* The author would like to thank Guido Ferrarini and Victor de Seriere, as well as other participants in the International MiFID II Working Group conference in Amsterdam, for insightful comments. The usual disclaimer applies.
1 See, for a similar approach, e.g., Klaus J. Hopt, ‘Corporate Governance of Banks and Other Financial Institutions After the Financial Crisis’, (2013) Journal of Corporate Law Studies 13, 219, 222; Klaus J. Hopt, ‘Corporate Governance of Banks after the Financial Crisis’ in Eddy Wymeersch, Klaus J. Hopt, and Guido Ferrarini (eds) Financial Regulation and Supervision—A Post-Crisis Analysis (Oxford: OUP, 2012), para. 11.01.
2 Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, OJ L 145 p. 1 (hereafter: ‘MiFID I’).
3 Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field, OJ L 141 p. 7 (hereafter: ‘ISD 1993’).
4 See, in particular, ISD 1993, Article 3(3)(1), second indent (directors of investment firms to be ‘of sufficiently good repute and … sufficiently experienced’) and 3(3)(2) (at least two responsible directors required), Article 3(4) (organizational structure to be submitted to supervisory scrutiny before authorization), Article 4 (identity of owners and qualifying holdings to be disclosed and their ‘suitability’ to be assessed prior to authorization), Article 9 (notification procedure for the acquisition of qualifying holdings), and Article 10 (specific governance requirements, including ‘sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing, and adequate internal control mechanisms’).
6 Commission Delegated Regulation (EU) no. …of 25 April 2016 on Directive 2014/65/EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive. As of end October 2016, the document has not yet been published in the Official and has not entered into force. The version adopted by the Commission is document no. C (2016)2398 final.
7 MiFID II, Preamble, Recital 4.
8 MiFID II, Preamble, Recital 5.
9 See generally, e.g., Rüdiger Veil, ‘Concept and Aims of Capital Markets Regulation’ in Rüdiger Veil (ed.) European Capital Markets Law (Oxford: Hart Publishing, 2013), pp. 18–19.
10 Commission, Green Paper on Corporate Governance in Financial Institutions, COM(2010) 284 final. See also Niamh Moloney, EU Securities and Financial Markets Regulation, 3rd edn (New York: OUP, 2014), 357–8.
11 See further infra II.2.
12 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, OJ L 176, 27.6.2013, p. 338. For an in-depth analysis of that regime, see Peter O. Mülbert and Alexander Wilhelm, ‘CRD IV Framework for Banks’ Corporate Governance’ in Danny Busch and Guido Ferrarini (eds) European Banking Regulation (Oxford: OUP, 2015), Chapter 6.
13 Cf., for useful analyses of the Lehman collapse and its systemic implications, e.g., Michael Fleming and A. Sarkar, ‘The Failure Resolution of Lehman Brothers’ (2014) Special Issue: Large and Complex Banks, FRBNY Econ. Pol’y Rev. 20, 175; Stephen J. Lubben and Sarah Pei Woo, ‘Reconceptualizing Lehman’ (2014) Texas International Law Journal 49, 297; Rainer Kulms, ‘Lehman’s Spill-over Effects’ (2012) Peking University Journal of Legal Studies 3, 3. And see, from a policy perspective, Basel Committee on Banking Regulation, ‘Report and Recommendations of the Cross-border Bank Resolution Group’ (March 2010), available at http://www.bis.org/publ/bcbs169.pdf, paras 49 and 50; Centre for Economic Policy Research, A Safer World Financial System: Improving the Resolution of Systemic Institutions, Geneva Reports on the World Economy No. 12 (London: CEPR, 2012) (available online at <http://www.cepr.org/active/publications/books_reports/viewreport.php?cvno=P210>), pp. 42–6.
