On 30 May 2018, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) issued a statement which examines the treatment of retail holders of debt financial instruments in the context of the Bank Recovery and Resolution Directive (BRRD) and the recast Markets in Financial Instruments Directive (MiFID II). The statement encourages institutions, market and resolution authorities to properly consider retail holders of debt financial instruments subject to the BRRD when carrying out their respective tasks.

The statement notes that the BRRD does not provide for different treatment of eligible liabilities based on the nature of the holder. Where there is a material presence of retail debt investors, resolution authorities are encouraged to factor this element into their resolution planning and assessment of possible impediments to resolution. The statement also calls for a cooperative dialogue between resolution and market authorities and the sharing of information when this issue is relevant.

The statement reminds institutions that in relation to:

• the outstanding legacy stock of issuances of retail debt liabilities, they provide existing clients with complete and updated information on the potential treatment of such investments in resolution or insolvency; and
• new debt financial instruments being issued under the framework of MiFID II, they properly implement the new requirements, which include a number of provisions aiming at strengthening investor protection.