On 8 April 2025, the European Securities and Markets Authority (ESMA) published a Final Report containing technical advice on amendments to the research provisions in the MiFID II Delegated Directive (Commission Delegated Directive (EU) 2017/593 of 7 April 2016) in the context of the Listing Act (Regulation (EU) 2024/2809 and Directive (EU) 2024/2810).
The Final Report follows a consultation paper that ESMA issued last October.
Background
ESMA received a request from the European Commission on 6 June 2024 to provide technical advice on the implementation of the amendments to the Prospectus Regulation, Market Abuse Regulation and Markets in Financial Instruments Directive II (MiFID II) in the context of the Listing Act. The Final Report now published by ESMA focuses on the changes in MiFID II related to the payment for research and execution services.
The MiFID II investment research regime was amended in 2021 by the Capital Markets Recovery Package which inserted into Article 24 of MiFID II a new paragraph 9a which provided for the possibility for joint payments for execution services and research covering issuers whose market capitalisation did not exceed EUR 1 billion.
The Listing Act Directive, approved in 2024, allows for the possibility of joint payments for execution services and research irrespective of the market capitalisation of the issuers covered by the research.
At present MiFID II and the MiFID II Delegated Directive set out the conditions that the provision of research by third parties to investment firms must meet in order not to be regarded as an inducement. The new conditions introduced by the Listing Act Directive have an impact on Article 13 of the MiFID II Delegated Directive, which only describes conditions associated to the unbundling regime. Therefore the delegated act will have to be amended in order to supplement the application of the new optional regime.
Proposed amendments
Section 4.4 of the Final Report sets out ESMA’s proposed amendments to the MiFID II Delegated Directive.