4.1.3.1. Composition
Members and status
4:42 Senior management should consist of at least two persons holding a position that enables them to exercise effective reciprocal supervision (dual supervision). The NBB recommends that there preferably be three or more, to avoid deadlock.
4:43 Senior managers may be executive directors as well as persons who, without having the capacity of director, are considered by the firm as de facto managers due to the direct and decisive influence they can exercise over the management of all or some of its activities. The senior manager to whom daily management of the firm is delegated (for corporate forms where this possibility exists) must be an executive director.
4:44 Where a management committee has been set up, Article 21 §4 of the Brokerage Supervision Act requires that it be comprised exclusively of members of the statutory governing body.[1]
4:45 The NBB recommends that senior management or, where applicable, the management committee be comprised of at least the three following functions: the chief executive officer, the chief financial officer and the chief risk officer.
4:46 Members of senior management or, where applicable, the management committee must be natural persons who meet the (individual and collective) suitability requirements set out in the NBB’s Fit & Proper Manual. Where they are members of the statutory governing body, they must perform their duties in a self-employed capacity (without exception).[2] If the composition of senior management or, where applicable, the management committee, is mixed (i.e. one or more executive directors and one or more non-directors), the non-director senior managers must also have self-employed status.[3]
Chief Executive Officer
4:47 The appointment of a chief executive officer or CEO (or, where applicable, a chair of the management committee) contributes to the efficient and coherent overall functioning of stockbroking firms and to the efficient flow of information with the statutory governing body.
Chief Financial Officer
4:48 The Brokerage Supervision Act does not require the chief financial officer (CFO) to be a member of senior management or, where applicable, the management committee. In practice, however, this is very often the case and is recommended by the NBB. The CFO is generally responsible for managing financial resources, financial planning and financial reporting. In firms where the CFO is not a senior manager or, where applicable, a member of the management committee, the CFO should be a senior member of staff (at N-1 level in relation to the senior managers).
Chief Risk Officer
4:49 Pursuant to Article 33 §3 of the Brokerage Supervision Act, the person responsible for the risk management function (usually referred to as the chief risk officer or CRO) must be a member of senior management or, where applicable, the management committee. In principle, this person should only be responsible for the risk management function. However, by way of derogation from this rule, the NBB may authorise the CRO to be responsible for the compliance function as well, provided these two functions are performed separately.
4:50 Par ailleurs, la BNB peut – en tenant compte du principe de proportionnalité – autoriser que la fonction de gestion des risques soit confiée à un cadre supérieur (« N-1 » par rapport aux dirigeants effectifs), à condition qu’il n’y ait pas de conflit d’intérêt dans le chef de cette personne. Les sociétés de bourse de petite taille pourront également demander cette autorisation.
Senior manager responsible for the prevention of money laundering and countering the financing of terrorism (AML/CFT)
4:51 In accordance with Article 9 §1 of the Act of 18 September 2017 on the prevention of money laundering and terrorist financing and on restriction of the use of cash, the firm must appoint a senior manager responsible for AML/CFT from amongst the members of its senior management or, where applicable, its management committee. The senior manager responsible for AML/CFT is expected to possess general AML/CFT-related knowledge so as to be able to review critically the measures taken by the AMLCO and ensure compliance with the provisions of AML Act. It should also be ensured that the senior manager responsible for AML/CFT does not combine this role with other roles giving rise to AML/CFT risks (such as a commercial function).
[1] A derogation allowing a mixed management committee in terms of composition (directors and non-directors) is, however, possible on the basis of Article 22 of the Brokerage Supervision Act.
[2] See Article 64 of the Brokerage Supervision Act. Thus, the person to whom daily management has been delegated (for corporate forms where this possibility exists) must be an executive director with self-employed status.
[3] A subordinate relationship - if proven - would compromise the proper functioning and collective decision-making of senior management.