14 E.g., Marco Becht, Patrick Bolton, and Ailsa Röell, ‘Why Bank Governance is Different’ (2011) Oxford Review of Economic Policy 3, 437, 455.; Klaus J. Hopt, ‘Corporate Governance of Banks after the Financial Crisis’ in Wymeersch, Hopt, and Ferrarini (eds) (n. 2), paras 11.16 et seq., 11.45 et seq.; see also René M. Stulz, ‘Governance, Risk Management, and Risk-Taking in Banks’ (2014), available at http://ssrn.com/abstract=2457947.
15 Cf., e.g., Becht, Bolton, and Röell (n. 15), 437 (discussing both board incompetence and deficient risk management); on the relationship between shareholder-friendly governance structures and risk appetite of intermediaries, see (with mixed results) Deniz Anginer et al., ‘Corporate Governance and Bank Insolvency Risk. International Evidence’ (2014), available at http://ssrn.com/abstract=2491490; Andrea Beltratti and René M. Stulz, ‘Why Did Some Banks Perform Better During the Credit Crisis? A Cross-Country Study of the Impact of Governance and Regulation’ (2012) Journal of Financial Economics 105, 1; David H. Erkens, Mingyi Hung, and Pedro P. Matos, ‘Corporate Governance in the 2007–2008 Financial Crisis: Evidence from Financial Institutions Worldwide’ (2012) Journal of Corporate Finance 18, 389; Luc Laeven and Ross Levine, ‘Bank Governance, Regulation and Risk Taking’ (2009) Journal of Financial Economics 93, 259. For comprehensive reviews of the available literature, see, e.g., James R. Barth, Chen Lin, and Clas Wihlborg (eds) Research Handbook on International Banking and Governance (Oxford: OUP, 2012); Jakob de Haan and Razvan Vlahu, Corporate Governance of Banks: A Survey (Oxford: OUP, 2013), available at <http://www.dnb.nl/en/binaries/Working%20Paper%20386_tcm47-294339.pdf>. See also, discussing possible implications from a legal perspective, Andreas Kokkinis, ‘A Primer on Corporate Governance in Banks and Financial Institutions: Are Banks Special?’ in Iris Chiu (ed.) The Law on Corporate Governance of Banks (Cheltenham: Edward Elgar, 2015), paras 1.37 et seq.; Klaus J. Hopt, (2013) JCLS 13, 219, 237 ff.; Klaus J. Hopt, in Wymeersch, Hopt, and Ferrarini, (n. 2), paras 11.16–11.22; Peter O. Mülbert, ‘Corporate Governance of Banks’ (2009) European Business Organization Law Review 10, 411, 433–4; Peter O. Mülbert and Ryan Citlau, ‘The Uncertain Role of Banks’ Corporate Governance in Systemic Risk Regulation’ in Hanne S. Birkmose, Mette Neville, and Karsten E. Sørensen (eds) The European Financial Market in Transition (Aalphen aan den Rijn: Kluwer, 2012), p. 275; Christoph Van der Elst, Corporate Governance and Banks: How Justified is the Match? (Oxford: OUP, 2015), available at <http://ssrn.com/abstract=2562072>.
16 Contrast, e.g., Aslɩ Demirgüç-Kunt and Enrica Detragiache, ‘Basel Core Principles and Bank Soundness’, World Bank Policy Research Working Paper No. 5129 (2009), available at <http://ssrn.com/abstract=1509196> (reaching a rather negative conclusion); with the more positive assessment by Richard Podpiera, ‘Does Compliance with Basel Core Principles Bring Any Measurable Benefits?’, IMF Working Paper WP/04/204 (2004), available at <www.imf.org/external/pubs/ft/wp/2004/wp04204.pdf>.
