EUROPE: ESMA Updates Q and As on MiFID II Investor Protection

Friday May 29 2020

On 28^th May 2020, the European Securities and Markets Authority (ESMA) 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 includes a new answer on ‘MiFID inducements’.

More specifically, the new Q&A provides clarification on the application of the MiFID definition of “acceptable minor non-monetary benefits”.

The purpose of the MiFID II/MiFIR investor protection Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR.

Question: Acceptable minor non-monetary benefits are defined in paragraph 3 Article 12 of the MiFID II Delegated Directive in respect of portfolio management and independent investment advice. Should investment firms consider such definition is also applicable to investment or ancillary services other than portfolio management and independent investment advice?

Answer: Yes, in ESMA’s view, acceptable minor non-monetary benefits should have the same meaning, defined in paragraph 3 Article 12 of the MiFID II Delegated Directive, irrespective of the investment or ancillary service provided. In particular, according to the penultimate indent of such paragraph, “acceptable minor non-monetary benefits shall be reasonable and proportionate and of such a scale that they are unlikely to influence the investment firm’s behaviour in any way that is detrimental to the interests of the relevant client”. With regard to disclosure, it is reminded that – in accordance with Article 11(5) (a), to which Article 12 cross refers – minor non-monetary benefits may be described in a generic way for all services provided.

Click on the link for further information.