Investment Management Association

We support the subtractive approach.
The list of items that can be subtracted does not provide any ability to subtract expenditure that is of a highly discretionary nature and which can be switched off very quickly in the event of an economic or company specific downturn (e.g. some types of marketing / branding expenditure, sales-related travel and entertainment). Under other rulebooks, the term “other variable expenditure” is used. Whilst this requires judgement to be used, it reflects a company’s true fixed expense base more accurately.

Extraordinary should be defined to allow for flexibility. Understanding may not be fixed and will vary from firm to firm.

We note the omission of foreign exchange losses from the list. The list should be made future proof.
No comment.
We support the inclusion of tied agents in the capital calculations.
We believe that firms should be able to agree an approach with their supervisors.
No comment.
We agree with a guideline setting out a % threshold. 20% seems reasonable. We are not sure that the addition of an absolute threshold adds much. The suggested threshold of EUR 2m may not be material for large investment firms in the context of their overall expense base.
A discussion between firms and their regulators, as part of the capital planning process, would be more appropriate to work out a numerative trigger.
EUR 2 million would be more appropriate as guidance and applied in a proportionate manner, taking into account the firm’s business model, capital base and assets under management.
No comment.
No comment.
Irving Henry