The European Securities and Markets Authority (ESMA) has published a new set of Q&As on investor protection topics under MiFID II and MiFIR. The Q&As provide responses to questions raised by the general public, market participants and competent authorities in relation to the practical application of MiFID II and MiFIR. The content of the Q&A is aimed at competent authorities and firms and covers the following investor protection topics:

  • best execution. Includes a Q&A on how firms and competent authorities should understand the difference between “reasonable steps” and “sufficient steps”;
  • suitability and appropriateness. Includes a Q&A on whether the suitability report only has to be provided if the investment advice leads to a transaction;
  • recording of telephone conversations and electronic communications. Includes a Q&A on which telephone conversations or electronic communications regarding the handling of orders and transactions need to be recorded;
  • record keeping. Includes a Q&A on how firms should prepare copies of records that have been encrypted and which have been requested by clients, competent authorities or other competent third parties;
  • investment advice on an independent basis. Includes a scenario question and whether a firm can continue to hold itself out as being independent;
  • underwriting and placing. Includes a Q&A on Article 38(1) of the MiFID II Delegated Regulation and the meaning of “various financing alternatives”; and
  • inducements (research). Includes a Q&A concerning the use of a research payment account.

View New ESMA Q&As on MiFID and MiFIR investor protection topics, 10 October 2016

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