17 Starting with the 2009 London summit, G20 Finance Ministers and Governors have called for guidance on the assessment of the systemic importance of financial institutions and special regulatory measures to address relevant risks; see International Monetary Fund, Bank for International Settlements and Financial Stability Board, ‘Report to G20 Finance Ministers and Governors: Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations’, October 2009, available at <http://www.fsb.org/wp-content/uploads/r_091107c.pdf>; and see further Financial Stability Board, ‘Reducing the moral hazard posed by systemically important financial institutions’, 20 October 2010, available at <http://www.fsb.org/wp-content/uploads/r_101111a.pdf>, and see Financial Stability Board, Press Release: ‘G20 Leaders endorse Financial Stability Board policy framework for addressing systemically important financial institutions’, 12 November 2010, available at <http://www.fsb.org/wp-content/uploads/pr_101111a.pdf> For an industry perspective, cf. also Institute of International Finance, ‘Systemic Risk and Systemically Important Firms: An Integrated Approach’ (May 2010), available at <https://www.iif.com/file/7099/download?token=MEOyTkEA>, in particular pp. 17–40.
19 ISD 1993, Preamble, Recitals 2 and 41.
20 ibid., Preamble, Recital 5.
21 ibid., Preamble, Recital 6.
22 ibid., Article 3(3) sentences 1 and 2.
23 As to which, see infra III.2.
24 First Council Directive 77/780/EEC of 12 December 1977 on the coordination of the laws, regulations, and administrative provisions relating to the taking up and pursuit of the business of credit institutions, OJ L 322, 17.12.1977, p. 30, Article 3(2). The origins of this requirement can be traced to earlier precedents in national legislation, e.g., in Germany, see Jens-Hinrich Binder, ‘Organisationspflichten und das Finanzdienstleistungs-Unternehmensrecht: Bestandsaufnahme, Probleme, Konsequenzen’ (2015) ZGR—Zeitschrift für Unternehmens- und Gesellschaftsrecht, 667, 677.
25 ISD 1993, Articles 4 and 9.
26 See Second Council Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations, and administrative provisions relating to the taking up and pursuit of the business of credit institutions and amending Directive 77/780/EEC, OJ L 386, 30.12.1989, p. 1, Articles 5 and 11.
27 ISD 1993, Article 3(4).
28 ibid., Article 10, sentence 1.
29 ibid., Article 3(7)(e).
30 ibid., Article 10 sentence 2, first indent.
31 ibid., Article 10 sentence 2, indents 2–5, respectively.
32 Binder (n. 25), 688. The organizational requirements for banks under the Second Banking Directive of 1989 (Second Council Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions and amending Directive 77/780/EEC, OJ L 386, 30.12.1989, p. 1) were confined to the very vaguely defined rule ‘that every credit institution have sound administrative and accounting procedures and adequate internal control mechanisms’ (Article 13(2)). Taking an even narrower perspective, Article 8(1) of the ISD 1993 required that ‘institutions’ internal control mechanisms and administrative and accounting procedures permit the verification of their compliance with [the Directive’s requirements] at all times.’
33 See, for an excellent overview of the relevant issues, Moloney (n. 11), 320–3. And see further infra III.6.A.
34 As prescribed by Article 11 of the Directive.
35 In the words of a contemporary analysis, see Marc Dassesse, Stuart Isaacs, and Graham Penn, EC Banking Law, 2nd edn (London: Lloyd’s of London Press, 1994), para. 7.2.
36 MiFID I, Preamble, Recital 17, see also Recital 25 (scope of prudential regulation to be confined to ‘those entities which, by virtue of running a trading book on a professional basis, represent a source of counterparty risk to other market participants’).
37 For an exposition of the underlying policy considerations, cf. MiFID I, Preamble, Recitals 18–19, 22, and 24.
38 MiFID I, Articles 9 and 10, respectively.
39 Significantly, Article 13(4) MiFID I now required specific precautions in the interest of business ‘continuity and regularity in the performance of investment services and activities’, while Article 13(5) stipulated more detailed provisions for the outsourcing of operational functions.
40 See Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive, OJ L 241, 2.9.2006, p. 26 (hereafter: ‘Implementing Directive 2006/73/EC’), Chapters 2 and 3.
41 ibid., Article 5 (specifying the requirements under Article 13(2) to (8) MiFID I).
42 ibid., Article 6 (specifying the requirements under Article 13(2) MiFID I).
43 ibid., Article 7 (specifying the second subparagraph of Article 13(5) MiFID I).
