In the document, released at the end of last week, the European Securities and Markets Authority (ESMA) proposed a number of measures, including specifications of powers for national regulators with regards to prohibiting or restricting the marketing and distribution of financial instruments.
Also included in the proposals is a requirement for investment firms to have product governance arrangements in place, and a requirement to provide clients with details of all costs related to their investment and information on the cumulative effect of these costs on the investments return.
MiFID II, which will not be fully implemented until 2016, has been designed to address the residual effects of the financial crisis by improving financial market transparency and strengthening investor protection within the insurance and investment market.
ESMA began its consultation process to look at how best to implement MiFID II in May.
The directive contains over 100 requirements, and ESMA will have to meet all of these in order to draft regulatory technical standards and implementing technical standards.
Other recommendations included in last week’s release are organisational requirements for firms providing investments advice on an independent basis, and clarifications under which circumstances inducements meet a predefined quality enhancement requirement.
"Significant"
ESMA chair, Steven Maijoor, said: “Today’s implementing rules on both secondary markets and investor protection issues reflect ESMA’s desire to achieve the best outcome for market users and investors, taking into account the extensive submissions received from our stakeholders.
“The advice now goes to the European Commission to use in preparation of its delegated legislation, while our technical standards are open for a second round of consultation.”
He added that, once fully implemented, MiFID II will have a “significant” impact on the EU’s securities markets.
The UK’s Investment Management Association said it supports ESMA’s decision to deliver additional protection measures while leaving space for national regulators to determine their precise form.
“We look forward to working further with domestic and European regulators to ensure that consumers have access to meaningful information,” it added.
