The European Securities and Markets Authority (ESMA) has updated its Q&As on the implementation of investor protection topics under MiFID II and MiFIR.
The topics that have been updated are best execution and inducements (research).
On best execution the following questions have been updated:
- How soon after MiFID II comes into effect will venues and firms have to publish Regulatory Technical Standards (RTS) 27 and 28 reports?
- If portfolio managers or receivers and transmitters of orders use different entities within a single group to execute orders, should they list those entities separately, or aggregate them and list the group parent as a single entry for the purposes of the RTS 28 report that it is required to be published under Article 65(6) of the Delegated Regulation?
- Are eligible counterparty transactions to be included in the data required to be published by execution venues under RTS 27?
- When an investment firm operates an organised trading facility (OTF), at which level should the best execution policy be set? At the level of the investment firm or at the level of the OTF or both? Would similar requirements apply to a market operator operating an OTF?
- How should passive and aggressive orders be understood in the context of portfolio management or of reception and transmission of orders for the purposes of the RTS 28 report to be published under Article 65(6) of the Delegated Regulation?
On inducements the following questions have been updated:
- Can the service of a third party arranging meetings with the management of a corporate issuer for an investment firm (corporate access) be considered as research that can be paid for from a research payment account (RPA) under Article 13(1)(b) of the Delegated Directive, and if not, how should firms providing independent investment advice or portfolio management services treat such services?
- Can macro-economic analysis be considered research that can be paid for from an RPA and client research charges under Article 13(1)(b) of the Delegated Directive?
- How should research related to fixed income, currencies or commodities be treated for the purposes of the MiFID II inducements restriction for firms providing portfolio management or independent investment advice (Article 24(7) and (8))?
- What approach should firms adopt to ensure that the allocation of their research budget to third party providers and the determination of the payments made from it are in the best interests of the firm’s clients under Article 13(6)?
- How should the estimated client research charge disclosure be presented for the purposes of Article 13(1)(c)(i)?
View ESMA updates MiFID II / MiFIR investor protection Q&As, 4 April 2017