44 ibid., Article 8 (specifying the second subparagraph of Article 13(5) MiFID I).
45 ibid., Article 9 (specifying Article 13(2) MiFID I).
46 ibid., Article 16 (specifying Article 13(7) and (8) MiFID I).
47 ibid., Preamble, Recitals 4 and 7.
49 Basel Committee on Banking Supervision, ‘International Convergence of Capital Management and Capital Standards—A Revised Framework’ (June 2004).
50 Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions, OJ L 177, 30.6.2006, p. 1 (the ‘recast Banking Directive’); Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast), OJ L 177, 30.6.2006, p. 201 (the ‘recast Capital Adequacy Directive’).
51 See, e.g., Mülbert and Wilhelm (n. 13), para. 6.05.
52 Directive 2010/76/EU of the European Parliament and of the Council of 24 November 2010 amending Directives 2006/48/EC and 2006/49/EC as regards capital requirements for the trading book and for re-securitizations, and the supervisory review of remuneration policies, OJ L 329, 14.12.2010, p. 3, Article 1(3).
53 ibid., Preamble, Recitals 7–10 and 17–22. As for the Green Paper, see ibid., Recital 17 and supra text and n. 11.
55 See MiFID II, Article 9(1), referring to CRD IV, Articles 88 and 91.
56 MiFID II, Article 9(3)–(6).
57 MiFID II, Articles 10–13.
58 See, again, supra text accompanying n. 9.
59 See, again, MiFID II, Preamble, Recital 5 (quoted supra text accompanying n. 9).
60 See, for further discussion, Mülbert and Wilhelm (n. 13), paras 6.75 and 6.76.
61 See, for further discussion, infra III.6.A.
63 For a good introduction to the problem and analysis of the CRD IV framework in this respect, see Mülbert and Wilhelm (n. 13), paras 6.38–6.47.
64 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, OJ L 176, 27.6.2013, p. 1. Article 4(2) CRR extends to persons subject to the
Obviously, this definition must now be read as referring to the definition of investment firms as stipulated by Article 4(1)(1) MiFID II, with the exception of firms specified in Article 4(1)(2)(a)–(c) MiFID II; see Mülbert and Wilhelm (n. 13), para. 6.11 notes 23 and 24.
65 Cf. Articles 88, 91 in conjunction with Article 2(1) CRD IV.
66 That is, those firms mentioned in CRR, Article 4(1)(b) and (c): ‘local firms’ and ‘firms which are not authorized to provide the ancillary service referred to in point (1) of Section B of Annex I to Directive 2004/39/EC, which provide only one or more of the investment services and activities listed in points 1, 2, 4 and 5 of Section A of Annex I to that Directive, and which are not permitted to hold money or securities belonging to their clients and which for that reason may not at any time place themselves in debt with those clients’.
67 Cf. CRD IV, Preamble, Recital 55; replicated in MiFID II, Preamble, Recital 55. Consequently, the definition of a ‘management body’ set out in Article 3(1)(7) CRD IV and, in almost identical wording, Article 4(1)(36) MiFID II follows a functional approach, referring to the ‘body or bodies […] which are appointed in accordance with national law, which are empowered to set the institution’s/entities strategy, objectives and overall direction, and which oversee and monitor management decision-making, and include the persons who effectively direct the business of the institution/entity’.
68 Cf. Article 3(2) CRD IV and Article 4(1)(36) MiFID II, pursuant to which, ‘Where this Directive refers to the management body and, pursuant to national law, the managerial and supervisory functions of the management body are assigned to different bodies or different members within one body, the Member State shall identify the bodies or members of the management body responsible in accordance with its national law, unless otherwise specified by this Directive’. See, for an in-depth discussion and critique, Mülbert and Wilhelm (n. 13), paras 6.38–6.47.
