This supervisory briefing covers the following topics: 

• determining situations where the suitability assessment is required;
• information to clients about the purpose of the suitability assessment;
• obtaining information from clients;
• arrangements necessary to understand investment products;
• arrangements necessary to understand the suitability of an investment;
• suitability report;
• qualifications of firm staff; and
• record keeping.

Background

This supervisory briefing is aimed at competent authorities as defined in MiFID II. It is also meant to give market participants indications of compliant implementation of the MiFID II suitability provisions. The purpose of this supervisory briefing is to promote common supervisory approaches and practices in the application of the MiFID II suitability rules.

The Q&A provides clarification on the application of the temporary product intervention measures in relation to the prominence of the risk warning (Question 5.13) and further clarifies what is considered “payments for the purpose of entering into a CFD” (Question 5.2).

The purpose of this document is to promote common, uniform and consistent supervisory approaches and practices in the day-to-day application of ESMA’s temporary product intervention measures on the marketing, distribution or sale of CFDs and binary options to retail clients. It aims at market participants.

Next steps

ESMA will continue to monitor this Q&A on ESMA’s temporary product intervention measures on the marketing, distribution or sale of CFDs and binary options to retail clients in the coming months and will review and update them where required.

ESMA has carefully considered the need to extend the intervention measure currently in effect. It considers that a significant investor protection concern related to the offer of binary options to retail clients continues to exist. ESMA has therefore agreed to renew the measure from 2 January 2019 on the same terms as the previous renewal decision that started to apply on 2 October 2018.

The renewal was agreed by ESMA’s Board of Supervisors on 7 November 2018.

Next steps

ESMA intends to adopt the renewal measure in the official languages of the EU in the coming weeks, following which ESMA will publish an official notice on its website.  The measure will then be published in the Official Journal of the EU and will start to apply from 2 January 2019 for a period of three months.

·         Carmine Di Noia, Commissioner of the Commissione Nazionale per le Società e la Borsa (CONSOB), Italy, will chair the Committee for Economic and Markets Analysis;

·         Christopher Buttigieg, Director of the Securities and Markets Supervision Unit at the Malta Financial Services Authority (MFSA), will chair the Data Standing Committee;

·         Martin Moloney, Head of Markets Policy Division at the Central Bank of Ireland (CBI)  will chair the Investment Management Standing Committee; and  

·         Merel van Vroonhoven, Chair of the Autoriteit Financiële Markten (AFM), Netherlands will chair the Investor Protection and Intermediaries Standing Committee.

The standing committees are expert groups drawn from ESMA staff and the national competent authorities for securities markets regulation in the Member States, and are responsible for the development of policy in their respective areas.

The appointments of the chairs to the Data, Investment Management and Investor Protection and Intermediaries Standing Committee are effective immediately for a period of two years until 30 October 2020. While the new chair of the Committee for Economic and Markets Analysis replaces the previous chair, effective immediately, and will complete the current term which ends on 30 September 2019.

National Competent Authorities (NCAs) to which these Guidelines apply must notify ESMA whether they comply or intend to comply with the Guidelines, within two months of the date of publication by ESMA of the Guidelines in all EU official languages.