On 13 January 2021, the European Securities and Markets Authority (ESMA) issued a public statement designed to remind firms of the MiFID II requirements on the provision of investment services to retail or professional clients by firms not established or situated in the EU.
The public statement notes that there have been some questionable practices by firms around reverse solicitation and gives the examples that some firms appear to be trying to circumvent the MiFID II requirements by including general clauses in their terms of business or through the use of online pop-up “I agree” boxes whereby clients state that any transaction is executed on the exclusive initiative of the client.
The public statement reminds firms that it has provided guidance on reverse solicitation in its Q&As on MiFID II and MiFIR investor protection and intermediaries topics. It also reminds firms that as provided in recital 111 of MiFID II “where a third-country firm solicits clients or potential clients in the Union or promotes or advertises investment services or activities together with ancillary services in the Union, it should not be deemed as a service provided at the own exclusive initiative of the client”. This is true “regardless of any contractual clause or disclaimer purporting to state, for example, that the third country firm will be deemed to respond to the exclusive initiative of the client”.
The public statement also draws firms’ attention to the following:
- Every communication means used, such as press releases, advertising on internet, brochures, phone calls or face-to-face meetings should be considered to determine if the client or potential client has been subject to any solicitation, promotion or advertising in the EU on the firm’s investment services or activities or on financial instruments.
- A solicitation, promotion or advertising should be considered regardless of the person through whom it is issued: the third country firm itself, an entity acting on its behalf or having close links with such third country firm or any other person acting on behalf of such entity.
