 8.5 (Own funds requirements) also apply to an SNI MIFIDPRU investment firm that has additional tier 1 instruments in issue.

3. (3)

   MIFIDPRU 8.6 (Remuneration policies and practices) applies to every MIFIDPRU investment firm.

4. (4)

   MIFIDPRU 8.7 (Investment policy) applies only to a non-SNI MIFIDPRU investment firm that does not fall within MIFIDPRU 7.1.4R(1).

2Where a non-SNI MIFIDPRU investment firm is reclassified as an SNI MIFIDPRU investment firm, it must comply with the disclosure obligations that apply to a non-SNI MIFIDPRU investment firm in relation to the financial year in which it is reclassified.

2Where an SNI MIFIDPRU investment firm is reclassified as a non-SNI MIFIDPRU investment firm, it must comply with the disclosure obligations that apply to an SNI MIFIDPRU investment firm in relation to the financial year in which it ceased to be an SNI MIFIDPRU investment firm.

2A MIFIDPRU investment firm must comply with the rules in this chapter on an individual basis, unless the firm is exempt in accordance with MIFIDPRU 2.3.1R.

2In complying with the rules in this chapter, a MIFIDPRU investment firm must provide a level of detail in its qualitative disclosures that is appropriate to its size and internal organisation, and to the nature, scope, and complexity of its activities.

2As a minimum, a firm must publicly disclose the information specified in this chapter annually on:

1. (1)

   the date it publishes its annual financial statements; or

2. (2)

   where it does not publish annual financial statements, the date on which its annual solvency statement is submitted to the FCA in accordance with requirements in SUP 16.12.

2A firm must publish the information required by this chapter in a manner that:

1. (1)

   is easily accessible and free to obtain;

2. (2)

   is clearly presented and easy to understand;

3. (3)

   is consistent with the presentation used for previous disclosure periods or otherwise allows a reader of the information to make comparisons easily; and

4. (4)

   highlights in a summary any significant changes to the information disclosed, when compared with previous disclosure periods.

2A firm is not required to comply with MIFIDPRU 8.1.13R to the extent that compliance would breach the law of another jurisdiction.

1A firm must disclose its risk management objectives and policies for the categories of risk addressed by:

1. (1)

   MIFIDPRU 4 (Own funds requirements);

2. (2)

   MIFIDPRU 5 (Concentration risk); and

3. (3)

   MIFIDPRU 6 (Liquidity).

1The risk management objectives and policies for each of the items listed in MIFIDPRU 8.2.1R must include:

1. (1)

   a concise statement approved by the firm’s governing body describing the potential for harm associated with the business strategy; and

2. (2)

   a summary of the strategies and processes used to manage each of the categories of risk listed in MIFIDPRU 8.2.1R and how this helps to reduce the potential for harm.

1A non-SNI MIFIDPRU investment firm must disclose the following information regarding internal governance arrangements:

1. (1)

   an overview of how the firm complies with the requirement in SYSC 4.3A.1R to ensure the management body defines, oversees and is accountable for the implementation of governance arrangements that ensure effective and prudent management of the firm, including the segregation of duties in the organisation and the prevention of conflicts of interest, and in a manner that promotes the integrity of the market and the interests of clients;

2. (2)

   subject to MIFIDPRU 8.3.2R, the number of directorships (executive and non-executive) held by each member of the management body;

3. (3)

   where relevant, whether the FCA has granted a modification or waiver of SYSC 4.3A.6R(1)(a) or (b) in order to allow a member of the management body to hold additional directorships;

4. (4)

   a summary of the policy promoting diversity on the management body, including explanations of:

   1. (a)

      the objectives of the policy and any target(s) set out in the policy; and

   2. (b)

      the extent to which the objectives and any target(s) have been achieved; and

   3. (c)

      where the objectives or target(s) have not been achieved:

      1. (i)

         the reasons for the shortfall; and

      2. (ii)

         the firm’s proposed actions to address the shortfall; and

      3. (iii)

         the proposed timeline for taking those actions;

5. (5)

   whether the firm has a risk committee; and

6. (6)

   whether the firm:

   1. (a)

      is required by MIFIDPRU 7.3.1R to establish a risk committee; or

   2. (b)

      would have been required by MIFIDPRU 7.3.1R to establish a risk committee, but that obligation has been removed as a result of a waiver or modification granted by the FCA.

1The following directorships are not within the scope of MIFIDPRU 8.3.1R(2):

1. (1)

   executive and non-executive directorships held in organisations which do not pursue predominantly commercial objectives; and

2. (2)

   executive and non-executive directorships held within the same group or within an undertaking (including a non-financial sector entity) in which the firm holds a qualifying holding.

1. (1)

   1Subject to (2), a firm must disclose the following information regarding its own funds:

   1. (a)

      a reconciliation of common equity tier 1 items, additional tier 1 items, tier 2 items, and the applicable filters and deductions applied in order to calculate the own funds of the firm;

   2. (b)

      a reconciliation of (a) with the capital in the balance sheet in the audited financial statements of the firm; and

   3. (c)

      a description of the main features of the common equity tier 1 instruments, additional tier 1 instruments and tier 2 instruments issued by the firm.

