ESMA consults on MiFID II compliance function requirements

The compliance function is a crucial function within firms, responsible for identifying, assessing, monitoring and reporting on the firms’ compliance risk. Strengthening the compliance function under MiFID II represents an important step forward, as a strong compliance function reduces compliance risk and facilitates competent authorities to exercise their powers effectively.

Proposed Guidelines

ESMA’s proposals for guidelines in this area are aimed at helping firms to increase the effectiveness of the compliance function, enhance clarity and to foster convergence on the expanded the role of the compliance function under MiFID II. The Consultation Paper includes proposals on the draft guidelines which confirm and broaden the existing guidelines, issued in 2012, in order to:

• consider the changes to the compliance function requirements brought by MiFID II;
• give relevance to the results of supervisory activities conducted by national competent authorities on the compliance function requirements; and,
• provide additional details on some aspects that were already covered under ESMA’s 2012 guidelines.

Next Steps

The closing date for responses from stakeholders is 15 October 2019 and ESMA, taking into account the feedback received, aims to publish a final report, and final guidelines, in Q2 2020.