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01 December 2011

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Senior management

Current MiFID rules

A firm must employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them. This applies in relation to all of a firm’s staff – senior and junior.
A firm must satisfy itself as to the competence of its staff both at the point of recruitment and on an on-going basis. This assessment should take into account role and responsibilities. The firm should also take into account the nature, scale and complexity of its business, and the nature and range of MiFID investment services and activities undertaken in the course of that business

MiFID Level 1 Directive Art: 13 (2)

MiFID Level 2 Directive Art: 5(2)

FSA rules

FIT 1, 2

Proposed changes
Draft Directive
Recitals (38) – (39
Article 9(1)

The draft Directive proposes that:

  • the fit and proper criteria becomes applicable to all members of the board of directors (both executive and non-executive directors), not only to persons who effectively direct the business; and
  • regulators must be satisfied at all times that all members of the board are and continue to be of sufficiently good repute and sufficiently knowledgeable, experienced and are able to commit sufficient time to perform their duties.
  • to ensure that members of the management board have sufficient time to commit to the firm, the draft Directive prescribes that they are not permitted to combine more than (i) one executive directorship with two non-executive directorships or (ii) four non-executive directorships. Directorships held in same group are considered as one single directorship and regulators have some flexibility to permit persons to exceed those limits, taking into account the firm and the individual.
  • Each member of the management body is required to act with honesty and integrity to assess and challenge the decisions of senior management..
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