2. (2)

   A firm that is not required to publish annual financial statements is only required to disclose the information specified at (1)(a) and (c).

1A firm must use the template available at MIFIDPRU 8 Annex 1R in order to disclose the information requested at MIFIDPRU 8.4.1R.

1A firm must disclose the following information regarding its compliance with the requirements set out in MIFIDPRU 4.3 (Own funds requirement):

1. (1)

   the K-factor requirement, broken down as follows:

   1. (a)

      the sum of the K-AUM requirement, the K-CMH requirement and the K-ASA requirement;

   2. (b)

      the sum of the K-COH requirement and the K-DTF requirement; and

   3. (c)

      the sum of the K-NPR requirement, the K-CMG requirement, the K-TCD requirement and the K-CON requirement; and

2. (2)

   the fixed overheads requirement.

1A firm must disclose its approach to assessing the adequacy of its own funds in accordance with the overall financial adequacy rule in MIFIDPRU 7.4.7R.

1The rules in this section apply to all MIFIDPRU investment firms, unless otherwise specified.

1A MIFIDPRU investment firm must disclose a summary of:

1. (1)

   its approach to remuneration for all staff (“staff” interpreted according to SYSC 19G.1.24G);

2. (2)

   the objectives of its financial incentives;

3. (3)

   the decision-making procedures and governance surrounding the development of the remuneration policies and practices the firm is required to adopt in accordance with the MIFIDPRU Remuneration Code, to include, where applicable:

   1. (a)

      the composition of and mandate given to the remuneration committee; and

   2. (b)

      details of any external consultants used in the development of the remuneration policies and practices.

1A non-SNI MIFIDPRU investment firm must disclose the types of staff it has identified as material risk takers under SYSC 19G.5, including any criteria in addition to those in SYSC 19G.5.3R that the firm has used to identify material risk takers

1A MIFIDPRU investment firm must disclose the key characteristics of its remuneration policies and practices in sufficient detail to provide the reader with:

1. (1)

   an understanding of the risk profile of the firm and/or the assets it manages; and

2. (2)

   an overview of the incentives created by the remuneration policies and practices.

1For the purpose of MIFIDPRU 8.6.5R, a firm must disclose at least the following information:

1. (1)

   the different components of remuneration, together with the categorisation of those remuneration components as fixed or variable;

2. (2)

   a summary of the financial and non-financial performance criteria used across the firm, broken down into the criteria for the assessment of the performance of:

   1. (a)

      the firm;

   2. (b)

      business units; and

   3. (c)

      individuals.

3. (3)

   for a non-SNI MIFIDRU investment firm:

   1. (a)

      the framework and criteria used for ex-ante and ex-post risk adjustment of remuneration, including a summary of:

      1. (i)

         current and future risks identified by the firm;

      2. (ii)

         how the firm takes into account current and future risks when adjusting remuneration; and

      3. (iii)

         how malus (where relevant) and clawback are applied;

   2. (b)

      the policies and criteria applied for the award of guaranteed variable remuneration; and

   3. (c)

      the policies and criteria applied for the award of severance pay.

4. (4)

   for a non-SNI MIFIDPRU investment firm not falling within SYSC 19G.1.1R(2):

   1. (a)

      details of the firm’s deferral and vesting policy, including as a minimum:

      1. (i)

         the proportion of variable remuneration that is deferred;

      2. (ii)

         the deferral period;

      3. (iii)

         the retention period;

      4. (iv)

         the vesting schedule; and

      5. (v)

         an explanation of the rationale behind each of the policies referred to in (i) to (iv).

      Where the firm’s deferral and vesting policy differs for different categories of material risk takers, the information should be presented and sub-divided accordingly.

   2. (b)

      a description of the different forms in which fixed and variable remuneration are paid, for example, whether paid in:

      1. (i)

         cash;

      2. (ii)

         share-linked instruments;

      3. (iii)

         equivalent non-cash instruments;

      4. (iv)

         options; or

      5. (v)

         short or long-term incentive plans.

1. (1)

   1Subject to (7), a MIFIDPRU investment firm must disclose the quantitative information required by (2) to (6) for the financial year to which the disclosure relates.

2. (2)

   An SNI-MIFIDPRU investment firm must disclose the total amount of remuneration awarded to all staff, split into:

   1. (a)

      fixed remuneration; and

   2. (b)

      variable remuneration.

3. (3)

   A non-SNI MIFIDPRU investment firm must disclose the total number of material risk takers identified by the firm under SYSC 19G.5.

4. (4)

   A non-SNI MIFIDPRU investment firm must disclose the following information, split into categories for senior management, other material risk takers, and other staff:

   1. (a)

      the total amount of remuneration awarded;

   2. (b)

      the fixed remuneration awarded; and

   3. (c)

      the variable remuneration awarded.

