On 1 April 2020, the European Securities and Markets Authority (ESMA) published its final report to the European Commission on inducements and costs and charges disclosures under MiFID II.

The final report deals with technical advice in relation to certain investor protection topics under MiFID II. In this respect, in line with the previous mandate from the Commission, ESMA’s final report focuses on the impact of:

• the second paragraph of Article 24(9) of MiFID II on the provision of investment services and ancillary services other than portfolio management and investment advice provided on an independent basis; and
• Article 24(4)(c) of MiFID II on the provision of investment services and ancillary services.

The final report summarises the feedback received to the call for evidence published by ESMA on

17 July 2019 and the rationale behind ESMA’s final proposals.

In the final report, ESMA encourages the Commission to conduct further analysis on inducements, and proposes some changes to the regime mainly aimed at improving clients’ understanding of inducements. In relation to costs and charges disclosure, ESMA has found that the MiFID II disclosure regime generally works well. However, it advises that some disclosure obligations vis-à-vis eligible counterparties and professional investors are scaled back. Other elements of the final report relate to trading by telephone, the provision of information to clients in a durable medium and to the possibility to create new categories of clients.

ESMA has submitted the final report to the Commission.