69 CRD IV, Article 88(1)(e).
70 Mülbert and Wilhelm (n. 13), paras 6.38.
71 See, critiquing the underlying policy decision against the available empirical evidence, Luca Enriques and Dirk Zetzsche, ‘Quack Corporate Governance, Round III? Bank Board Regulation Under the New European Capital Requirement Directive’ (2015) Theoretical Enquiries in Law 16, 211, 233–5; similarly Mülbert and Wilhelm (n. 13), para. 6.77 (expressing their preference for a more flexible comply-or-explain approach).
72 CRD IV, Articles 76(3), 88(2), and 95(1).
75 See, again, CRD IV, Article 3(1)(7) and MiFID II, Article 4(1)(36), quoted supra n. 68.
76 To be discussed in detail infra III.3.
77 At least two persons, cf. CRD IV, Article 13(1) and MiFID II, Article 9(6)—note the exception in the second subparagraph of the latter provision.
78 MiFID II, Article 9(3)(3).
79 Contrast, e.g., the requirements pursuant to Article 88 CRD IV and Article 9 MiFID II with the general exposition of tasks of the management body in Sections 76, 77, 91, and 93 of the German Aktiengesetz (Stock Corporation Act), which are formulated in much more general terms and, with the exception of Section 91(1) (on bookkeeping) and Section 91(2) (on risk-control arrangements) hardly mention any specific responsibilities at all.
80 Cf. MiFID II, Article 8(d).
81 CRD IV, Article 67(2)(f)–(g).
82 As to which, see infra text accompanying n. 90.
83 See supra text accompanying n. 18.
84 See, for details, CRD IV, Article 88(2)(2)(a)–(d). For a discussion of the diversity requirement as such, see infra 3.
85 CRD IV, Article 95(2).
86 CRD IV, Article 76(3).
87 Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC, OJ L 157, 9.6.2006, p. 87. But cf. CRD IV, Article 76(3), pursuant to which non-significant institutions may combine their risk committee and their audit committee in one committee. For further discussion, see Mülbert and Wilhelm (n. 13), para. 6.13.
88 Cf., e.g., Hopt, in Wymeersch, Hopt, and Ferrarini (n. 2), para. 11.18; for empirical assessments, see again supra n. 16.
89 CRD IV, Article 91(2) and MiFID II, Article 9(4).
90 CRD IV, Article 91(8).
91 CRD IV, Article 91(7).
92 CRD IV, Article 91(9).
93 CRD IV, Article 91(10).
94 CRD IV, Article 88(2)(a).
95 Promulgation of which was required by 31 December 2015. As of October 2016, however, the guidelines have yet to be published.
96 Cf., e.g., the much less complex requirements under the ISD 1993, Article 3(3) (quoted supra text accompanying n. 23).
97 Cf., discussing the German practice in banking supervision in this regard, Jens-Hinrich Binder, ‘Vorstandshandeln zwischen öffentlichem und Verbandsinteresse—Pflichten- und Kompetenzkollisionen im Spannungsfeld von Bankaufsichts- und Gesellschaftsrecht’ (2013) ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht, 760, 774–5.
98 See, expressing similar doubts, also Mülbert and Wilhelm (n. 13), para. 6.67; see also Jaap Winter, ‘The Financial Crisis: Does Good Corporate Governance Matter and How to Achieve It?’ in Wymeersch, Hopt, and Ferrarini (eds) (n. 2), para. 12.28; Enriques and Zetzsche (n. 72), 226.
99 Cf. CRD IV, Preamble, Recital 60, according to which board composition ought to be ‘sufficiently diverse as regards age, gender, geographical provenance and educational and professional background to present a variety of views and experiences’.
100 Contrast, e.g., Irene van Staveren, ‘The Lehman Sisters hypothesis’ (2014) Cambridge Journal of Economics 38, 995 (finding that women in boards tend to perform better than men when deciding under uncertainty), with Renee B. Adams and Vanitha Ragunathan, ‘Lehman Sisters’ (2015), FIRN Research Paper, available at SSRN: <http://ssrn.com/abstract=2380036> (finding that this is not necessarily the case). For an extensive review of the available economic literature without a special focus on the financial sector, see Enriques and Zetzsche (n. 72), 219–25. For a general analysis of ‘groupthink’ as a corporate governance problem, cf. Andrew Howard, ‘Groupthink and Corporate Governance Reform: Changing the Formal and Informal Decision-making Processes of Corporate Boards’ (2011) S. Cal. Interdisc. L. J. 20, 425.
