On 29 January 2021, the European Securities and Markets Authority (ESMA) issued a consultation paper on draft guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements. The purpose of the draft guidelines is to enhance clarity and foster convergence in the application of certain aspects of the MiFID II appropriateness and execution-only requirements. When finalised the guidelines apply in relation to Article 25(3) and (4) of MiFID II and Articles 55 to 57 of Commission Delegated Regulation 2017/565 of 25 April 2016.
The consultation paper builds on relevant parts from ESMA’s guidelines on certain aspects of the MiFID II suitability requirements, while adjusting these to the appropriateness and execution-only framework. Guidelines on aspects such as ‘know your client’ and ‘know your product’ that are relevant for both the appropriateness ad suitability assessment have been adjusted to the appropriateness regime (and in some instances updated). Certain guidelines that were not relevant for the appropriateness assessment have been deleted, while others have been added on aspects not relevant for the suitability assessment (for example the effectiveness of warnings).
In addition, the draft guidelines take into account the results of supervisory activities conducted by Member State national competent authorities on the application of the appropriateness and execution-only requirements, in particular resulting from the 2019 common supervisory action on appropriateness.
The deadline for comments on the consultation paper is 29 April 2021. ESMA intends to issue the final guidelines in Q3 2021.