5. (5)

   A non-SNI MIFIDPRU investment firm must disclose the following information, split into categories for senior management and other material risk takers:

   1. (a)

      the total amount of guaranteed variable remuneration awards made during the financial year and the number of material risk takers receiving those awards;

   2. (b)

      the total amount of the severance payments awarded during the financial year and the number of material risk takers receiving those payments; and

   3. (c)

      the amount of the highest severance payment awarded to an individual material risk taker.

6. (6)

   A non-SNI MIFIDPRU investment firm not meeting the conditions in SYSC 19G.1.1R(2) must disclose the following information, split into categories for senior management, and other material risk takers:

   1. (a)

      the amount and form of awarded variable remuneration, split into cash, shares, share-linked instruments and other forms of remuneration, with each form of remuneration also split into deferred and non-deferred;

   2. (b)

      the amounts of deferred remuneration awarded for previous performance periods, split into the amount due to vest in the financial year in which the disclosure is made, and the amount due to vest in subsequent years;

   3. (c)

      the amount of deferred remuneration due to vest in the financial year in respect of which the disclosure is made, split into that which is or will be paid out, and any amounts that were due to vest but have been withheld as a result of performance adjustment;

   4. (d)

      information on whether the firm uses the exemption for individual material risk takers set out in SYSC 19G.5.9R, together with details of:

      1. (i)

         the provisions in SYSC 19G.5.9R(2) in respect of which the firm relies on the exemption;

      2. (ii)

         the total number of material risk takers who benefit from an exemption from each provision referred to in (i); and

      3. (iii)

         the total remuneration of those material risk takers who benefit from an exemption, split into fixed and variable remuneration.

7. (7)
   1. (a)

      For the purposes of (4), (5)(a), (5)(b) and (6), a non-SNI MIFIDPRU investment firm must aggregate the information to be disclosed for senior management and other material risk takers, where splitting the information between those two categories would lead to the disclosure of information about one or two people.

   2. (b)

      Where aggregation in accordance with (a) would still lead to the disclosure of information about one or two people, a non-SNI MIFIDPRU investment firm is not required to comply with the obligation in (4), (5)(a), (5)(b) or (6).

1A non-SNI MIFIDPRU investment firm that relies on MIFIDPRU 8.6.8R(7) must include a statement in the main body of its remuneration disclosure that:

1. (1)

   explains the obligations in relation to which it has relied on the exemption; and

2. (2)

   confirms that the exemption is relied on to prevent individual identification of a material risk taker.

1A non-SNI MIFIDPRU investment firm not meeting the conditions in MIFIDPRU 7.1.4R must disclose:

1. (1)

   the proportion of voting rights attached to the shares held directly or indirectly by the firm, broken down by country or territory; and

2. (2)

   a complete description of voting behaviour in the general meetings of companies the shares of which are held in accordance with MIFIDPRU 8.7.4R, including:

   1. (a)

      an explanation of the votes; and

   2. (b)

      the ratio of proposals put forward by the administrative or governing body of the company that the firm has approved; and

3. (3)

   an explanation of the use of proxy adviser firms; and

4. (4)

   a summary of the voting guidelines regarding the companies in which the shares referred to in (1) are held with links to supporting non-confidential documents where available.

1A firm must use the template available at MIFIDPRU 8 Annex 2R in order to disclose the information requested at MIFIDPRU 8.7.1R.

1The disclosure requirements in MIFIDPRU 8.7.1R(2) do not apply if the contractual arrangements of all shareholders represented by the firm at the shareholders’ meeting only authorise the firm to vote on their behalf when express voting orders are given by the shareholders after receiving the meeting’s agenda.

1. (1)

   1To the extent that any data item required by MIFIDPRU 8.7 is treated as proprietary information in accordance with (2), or confidential information in accordance with (3), a firm may refuse to disclose it, noting on the template available at MIFIDPRU 8 Annex 2R which item has not been disclosed and why.

2. (2)

   A firm may only treat information as proprietary information if sharing that information with the public would have a material adverse effect upon its business.

3. (3)

   A firm may only treat information as confidential information if there are obligations to customers or other counterparty relationships binding the firm to confidentiality.

1Where a firm refuses to disclose information in reliance on MIFIDPRU 8.7.4 R(2), the firm should record why the information is considered proprietary and make that information available to the FCA if requested.

1A firm referred to in MIFIDPRU 8.7.1R must comply with that rule:

1. (1)

   only in respect of a company whose shares are admitted to trading on a regulated market;

2. (2)

   only where the proportion of voting rights that the MIFIDPRU investment firm directly or indirectly holds in that company is greater than 5% of all voting rights attached to the shares issued by the company; and

3. (3)

   only in respect of shares in that company to which voting rights are attached.

1The voting rights referred to in MIFIDPRU 8.7.6R(2) must be calculated on the basis of all shares to which voting rights are attached, even if the exercise of any of those voting rights is suspended.

1[Editor’s note: The form can be found at this address:MIFIDPRU8_Annex1R_20220101.pdf ]

1[Editor’s note: The form can be found at this address: MIFIDPRU8_Annex2R_20220101.pdf ]