Internal governance

Securities institutions must establish sound governance arrangements that are appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the business of the securities institution; these include 1. a clear organisational structure with well-defined, transparent and consistent lines of responsibility; 2. effective procedures to identify, assess, manage and monitor, and report on, the risks and potential risks to which the securities institution is or may be exposed, or that the securities institution poses to others, including concentration risk arising from exposures to central counterparties, having regard to the requirements laid down in Article 7a of Regulation (EU) No 648/2012; 3. adequate internal control mechanisms, including sound administrative and accounting procedures; and 4. a remuneration policy that is compatible with, and promotes, sound and effective risk management, and that is designed to be gender-neutral.