101 Enriques and Zetzsche, ibid., pp. 224–5.
103 Green Paper (n. 11), 17–18.
105 Cf., e.g., discussing the introduction of relevant regulations in Germany, Jens-Hinrich Binder, ‘Steuerung und Kontrolle von Vergütungssystemen durch die BaFin’ in Volker Rieble, Abbo Junker, and Reinhard Giesen (eds) Finanzkriseninduzierte Vergütungsregulierung und arbeitsrechtliche Entgeltsysteme (Munich: ZAAR-Verlag, 2011), p. 63.
106 Cf. MiFID II, Article 9(3)(c), pursuant to which the policy has to aim ‘to encourage responsible business conduct, fair treatment of clients as well as avoiding conflict of interest in the relationships with clients’.
108 Supra n. 73 and accompanying text.
109 See, for introductions to the regime, e.g., Moloney (n. 11), 388–90; Mülbert and Wilhelm (n. 13), at paras 6.16–6.20. And see generally Tom Dijkhuizen, ‘The EU’s Regulatory Approach to Banks’ Executive Pay: From Pay Governance to Pay Design’ (2014) European Company Law 11, 30; Eilís Ferran, ‘New Regulation of Remuneration in the Financial Sector in the EU’ (2012) ECFR 9, 1; Guido Ferrarini and Maria Cristina Ungureanu, ‘An Overview of the Executive Remuneration Issue Across the Crisis’ in Birkmose, Neville, and Sørensen (eds) (n. 16), 349; Guido Ferrarini and Maria Cristina Ungureanu, ‘Lost in Implementation: The Rise and Value of the FSB Principles for Sound Compensation Practices at Financial Institutions’ (May 2011) Revue Trimestrielle de Droit Financier, 1–2, 60; Andrew Johnston, ‘Preventing the Next Financial Crisis? Regulating Bankers’ Pay in Europe’ (2014) Journal of Law and Society 41, 6; for a US perspective, cf. Lucian Bebchuk and Holger Spamann, ‘Regulating Bankers’ Pay’ (2010) Geo. L. J. 98, 247.
110 See, again, supra n. 65 and accompanying text.
111 See, for a brief comparison with the CRD I–III regimes, Mülbert and Wilhelm (n. 13), para. 6.21.
112 CRD IV, Article 74(1).
113 CRD IV, Article 74(2), The present version dates back to the corresponding provision of Article 22 in the recast Banking Directive of 2006 (supra text and n. 51), see EBA, Guidelines on Internal Governance (GL 44) (27 September 2011).
114 CRD IV, Article 76(3) and (4), see supra text accompanying n. 86.
115 See, for details, ibid., Article 76(5); Mülbert and Wilhelm (n. 13), para. 6.23.
116 CRD IV, Article 76(1). Note the similarities with the formulation of board duties in Article 88(1), quoted supra text accompanying n. 77.
117 ibid., Article 76(2).
118 Iris H.-Y. Chiu, Regulating (from) the Inside—The Legal Framework for Internal Control in Banks and Financial Institutions (Oxford: Bloomsbury, 2015), p. 87.
120 For an excellent, in-depth analysis see Chiu (n. 119), 77–118.
121 In the words of John Braithwaite, ‘Rules and Principles: A Theory of Legal Certainty’ (2002) Australian Journal of Legal Philosophy 27, 47, 55–6.
