286. Investment firms should use at least the initially used performance and risk criteria to …

Investment firms should use at least the initially used performance and risk criteria to ensure a link between the initial performance measurement and its back-testing. Investment firms should, in addition to the criteria set out in Article 32(1)(m)(i) and (ii) of Directive (EU) 2019/2034, use specific criteria including:

• a. evidence of misconduct or serious error by the staff member (e.g. breach of code of conduct and other internal rules, especially concerning risks);
• b. whether the investment firm and/or the business unit subsequently suffers a significant downturn in its financial performance (e.g. specific business indicators);
• c. whether the investment firm and/or the business unit in which the identified staff member works suffers a significant failure of risk management;
• d. significant increases in the investment firm’s or business unit’s economic or regulatory capital base;
• e. any regulatory sanctions, e.g. punitive, administrative, disciplinary or otherwise, where the conduct of the identified staff member contributed to the sanction.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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