BPCE - 2018 Registration document

6 RISK REPORT

Non-compliance, security and operational risks

a committee in charge of validating model portfolios of financial ● instruments, meeting semi-annually to monitor the performance of risk asset allocations, perform a macroeconomic review and analyses, and prepare an allocation outlook; a product governance and supervision committee, working ● alongside manufacturers: exchanging information between manufacturers and distributors, and overseeing distribution strategy, product changes and investor protection. In response to the enactment of the Market Abuse Directive and Regulation, the Group uses a market abuse alert analysis and reporting tool. This tool covers the Banque Populaire banks, the Caisses d’Epargne and their subsidiaries. BPCE conducted a feasibility study on the implementation of a virtual assistant for employees, designed to facilitate the analysis of alerts reported by the Group tool: the virtual assistant is in the process of being implemented. Software tool NORMA (market abuse) was updated and special training was dispensed on the analysis of market abuse alerts. This training was offered to the employees of the Compliance function in charge of market abuse oversight, in the interest of heightening due diligence in this area. Lastly, the SRAB indicator measurement methods recommended by the AMF and ACPR were implemented throughout the Group.

Since May 2015, the Group has used the mapping of its market activities to calculate, on a quarterly basis, the required indicators referred to in Article 6 of the Ministerial Order of September 9, 2015. It also calculates additional annual indicators for documentation purposes and quantitative indicators such as the economic NBI or VaR of the internal units. Based on the work carried out by the Group, it has not been necessary to create a ring-fenced subsidiary, and mandates have been implemented at the institutions in order to handle the various activities. In July 2017, the AMF and the ACPR published directives on market-making indicators aimed at harmonizing the calculation methodologies of banking institutions in the French marketplace. These harmonized methodologies are now implemented across the entire Group. In conjunction with the calculations and other work done in accordance with the SRAB, an enhanced compliance program was adopted and implemented as from July 2015 in response to the Volcker Rule (a sub-section of the US Dodd-Frank Act) within the scope of BPCE SA group and its subsidiaries. Taking a broader approach than that of the French Banking Separation and Regulation Act, this program aims to map out all the financial and commercial activities of BPCE SA group, notably to ensure that they comply with the two major bans imposed by the Volcker Rule: the ban on proprietary trading and on certain activities related to covered funds. In March 2018, the Group certified its compliance with the Volcker Rule with the US regulator, as it has every year since July 2015. Note: in early 2017, Groupe BPCE appointed a SRAB-Volcker officer, responsible for the security of banking segregation mechanisms. This officer also oversees the requirements set forth by US regulations on Legal Entity Management (LEM).

FRENCH BANKING SEPARATION AND REGULATION ACT (SRAB)

Groupe BPCE regularly updates the mapping of its market activities, calling for the creation of internal units subject to an exemption within the meaning of act No. 2013-672 of July 26, 2013 on the separation and regulation of banking activities.

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Registration document 2018