4.2.1. Organisational framework and structure

Statutory and regulatory framework

  1. Brokerage Supervision Act: Article 17
  2. NBB regulations:
    • Regulation of 19 May 2015 on the internal control system and the internal audit function
  3. NBB circulars:
  4. International reference documents:
    • EBA/GL/2021/14 on internal governance => paragraphs 61 to 84

4.2.1.1 Organisational framework

4:87 The statutory governing body should implement and ensure a suitable and transparent organisational and operational structure for the firm. This implies in particular that the reporting lines and the division of responsibilities should be clear, well defined, coherent and adequately documented.  For more information on this subject, please see paragraphs 61 to 64 of EBA/GL/2021/14.

4.2.1.2. Decision-making process, reporting lines and division of tasks

4:88 The firm should have a clear, transparent and documented decision-making process and a clear division of responsibilities and reporting lines within its internal control framework, covering its business lines, internal units and independent control functions.

4:89 Reporting lines should be clearly defined. Internal reporting should be adapted to the nature, size, complexity and risk profile of the firm and should cover all of the firm’s activities.

4:90 When implementing the internal control framework, firms should ensure an adequate segregation of duties, for example by allocating conflicting activities or supervisory and reporting responsibilities to different persons and by establishing information barriers to prevent the transmission of certain information (e.g. through the physical separation of certain departments).

4.2.1.3. Administrative and accounting organisation

4:91 The firm should have an appropriate administrative and accounting organisation, including inter alia a system of controls that provides a reasonable level of assurance of the reliability of the financial reporting process.

4:92 Senior management or, where applicable, the management committee must take, under the supervision of the statutory governing body, the necessary steps to ensure that the firm has reliable financial and prudential reporting.

4.2.1.4. Know your structure

4:93 Directors should have a clear understanding of the firm’s legal and operational structure and of its activities, including the risks associated with the services and products offered. They must ensure that this structure and these activities are in line with the approved business and risk strategy and risk appetite. Support functions (secretary general, legal affairs, human resources, communication) and the independent control functions should be given all specific information they need to fulfil their respective tasks properly.

4:94 Firms that are part of a group should be able to inform the NBB of the structure of the group to which they belong, as well as the group’s governance and the control mechanisms applicable to them. When a firm has a large number of legal entities within its group, their number, and in particular any links and transactions between them, should not constitute an obstacle to sound governance or efficient management and supervision of the group’s risks.

4:95 For more information, please see paragraphs 65 to 69 of EBA/GL/2021/14.

4.2.1.5. Complex structures and non-standard or non-transparent activities

4:96 Firms may develop cross-border activities. The decision to develop activities in foreign jurisdictions may be driven by a range of factors and circumstances relating to legitimate strategic, commercial or financial objectives. However, complex structures or foreign activities, in particular in offshore financial centres or non-transparent jurisdictions, may give rise to financial, legal and/or reputational risks and thus may not meet prudential requirements.

4:97 For more information on this subject, please see paragraphs 70 to 76 of EBA/GL/2021/14. In addition, please refer to the provisions on special mechanisms and prevention policy for tax matters which have recently been revised (see in particular Article 17 §2 of the Brokerage Supervision Act and Circulars NBB_2021_17 of 6 July 2021 on prevention policy for tax matters and NBB_2021_17 of 6 July 2021 on special mechanisms).