

Core Viewpoint - The Financial Supervision and Administration Bureau has issued guidelines stating that the compensation of personnel responsible for market risk management in commercial banks should not be linked to direct operating profits [1] Group 1: Compensation and Incentives - Commercial banks are required to avoid conflicts of interest between their compensation systems and the objectives of market risk management [1] - The board of directors and senior management should ensure that the compensation structure does not encourage excessive risk-taking behavior [1] - Performance evaluations should focus on long-term operational risks rather than being overly concentrated on short-term profit performance [1] Group 2: Market Risk Management - The guidelines emphasize the importance of aligning risk management practices with compensation to prevent negative effects on risk-taking [1] - The compensation of staff responsible for market risk management should be independent of direct operating income [1]