The Financial Stability Board ("FSB") and IOSCO held a roundtable discussion to examine compensation practices in the securities sector. The examination included the compensation practices of sell-side and buy-side firms, securities firms that are affiliated with banks and those that are not, and firms engaged in a wide variety of businesses.
Members of the roundtable discussed, among other topics:
- the manner in which a firm generally determines compensation, including how compensation expenses are determined for the firm as a whole and at the individual level;
- the regulation of compensation practices of member firms across jurisdictions;
- financial stability risks that can arise from "star-based" compensation structures, and whether securities firms "align their compensation practices with long-term prudent risk taking";
- oversight of misconduct risk and how to reduce incentives for misconduct; and
- regulatory restrictions on compensation, "particularly the differences and commonalities between [restrictions in] the securities and banking sectors," as well as the "heterogeneity of the securities sector."
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