On 21 July 2022, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms. The final guidelines set out common process and criteria for the assessment of the main SREP elements, including governance arrangements and firm-wide controls. The guidelines will be translated into the official EU languages and published on the ESMA and EBA websites.
The EBA has also published the final draft regulatory technical standards (RTS) on Pillar 2 add-ons for investment firms. These final draft RTS provide technical details, including specific indicative metrics, to assess and measure material risks not otherwise captured or inadequately captured by Pillar 1 requirements. The draft RTS will be submitted to the European Commission for endorsement before being published in the Official Journal of the European Union. The technical standards should be in force when the above SREP guidelines become applicable.
Both regulatory products are based on the Investment Firms Directive and aim to harmonise the supervisory practices regarding the SREP of investment firms.