MiFID - Investor Protection

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

The Q&As on MiFID II and MiFIR investor protection and intermediaries topics provides new answers on: 

  • Best execution - Reporting for firms using a venue’s RFQ system to agree a trade; and, 
  • Investment advice on an independent basis – Use of a ‘look-through’ approach. 

The overall Q&As provide clarifications on the following topics:

  • Best execution;
  • Suitability and appropriateness;
  • Recording of telephone conversations and electronic communications;
  • Post-sale reporting;
  • Record keeping;
  • Investment advice on an independent basis;
  • Inducements (research);
  • Information on charges and costs;
  • Underwriting and placement of a financial instrument;
  • Client categorisation;
  • Inducements;
  • Provision of investment services and activities by third country firms;
  • Application of MiFID II after 3 January 2018, including issues of late transposition; and
  • Other issues.

The purpose of this Q&A is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR.

ESMA will continue to develop this Q&A on investor protection topics under MiFID II and MiFIR, both adding questions and answers to the topics already covered and introducing new sections for other MiFID II investor protection areas not yet addressed in this Q&A.

 

The European Securities and Markets Authority (ESMA) has written to the European Commission in relation to additional issues concerning some MiFID II/MiFIR requirements on investor protection and intermediaries. The letter is a follow-up to an earlier letter concerning some MIFID II/MIFIR requirements regarding trading venues.

The letter highlights a number of items, which are relevant in the context of the United Kingdom’s withdrawal from the European Union, in particular:

  • Concerns regarding the MiFIR regime for third country firms providing investment services and activities to eligible counterparties and per se professional clients;
  • Concerns regarding the MiFID II regime for third country firms providing investment services and activities to retail and professional clients on request;
  • Third country firms providing investment services and activities at the exclusive initiative of EU clients (reverse solicitation); and  
  • Investment firms outsourcing critical or important functions other than those related to portfolio management to third country providers.

On 21 September 2018, the European Securities and Markets Authority (ESMA) adopted a Decision under Article 40 of Regulation (EU) No 600/2014 to prohibit the marketing, distribution or sale of binary options to retail clients. The Decision renews and amends ESMA Decision (EU) 2018/795.

In accordance with Article 40(5) of Regulation (EU) No 600/2014, this Notice provides details of the Decision and the time from which the measure will take effect. The full text of the Decision is published in the Official Journal of the European Union.

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