14/12/2020
One key change is that the requirements for credit institutions and investment firms will no longer be the same:
- the scope of CSSF circular 12/552 has been restricted to credit institutions (and for certain aspects to professionals of the financial sector performing lending operations to the public);
- a new circular with simplified requirements has been introduced for investment firms, i.e. CSSF circular 20/758 together with a new prudential procedure for the appointment of key function holders, specifically for investment firms.
One of the main reasons for the update of CSSF Circular 12/552 is to ensure that it is aligned with several recent EBA Guidelines1. It is worth noting that some of the recent EBA Guidelines have, however, not yet been reflected therein, such as the EBA Guidelines on Outsourcing Arrangements (EBA/GL/2019/02).
It is also worth noting that some requirements only confirm existing regulatory practices and are thus not new but have now been expressly spelled out.
Please find below a summary of the key changes for credit institutions and an overview of the simplification of the requirements for investment firms.
1The following EBA Guidelines have now been reflected in CSSF circular 12/552:
- EBA Guidelines on internal governance (EBA/GL/2017/11)
- Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2017/12)
- EBA Guidelines on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013 (EBA/GL/2016/07)
- EBA Guidelines on specification of types of exposures to be associated with high risk (EBA/GL/2019/01),
- EBA Guidelines on the management of interest rate risk arising from non-trading book activities (EBA/GL/2018/02)
- EBA Guidelines on corrections to modified duration for debt instruments under the second subparagraph of Article 340(3) of Regulation (EU) 575/2013 (EBA/GL/2016/09).