122 See generally, e.g., Jens-Hinrich Binder, Regulierungsinstrumente und Regulierungsstrategien im Kapitalgesellschaftsrecht (Tübingen: Mohr Siebeck, 2012), p. 181; Jens-Hinrich Binder, ‘Prozeduralisierung und Corporate Governance—Innerbetriebliche Entscheidungsvorbereitung und Prozessüberwachung als Gegenstände gesellschaftsrechtlicher Regulierung’, (2007) ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht 745, 783–7. And see, stressing similar potential weaknesses in the context of governance-related regulation of financial institutions, also Chiu (n. 119), 30–3. For a more optimistic call for a regulatory focus on board processes, cf. also Nicola Faith Sharpe, ‘Process Over Structure: An Organizational Behavior Approach to Improving Corporate Boards’, (2011) S. Cal. L. Rev. 85, 261.
124 See Commission Delegated Regulation of 25 April 2016 (n. 7), in particular Articles 21 (general requirements), 22 (on compliance requirements), 23 (on risk management), 24 (on internal audit), and 25 (responsibilities of senior management).
125 See, again, the summary of organizational requirements under the ISD 1993 and MiFID I supra II.B.
126 MiFID II, Article 16(4).
127 ibid., Article 16(5), subparas 2 and 3, respectively. These requirements are complemented—again, in rather abstract and vague terms—by corresponding implementing provisions in Articles 23 and 24 of Commission Delegated Regulation of 25 April 2016 (n. 7).
128 ibid., Article 16(2).
130 ibid., Article 9(3)(4).
131 ibid., Article 16(3), first subparagraph. This requirement, in conjunction with Article 23 of the Directive, is specified further in Articles 33–35 of the Commission Delegated Regulation of 25 April 2016 (n. 7).
132 MiFID II, subparas 2 and 3.
135 ibid., Article 16(6) and (7).
136 ibid., Article 16(8)–(10).
137 It is perhaps telling, in this context, that the relevant international standards on risk-management approaches for securities firms have been developed in line with prudential standards developed for credit institutions—compare, e.g., International Organization of Securities Commissioners, ‘Risk Management and Control Guidance for Securities Firms and their Supervisors’ (May 1998), available at <http://www.iosco.org/library/pubdocs/pdf/IOSCOPD78.pdf>, with Basel Committee on Banking Supervisors, ‘Risk Management Practices and Regulatory Capital’ (November 2001), available at <http://www.bis.org/publ/joint04.pdf>.
138 Article 10(1) MiFID II and CRD IV, Article 14(1).
139 MiFID II, Article 4(1)(31), see also CRD IV, Article 3(1)(33), referring to CRR, Article 4(1)(36).
140 MiFID II, Article 10(1)(2), cf. CRD IV, Article 14(2).
141 MiFID II, Article 13(1), cf. CRD IV, Article 23(1). Note that—convincingly, but in contrast to the MiFID II, where Article 10 makes no reference to Article 13—these requirements are also to be applied in conjunction with the supervisory scrutiny of qualifying holdings in the initial authorization process (CRD IV, Article 14(2)). In practice, however, authorities are also likely to apply the same criteria under the initial authorization process in a ‘pure’ MiFID II scenario.
142 See also Moloney (n. 11), 391.
144 See, again, supra n. 18 and accompanying text.
146 See, again, supra III.3.
147 See, again, Binder, ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht (2015), pp. 667, 702–3; cf. also, discussing the prospect of governance-oriented regulation of banks participating in the Banking Union, Binder, ‘The Banking Union and the Governance of Credit Institutions: A Legal Perspective’ (2015) European Business Organization Law Review 16, 467, 478–87.
148 See, again, Binder, ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht (2015), pp. 667, 702–3, 707; Chiu (n. 119), 30–3; Enriques and Zetzsche (n. 72), 227–9.
149 See, again, CRD IV, Article 88(1)(e), on which, see supra III.2.A.
150 See, again, Enriques and Zetzsche (n. 72), 232; Mülbert and Wilhelm (n. 13), para. 6.77.
151 See, again, Mülbert and Wilhelm (n. 13), paras 6.38–6.47.
152 Cf., e.g., Section 91(2) of the German Stock Corporation Acts.
153 Cf. Binder, ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht (2015), pp. 667, 704 (discussing group-wide organizational requirements under EU and national banking regulation, which may conflict with limits to organizational choices within groups under German group law).