MiFID II/MiFIR Q&A Updates Concerning Best Execution and Client Categorization

On May 25, the European Securities and Markets Authority (ESMA) updated its questions and answers on the revised Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) investor protection and intermediaries topics, with nine new or updated Q&As.

While the clarifications impact investment firms more widely, ESMA expressly contemplates providers of contracts for difference in the Q&As as an example of an “other liquidity provider” that will need to comply with best execution requirements under the relevant MiFID II regulatory technical standard, RTS 27.

In addition, the updated Q&As clarify the conditions under which a firm may treat, to a certain extent, a private individual investor as a professional client. Crucially, firms must not implement any practice “that aims at incentivizing, inducing or pressuring a private individual investor to request to be treated as a professional client.”

The updated Q&As from ESMA are available here.

ESMA’s press release announcing the updated Q&As is available here.

MiFID II/MiFIR Q&As Updated and Guidelines Published on MiFID II Suitability Requirements

The European Securities and Markets Authority (ESMA) recently updated its questions and answers on the following topics:

• On May 29, the revised Markets in Financial Instruments Directive (MiFID II) Q&As on transparency and market structures topics (available here and here, respectively one for transparency and one for market structures). Among other things, ESMA clarifies how it expects post-trade data to be published 15 minutes after publication free of charge and in an easily accessible manner that can be easily copied. Data published by approved publication arrangements and consolidated tape providers must be in a machine readable format; and
• On May 25, Q&As on data reporting under the Markets in Financial Instruments Regulation (MiFIR), (available here). The Q&As clarify the requirements for submission of transaction reports and reference data under MiFIR, particularly in relation to complex trades and national client identifiers for natural persons.

On May 28, ESMA also published guidelines on MiFID II suitability requirements (available here). Investment firms providing investment advice or portfolio management must, under MiFID II and its delegated regulation, provide suitable personal recommendations to their clients or make suitable investment decisions on behalf of their clients.

ESMA’s accompanying press releases are available here, here and here respectively.